The soup busi­ness has grown cold. Can Camp­bell turn up the heat?

The many ad­just­ments at Camp­bell, in­clud­ing the new prod­ucts and the clos­ing of plants, “felt like chang­ing the tires on a mov­ing car,” the com­pany’s chief ex­ec­u­tive says.

The Washington Post Sunday - - BUSINESS - BY SARAH HALZACK

In the re­search and de­vel­op­ment kitchen at Camp­bell Soup, chef Todd Lyons spent much of the past 18 months fine­tun­ing a batch of new recipes. Would shop­pers go for chicken noo­dle soup with kale added as a health­ful twist? (An­swer: re­sound­ing yes.) Would a cau­li­flower soup sea­soned with dill land in their shop­ping carts? (An­swer: prob­a­bly not.) Lyons was cre­at­ing the culi­nary pro­to­types for two of three new lines that the pack­aged­food em­pire has rolled out on su­per­mar­ket shelves in re­cent months. But it is also fair to say that he — along with an army of Camp­bell’s mar­keters, prod­uct de­vel­op­ers and sup­ply­chain ex­perts — was try­ing to cook up a recipe for the com­pany’s fu­ture. Camp­bell’s soups are cold­weather sta­ples that de­buted more than a cen­tury ago, prod­ucts that were pi­o­neers of mass food man­u­fac­tur­ing and helped make shelf­stable goods a fix­ture in the Amer­i­can pantry. But to­day’s grow­ing pref­er­ence for the op­po­site ap­proach to eat­ing — sea­sonal, fresh, or­ganic — is ham­mer­ing the fa­mous brand.

Con­sumers ages 39 and younger have in­creased their con­sump­tion of fresh food by 23 per­cent from a decade ago, ac­cord­ing to the mar­ket re­searcher NPD Group. And the cen­ter aisles of the gro­cery store — the long rows of canned goods, ce­re­als, pack­aged cook­ies and the like — ac­count for a shrink­ing share of su­per­mar­ket sales.

Mean­while, re­search from the mar­ket data firm Min­tel sug­gests that shop­pers are grav­i­tat­ing to small, bou­tique brands for food and other prod­ucts. That’s a chal­leng­ing pat­tern for a be­he­moth com­pany that pulled down $7.96 bil­lion in rev­enue last year, in­clud­ing from mass brands such as Pep­peridge Farm and Gold­fish, and whose prod­ucts can be found in re­tail spa­ces as di­verse as gro­ceries, phar­ma­cies and gas sta­tion con­ve­nience stores.

It is against this back­drop that Camp­bell’s U.S. soup busi­ness has en­tered a years-long rough patch, high­lighted by sales that de­clined or re­mained flat for the past eight quar­ters. So the com­pany has de­vel­oped three new lines of soup — Well Yes, Gar­den Fresh Gourmet and Sou­plic­ity — to try to put its soup busi­ness back on a steady foot­ing. Each line tar­gets a slightly dif­fer­ent shop­per, looks starkly dif­fer­ent from the red-and-white cans ren­dered in Andy Warhol paint­ings and is cast as an an­swer to shop­pers’ de­sire to eat sim­ple, health­ful in­gre­di­ents.

The mar­ket­ing push is an ef­fort to make store-bought soup a main­stay of mil­len­ni­als’ shop­ping lists. And its suc­cess or fail­ure will of­fer lessons that could re­ver­ber­ate through the wider pack­aged-food in­dus­try, as Kraft Heinz, ConA­gra and Mon­delez In­ter­na­tional face se­ri­ous head winds as con­sumers em­brace fresh food.

On a dif­fer­ent shelf

If shop­pers are of­ten steer­ing clear of the cen­ter aisles, Camp­bell rea­sons it needs to meet them in the parts of the store that they visit. That is why two of the new soups, Gar­den Fresh Gourmet and Sou­plic­ity, are re­frig­er­ated prod­ucts that come in plas­tic con­tain­ers, not cans, that can be sold on the cold shelves that line a su­per­mar­ket’s perime­ter.

Sou­plic­ity is the high­est-end line of the three, a sin­gle-serv­ing or­ganic prod­uct that costs $5.99 for a 17.6-ounce con­tainer and comes in such fla­vors as “Car­rot Curry Ginger” and “Broc­coli Parme­san Lemon.” This is de­signed for a health-con­scious cus­tomer — pic­ture, per­haps, a yoga devo­tee who al­ready springs for items such as cold-pressed juices. Camp­bell made sure to mar­kettest this one in South­ern Cal­i­for­nia, a hub of health­ful eat­ing.

“We saw an op­por­tu­nity there for a very culi­nary ex­pe­ri­ence, very clean ex­pe­ri­ence,” said Suzanne Gine­stro, chief mar­ket­ing of­fi­cer and gen­eral man­ager of in­no­va­tion at C-Fresh, the di­vi­sion of Camp­bell Soup that makes fresh food.

