On Air Now

Current Show

Tommy Fox   7:00 PM - 12:00 AM

Spend your late nights with Tommy!

Show Info »

Upcoming Shows

Program Schedule »

Listen

Listen Live Now » 100.7 FM Terre Haute, IN

Weather

Current Conditions(Terre Haute,IN 47807)

More Weather »
41° Feels Like: 37°
Wind: SSW 6 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Tonight

Mostly Clear 36°

Tomorrow

Partly Cloudy 66°

Fri Night

Mostly Cloudy 47°

Alerts

Campbell reinvents soup, one cup, pouch or K-cup at a time

A worker restocks Campbell's soup cans inside a Fresh & Easy store in Burbank, California October 19, 2012. Picture taken October 19, 2012.
A worker restocks Campbell's soup cans inside a Fresh & Easy store in Burbank, California October 19, 2012. Picture taken October 19, 2012.

By Atossa Araxia Abrahamian

NEW YORK (Reuters) - When Campbell Soup Co was losing market share to private label brands and smaller competitors in recent years, it could have used another pop superstar like Andy Warhol to try to make its brand hip again, especially with 20-somethings.

Instead, it got a new CEO, Denise Morrison, who spent hundreds of millions of dollars to reinvent its marketing and packaging, including to-go soup cups that could be made in a Keurig coffeemaker. She also acquired or developed hundreds of new products such as puffed Goldfish snacks and soon-to-be-launched seasoned baby carrots.

Investors have embraced the initiatives, pushing Campbell stock up more than 30 percent in the last two years.

"The market message has changed toward flavor, how good soup tastes, how much of a full meal it is," said Jefferies analyst Thilo Wrede. "I think if she can keep it up, it can make a difference. The challenge is last year she introduced a lot of changes."

Under Morrison, Campbell has focused on marketing to families, teens, and young adults and developing products that will build loyalty as these consumers age.

These efforts helped boost soup sales by 5 percent last year, according to Campbell. Soup is expected to make up about a third of the company's sales in 2014, down from 40 percent in 2012, said Morrison, who was named CEO after working at Campbell as executive vice president and chief operating officer. The decline is largely due to the sale of its European soup business this summer to a private equity firm.

Despite the rise in the share price, it may be too early to declare Morrison's initiatives a success. The company tried in the past to lower its sodium, a move most consumers rejected. This time, it's trying to build the loyalty of the often fickle younger consumers, who tend to be more price-conscious and less brand-loyal than older cohorts.

Morningstar analyst Erin Lash, who rates the company's shares as slightly undervalued, said other rivals including General Mills Inc's Progresso are trying new innovations and have increased market share of its ready-to-serve soups.

"Competitive pressures remain intense not just for soup, but for simple meals in general," she said, referring to other food items such as macaroni and cheese or frozen pizza.

SELLING TO A NEW GENERATION

Attracting millennial consumers - those born between 1982 and 2002 and beginning to flex some of its economic muscle - is key to fostering brand loyalty in the long run, Morrison said at a meeting with analysts in June.

Millennials typically value healthfulness, convenience and portability, and have a more adventurous palate than previous generations, but they're also more driven by good deals. And soup is still considered a "conservative" or "old-fashioned" food, according to the market research firm Euromonitor.

Campbell has tried to overcome some of these perceptions by offering more exotic flavors, supplementing the classic tomato and chicken noodle varieties with such flavors as Moroccan chicken and curry lentil. It is supplementing the company's cans - made famous by Andy Warhol 1960s art - with portable bowls and pouches.

Campbell said the percentage of list sales from new products grew from 8 percent in fiscal 2011 to 9 percent in 2012 and 10 percent in 2013. The company expects this number to jump to 12 percent in fiscal 2014.

One weak spot, said Wrede, is Campbell's V8 products, which while popular with baby boomers hasn't won over younger consumers who like fresh squeezed, refrigerated juices.

Morrison's latest initiative was to take soup to the Keurig coffee machine, which makes cups of hot beverages from small single-serve containers.

"I am a Keurig user myself and a couple of years ago I was using my machine and thinking, I wonder if we can do soup in this," said Morrison, the oldest of four sisters who themselves have served in executive roles at AT&T Wireless, Frontier Communications and Expedia Corporate Travel.

Campbell is positioning the K-cup soups, a collaboration with Green Mountain Coffee Roasters , as convenient afternoon snacks that provide "a whole different experience of soup," Morrison told Reuters in an interview, adding that company studies found more than 80 percent of Keurig users eat Campbell soup.

"Single-serve really seems to be working, and we think there's an opportunity to broaden the occasions where soup is eaten," said Mark Alexander, president of Campbell North America.

The K-cups announcement came about a year after the launch of Campbell's Go Soups, sold in microwaveable pouches designed to be heated and sipped on the go.

"In food in general and our company, packaging is a key component to how we innovate. It's part of our broader research and development strategy. Every innovation team has a packaging engineer on it," Alexander added.

Bill Bishop, a supermarket consultant, said that changing packaging could give Campbell a leg up over private label brands, which often deliver similar products at lower prices.

"Private label is less of a threat when there's innovation... and moving away from cans is good innovation," Bishop said.

(Reporting By Atossa Araxia Abrahamian; Editing by Jilian Mincer and Andrew Hay)

Comments