By Atossa Araxia Abrahamian
NEW YORK, Oct 30 (Reuters) - When Campbell Soup Co was losing market share to private label brands and smallercompetitors in recent years, it could have used another popsuperstar like Andy Warhol to try to make its brand hip again,especially with 20-somethings.
Instead, it got a new CEO, Denise Morrison, who spenthundreds of millions of dollars to reinvent its marketing andpackaging, including to-go soup cups that could be made in aKeurig coffemaker. She also acquired or developed hundreds ofnew products such as puffed Goldfish snacks andsoon-to-be-launched seasoned baby carrots.
Investors have embraced the initiatives, pushing Campbellstock up more than 30 percent in the last two years.
"The market message has changed toward flavor, how good souptastes, how much of a full meal it is," said Jefferies analystThilo Wrede. "I think if she can keep it up, it can make adifference. The challenge is last year she introduced a lot ofchanges."
Under Morrison, Campbell has focused on marketing tofamilies, teens, and young adults and developing products thatwill build loyalty as these consumers age.
These efforts helped boost soup sales by 5 percent lastyear, according to Campbell. Soup is expected to make up about athird of the company's sales in 2014, down from 40 percent in2012, said Morrison, who was named CEO after working at Campbellas executive vice president and chief operating officer. Thedecline is largely due to the sale of its European soup businessthis summer to a private equity firm.
Despite the rise in the share price, it may be too early todeclare Morrison's initiatives a success. The company tried inthe past to lower its sodium, a move most consumers rejected.This time, it's trying to build the loyalty of the often fickleyounger consumers, who tend to be more price-conscious and lessbrand-loyal than older cohorts.
Morningstar analyst Erin Lash, who rates the company'sshares as slightly undervalued, said other rivals includingGeneral Mills Inc's Progresso are trying new innovations andhave increased market share of its ready-to-serve soups.
"Competitive pressures remain intense not just for soup, butfor simple meals in general," she said, referring to other fooditems such as macaroni and cheese or frozen pizza.
SELLING TO A NEW GENERATION
Attracting millennial consumers - those born between 1982and 2002 and beginning to flex some of its economic muscle - iskey to fostering brand loyalty in the long run, Morrison said ata meeting with analysts in June.
Millennials typically value healthfulness, convenience andportability, and have a more adventurous palate than previousgenerations, but they're also more driven by good deals. Andsoup 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 byoffering more exotic flavors, supplementing the classic tomatoand chicken noodle varieties with such flavors as Moroccanchicken and curry lentil. It is supplementing the company's cans- made famous by Andy Warhol 1960s art - with portable bowls andpouches.
Campbell said the percentage of list sales from new productsgrew from 8 percent in fiscal 2011 to 9 percent in 2012 and 10percent in 2013. The company expects this number to jump to 12percent in fiscal 2014.
One weak spot, said Wrede, is Campbell's V8 products, whichwhile popular with baby boomers hasn't won over youngerconsumers who like fresh squeezed, refrigerated juices.
Morrison's latest initiative was to take soup to the Keurigcoffee machine, which makes cups of hot beverages from smallsingle-serve containers.
"I am a Keurig user myself and a couple of years ago I wasusing my machine and thinking, I wonder if we can do soup inthis," said Morrison, the oldest of four sisters who themselveshave served in executive roles at AT&T Wireless, FrontierCommunications and Expedia Corporate Travel.
Campbell is positioning the K-cup soups, a collaborationwith Green Mountain Coffee Roasters, as convenientafternoon snacks that provide "a whole different experience ofsoup," Morrison told Reuters in an interview, adding thatcompany studies found more than 80 percent of Keurig users eatCampbell soup.
"Single-serve really seems to be working, and we thinkthere's an opportunity to broaden the occasions where soup iseaten," said Mark Alexander, president of Campbell NorthAmerica.
The K-cups announcement came about a year after the launchof Campbell's Go Soups, sold in microwaveable pouches designedto be heated and sipped on the go.
"In food in general and our company, packaging is a keycomponent to how we innovate. It's part of our broader researchand development strategy. Every innovation team has a packagingengineer on it," Alexander added.
Bill Bishop, a supermarket consultant, said that changingpackaging could give Campbell a leg up over private labelbrands, which often deliver similar products at lower prices.
"Private label is less of a threat when there'sinnovation... and moving away from cans is good innovation,"Bishop said.
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- Denise Morrison
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