Camp­bell made this line us­ing a method called high-pres­sure pro­cess­ing, which is meant to help the prod­uct re­tain its color and fla­vor with­out preser­va­tives. The com­pany pre­vi­ously used this tech­nique for or­ganic juices and other Gar­den Fresh Gourmet items.

In Sou­plic­ity prod­ucts, “there are broc­coli flo­rets that, with­out this tech­nol­ogy, would be ab­so­lutely de­stroyed,” said Lyons, se­nior chef in the C-Fresh di­vi­sion. “Now they’re much more in­tact.”

Gar­den Fresh Gourmet soups, on the other hand, come in 24ounce con­tain­ers, cost $5.99, and are aimed more at feed­ing a fam­ily. Camp­bell spent $231 mil­lion in 2015 to ac­quire Gar­den Fresh Gourmet, a health-fo­cused brand that had built a loyal fol­low­ing for its small-batch salsa and hum­mus. The soups add to that of­fer­ing and aim for sim­i­lar brand po­si­tion­ing — no ar­ti­fi­cial fla­vors and sweet­en­ers, but not or­ganic.

Re­frig­er­ated soups also call for a dif­fer­ent sup­ply-chain ex­e­cu­tion than that used for canned soups: The shelf life of Sou­plic­ity, for ex­am­ple, is about 50 days, com­pared with two years for many canned soups. That means the new soups need speed­ier de­liv­ery to stores and must be trans­ported in re­frig­er­ated trucks.

And then there’s the task of build­ing a con­sumer base.

“Ev­ery­thing I’ve learned as a brand man­ager com­ing up through the ranks, I’ve had to un­learn,” said Gine­stro, who has been in the food in­dus­try for about 20 years.

In her ex­pe­ri­ence, a big food com­pany takes a promis­ing line na­tion­wide right away, storm­ing gro­cery store shelves and blitz­ing TV screens with com­mer­cials. That’s not what Gine­stro is do­ing time, though. Since her team sees that shop­pers are opt­ing for small, ar­ti­sanal food la­bels, they want to bring these brands to mar­ket in a sim­i­lar way.

There are no ma­jor me­dia cam­paigns now for Sou­plic­ity and Gar­den Fresh Gourmet. And the prod­ucts so far are sold in just a small set of gro­cery stores, where Camp­bell can see how shop­pers re­act to them and then slowly build into more stores.

“It’s much more or­ganic, from the ground up. And that helps you de­liver on this smaller, au­then­tic, real [prin­ci­ple],” Gine­stro said. “Let’s be com­pletely trans­par­ent and let this busi­ness grow or­gan­i­cally.” spins on tra­di­tional recipes, such as a “Chicken Noo­dle Soup” with white beans or a “Sweet Po­tato Corn Chow­der.” It’s not or­ganic, al­though ar­ti­fi­cial fla­vors and in­gre­di­ents are shunned in man­u­fac­tur­ing it.

The sug­gested re­tail price of Well Yes is rel­a­tively low, at $2.69 per 16.6 oz. can, and that’s cru­cial for reach­ing its tar­get cus­tomer. This shop­per, which Camp­bell dubbed “Maria” dur­ing its de­vel­op­ment process, is a young Gen­er­a­tion X-er or a mil­len­nial. Maria al­ready buys canned soup.

“She doesn’t re­strict her­self, she doesn’t have a bunch of rules in what she eats. But she does try to make pos­i­tive changes along the way that will bet­ter her health,” said So­phie Arsen­lis, di­rec­tor of soup and broth strat­egy at Camp­bell.

This may turn out to be an ef­fec­tive ap­proach to hook­ing cus­tomers.

“Con­sumers don’t want to con­sume prod­ucts where they feel like they’re on a diet,” said Erin Lash, an an­a­lyst at the in­vest­this

Count­ing on ‘Maria’

The third new soup line, Well Yes, isn’t quite as much of a reach for Camp­bell. It comes in a can; you’ll still find it in cen­ter aisles. But the idea is to of­fer some health­ful cues that shop­pers are look­ing for — chicken meat with­out an­tibi­otics, for ex­am­ple, and in­gre­di­ents such as kale and quinoa. The fla­vors are dif­fer­ent ment re­search firm Morn­ingstar who stud­ies the pack­aged-food in­dus­try.

In­deed, tar­get­ing a diet-minded shop­per has tripped Camp­bell up in the past: Sev­eral years ago, it went big with low-sodium soups, try­ing to cater to the nu­tri­tion con­cerns of the mo­ment. Turns out, cus­tomers didn’t find the soups very tasty with­out the salt. While Camp­bell still of­fers some low-sodium va­ri­eties, it pulled back sig­nif­i­cantly on this strat­egy.

