With Q2 delivering a 5% increase in organic net sales and market share gains, we look at how the Campbell Soup Company (Campbells) plans to sustain its performance as the COVID-19 pandemic eases.
1. Building on earlier momentum in its snacks business
Like many large CPGs, Campbells had a turnaround plan in progress ahead of the pandemic. This had helped to fuel growth within it snacks business. With the company’s research highlighting that snack foods accompany nearly 30% of all lunches, it believes it is well positioned with its portfolio of brands to capture further growth opportunities. The increase in the number of consumers working from home has further supported this. The company expects at-home lunches to remain elevated given the longer-term shift in working from home policies.
2. Tapping into the stickiness of new consumers and behaviours
Almost 13m more households have purchased Campbell’s soup since the initial peak of the pandemic, almost a third of which are millennials. With four out of five new users surveyed stating they were very or extremely satisfied with its brands, and that they plan to continue using them for cooking solutions and quick lunches and meals, the company expects to retain a large proportion of these. It has also seen macro behaviours like quick scratch cooking take root, with 30% of consumers cooking more with soup since the start of the pandemic.
3. Adapting products and pack formats
Campbell’s research has helped it to identify opportunities to strengthen the retention of new consumers. These include areas such as adding more convenient packaging options and sizes across its portfolio, developing new recipes, and developing more intense snacks by providing a variety of flavours and healthier ingredients. It plans to target its innovation to help it retain its new consumers, particularly younger consumers.
Source: IGD Research
4. Partnering with retail customers for the ecommerce opportunity
Ecommerce in-market dollar consumption increased 89% year-on-year in the second quarter. With the click and collect model representing around a third of its ecommerce retail sales, it is focused on partnering with its customers to deliver value to consumers. This includes bundling products for easy meal prep and creating inspiring snacking options.
5. Investing in high return initiatives
The strong sales growth the company has experienced has enabled it to reduce debt. Combined with its ability to generate cash flow above its commitments to capital investments and dividends over the next three years, the company is well-positioned to invest in high ROI initiatives and other actions to drive value creation. This includes M&A activity, with Campbell’s expected to focus on areas which are highly aligned or adjacent to its core strengths.
Retail Analysis subscribers: our latest two-part report series, How consumer packaged goods companies will win in 2021, unpacks these themes in more detail and looks at the changing strategic priorities of suppliers and the capabilities they are building this year.