Soup Tales: Campbell Continues to Lead

Includes: CPB, GIS, KHC, THS
by: Rick Shea


This is the first in a series of articles analyzing the top food categories within the supermarket industry. These articles will analyze sales, market share trends and key competitors in the top CPG food categories like soup, cookies, frozen pizza, coffee and many others.

Total canned soup sales achieved sales of $7.5 B in 2009 with 61% of sales coming from US Supermarkets, Drugstores and Mass Merchandisers. Sales in Walmart (NYSE:WMT), Club stores and dollar stores accounted for $2.9 B in sales. The total canned soup category has 3 main product segments: ready to serve, condensed and broth products with RTS comprising the largest segment within the total category. Other soup segments include dry soup mixes, Ramen, refrigerated and frozen soup products.

Campbell’s (NYSE:CPB) continues to lead market share for total category sales with total market share just under 50%. Campbell's dominates in the condensed segment with an 80+ share of the value orientated segment. The main competitor in the condensed segment is private label products manufactured by Treehouse Foods (NYSE:THS) and others with a 14.8 share of the market. In the Ready to serve segment General Mills (NYSE:GIS) Progresso brands provides a much greater challenge but Campbell still is fairly dominate with their Chunky, Select Harvest and Healthy Request brands. Private Label holds a small share in the RTS segment with flat market share despite the increase in number of private label offering from large retailers.

Other leading branded manufacturers include ConAgra (NYSE:CAG) (Healthy Choice), Amy’s, Pacific Foods, Snows, Imagine Foods and Heinz (HNZ) frozen soups.

Category innovation has been led by Campbell’s and Progresso focusing on improved nutrition with lower sodium, lower calories, higher quality ingredients and no preservatives. Campbell’s relaunch of the Chunky brand has proven mildly successful but sales still lag in the flagship red and white label. Private Label continues to expand their number of offerings and quality is much improved over the last few years. Other attempts at premium soups from Campbell’s like V-8 and Wolfgang Puck have yet to drive significant volume. Refrigerated and dry upscale soup mixes have driven strong growth but still make up a small percentage of total category sales.

Canned Soup Market Outlook 2010

Given the current economic slowdown one would expect soup sales to be stronger. Consumers are more value conscious than ever before and canned soup provides a good value relative to other food products. Growth in the category has lagged due to measured trade promotion activity and advertising that has been competitor focused, not benefit driven. (We have all seen the Campbell ads attacking Progresso nutrition and vice versa) Campbell’s started the year slow but has increased promotional activity and that appears to be helping drive category sales.

Look for increased deal activity through the remainder of 2010 as all branded players will continue to fight off private label sales with increased trade and consumer marketing. Our outlook is for category volume growth of +3% with $ sales -2% for all of 2010. We expect both Campbell and General Mills volume to be flat, with strong profit margins driven by lower commodity costs. Consolidation of shelf space will continue in the category with Healthy Choice and others under the most pressure from private label soups.

Disclosure: No ownership of stocks listed