Cau­tious de­vel­op­ment

At a pre­sen­ta­tion for in­vestors last year, chief ex­ec­u­tive Denise Mor­ri­son spoke can­didly about the hur­dles Camp­bell faces. She noted that shop­pers “con­tinue to re­de­fine the mean­ing of health and well-be­ing” and that many “con­sider fresh to be the lit­mus test for health.”

Lyons, the chef, talked about brain­storm­ing 60 fla­vor com­bi­na­tions be­fore set­tling on four for Sou­plic­ity. He and his col­leagues would taste a recipe again af­ter it had been re­frig­er­ated for two weeks, tweak­ing it when, for ex­am­ple, they no­ticed how pro­nounced the lemon taste be­came over time.

The Well Yes team, mean­while, cre­ated a group of ev­ery­day shop­pers — peo­ple who fit the pro­file of the Marias the com­pany was hop­ing to reach. They were brought in rou­tinely for ac­tiv­i­ties such as taste-test­ing soups and of­fer­ing feed­back on the la­bel de­sign. Camp­bell went into cus­tomers’ homes, poked around their pantries and tried to un­der­stand how soup fit into their lunch and din­ner rou­tines.

But it’s hardly a sure thing that these ef­forts will add up to suc­cess.

On a re­cent af­ter­noon at a Gi­ant su­per­mar­ket in Wash­ing­ton, Maura Cortez, 24, said she hardly ever sets foot in the aisles con­tain­ing canned items.

“I like to see what goes in my food,” Cortez said while mak­ing her way along the salad bar, as­sem­bling a lunch of let­tuce, cu­cum­bers, toma­toes, car­rots and grilled chicken.

Samira Har­ris, 28, picked up some hot chicken noo­dle soup from the pre­pared-foods area a short time later. Would she ever buy canned soup?

“It has a metal taste to it, to me,” Har­ris said.

Plus, she added, she tries to cook from scratch most of the time for her four daugh­ters so that she can avoid ad­di­tives and in­gre­di­ents she con­sid­ers un­health­ful.

Such sen­ti­ment is an enor­mous chal­lenge for a com­pany whose flag­ship prod­uct is a canned good you can stock­pile in your base­ment for years. For many baby boomers, that qual­ity was an em­blem of con­ve­nience and re­li­a­bil­ity. For mil­len­ni­als, it is some­times a draw­back.

There is no guar­an­tee that the com­pany will change minds this time. It has made big moves be­fore to rein­vig­o­rate soup sales, in­clud­ing with its 2012 in­tro­duc­tion of ex­ot­i­cally fla­vored soups served in mi­crowave­able pouches, not cans. That brand, Camp­bell’s Go, also was meant to court mil­len­ni­als, and while it still ex­ists, it hasn’t ex­actly been a trans­for­ma­tional force.

And then there are the ques­tions raised by the new prod­ucts: Well Yes is aimed at peo­ple who al­ready eat canned soups, and the goal is sim­ply to en­cour­age them to eat it more of­ten. But couldn’t that sim­ply can­ni­bal­ize sales of ex­ist­ing Camp­bell’s prod­ucts? Plus, it doesn’t do much to ac­quire new cus­tomers.

Gar­den Fresh Gourmet and Sou­plic­ity could bring in new shop­pers, but if these items are de­lib­er­ately with­held from the wide re­lease ac­corded to other Camp­bell soups, they can gen­er­ate only so much sales rev­enue.

With all the chal­lenges fac­ing the soup busi­ness, and pack­aged foods gen­er­ally, Camp­bell has be­gun steer­ing it­self to be a dif­fer­ent kind of com­pany. In ad­di­tion to the pur­chase of Gar­den Fresh Gourmet, it spent $1.55 bil­lion in 2012 for Bolt­house Farms, which sells fresh car­rots and re­frig­er­ated bev­er­ages. In 2013, it bought Plum Or­gan­ics, a pop­u­lar food line for ba­bies and tod­dlers.

Mak­ing these deals and other changes, such as clos­ing five man­u­fac­tur­ing fa­cil­i­ties to cut costs, “felt like chang­ing the tires on a mov­ing car,” Mor­ri­son said at the in­vestor meet­ing.

The com­pe­ti­tion, af­ter all, is com­ing from all di­rec­tions.

“There’s an asym­me­try in the food in­dus­try to­day, with smaller, more nim­ble com­peti­tors that fly un­der the radar,” she said. “Un­less you’re pay­ing close at­ten­tion — and we’re pay­ing very close at­ten­tion.”

MATT MCCLAIN/THE WASH­ING­TON POST

Sou­plic­ity This new prod­uct line is or­ganic and comes in sin­gle-serv­ing pack­ages. It is de­signed for health­con­scious con­sumers.

Well Yes! In­tended for young folks who care about health but are not dog­matic about it.

Gar­den Fresh These soups have no ar­ti­fi­cial fla­vors or sweet­en­ers but are not or­ganic.

MATT MCCLAIN/THE WASH­ING­TON POST

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