Campbell Soup Co. successfully reversed negative sales trends in its key US soup business by increasing spending on trade promotions during its third quarter, the company said today (24 May).
The world’s largest soup maker booked a 6.9% increase in total sales, which rose to US$1.8bn, in the three months to 2 May.
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While foreign exchange added 5% to the top line, Campbell was also able to book an increase in sales volumes, the company said.
After two negative quarters, Campbell said that US soup sales rose 2% as an increase in promotional activity partially offset a 5% gain in volumes.
While US consumers have increasingly been eating at home during the downturn, Campbell revealed that the soup category has seen little benefit due to increased competition from other “simple meals” categories.
Nevertheless, speaking during a conference call, Campbell president and CEO Doug Conant insisted that the group expected to drive category growth – as well as market share gains – by investing in its price positioning.
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By GlobalData“We know at what level we need to be competitive in order to grow the category,” he insisted. “We’re going to be very agile and stay on top of pricing in the soup category.”
Conant characterised Campbell’s pricing strategy as a return to previous price points and insisted that the group is balancing the risk of training consumers to only buy soup on promotion through continued investment in marketing.
“We are going to maintain a strong marketing profile as well as a trade promotional profile and we have the scale to do that,” he claimed.
Conant said that the group was managing its increased spending on promotions in a way that allows the company to continue to grow earnings.
“We do have the ability to control our pricing – we lead pricing in our categories – we ought to be able to manage this and get good leverage from our volume,” he suggested.
Looking at the group’s third-quarter performance, Conant said Campbell “got more competitive” to drive the top line while also increasing profitability over the previous quarter.
“Our outlook for the soup category is one of growth – albeit modest growth. Our belief is that we ought to be able to grow the soup category. I think that there is a growth model there,” he said.
