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Campbell Soup CEO weighs in on consumer demand, price increases, and company growth

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Campbell Soup CEO Mark Clouse speaks with Yahoo Finance Live about how consumer demand has remained resilient despite inflation and the future of the company.

Video Transcript


- Welcome back, everybody. Campbell's Soup Company says higher prices boosted sales even as it sold fewer items in the latest quarter. With more on their outlook, Yahoo Finance's Brian Sozzi sitting down with Campbell's CEO Mark Clouse. Soz.

BRIAN SOZZI: All right, thanks, Dave. Mark, thanks for joining Yahoo Finance. So a good quarter by Campbell's Soup and your team. Organic sales up 9%. Going through the quarter, margins up. The sales were up. And I can't help but to think, do you think you have a recession-proof portfolio?

MARK CLOUSE: Well, look, I think historically speaking, when we-- first of all, great to be here with you too, Brian, appreciate being on. I do think when you think about our portfolio-- and this is actually true I'd say on our meals and beverage business as well as our snacks business-- we have performed very well in a variety of difficult economic environments.

And why that I think is true is first on the meals and beverage side, we tend to have categories that even in a world where people are experiencing economic pressure and maybe trading down or making some compromises and what they're purchasing, our categories tend to be good destinations for those values. So if you're eating out less or you're trading down for more expensive choices into categories like soup or pasta sauce, we consistently do very well.

I think what's also interesting is on the snacking side, one of the things that in a lot of years in snacking that I've come to learn is that in times where things are high pressure, those comfort foods, those favorite kettle potato chips or Milano cookie, stays in the basket. And then we've seen so far through the journey we've been on that that's consistent even in the face of rising prices as we've needed to move some prices to match inflation.

BRIAN SOZZI: Well, Mark, I could say, you know, I have a stressful gig too. And I've definitely consoled myself in some of those Old Bay Goldfish snacks right behind you. Don't think I didn't see those, but I'll talk about--

MARK CLOUSE: Oh, yeah, we snuck that in.

BRIAN SOZZI: Yeah, no, no, we'll talk about that. We'll talk about that in a second. But you did mention-- you talked a lot about on the earnings call, price elasticities. And I guess another way to break that down or look at it is how consumers are responding to price increases. So how are they responding right now when they go into the supermarket?

MARK CLOUSE: Yeah, I would say we are experiencing some elasticities but significantly lower than historical levels. And I get asked a lot about why I think that's the case. And I think there's a couple of reasons why. The first is that probably not a lot of periods in history where we've seen the broad-based nature of the inflation that we're experiencing now.

In many cases, you'd have one particular commodity or one space that was feeling inflation. Consumers could potentially move between different options to meet different occasions and do that in a fairly kind of value-driven way. I think because inflation is so broad across the industry, we're seeing a little bit more of a level playing field.

I think the second reason why we're seeing it is as I said before, I think our categories are fairly well-positioned when consumers are starting to run into higher prices. I mean, I'll take a good example is Chunky Soup where even though we may be in the mid-teens for pricing right now, that's on a $3 can of soup. It's still a tremendous value when you think about what consumers are getting. So again, although we may see some pressure and trading down as prices are going up, I think we've been a bit more resilient. And I think both of those reasons are playing into it.

BRIAN SOZZI: Did I hear this right on the call? You are now looking at a third wave of price increases?

MARK CLOUSE: Yes, it's true. So we're through two waves that are in market already. We announced the third wave in April and have been working closely with our retail partners on that. And the fact of the matter is it's reflecting the inflation increases that we saw more recently. And although I think this will be far more specific or strategic in nature relative to where that is coming from and in particular areas like cooking oils or wheat and flour is where we've seen more of the recent inflation, I think there is still a need as we kind of think about getting that balance right.

Now, I will say, as we continue to move forward, we want to make sure we're using the full tool bag to try to address costs. So it's not all about pricing. I think it's very important and we remain very mindful of protecting value for consumers. And so things like productivity are really important.

And I think perhaps the thing I'm most excited about in the third quarter was the response of our supply chain and the continued improvement in our execution and performance because that gives us a platform to continue to work on productivity and identify ways that we can drive savings so that we're not entirely dependent on pricing. And I think that balance is something that going forward. Although we're expecting to see headwinds as far as inflation, I think we'll be able to utilize a variety of different levers to address it.

BRIAN SOZZI: Mark, this is the first time you've been on Yahoo Finance. So of course, welcome. So I have to ask you this question. A colleague wanted me to ask you this. Tomato soup. What is better to put in there? Is it water? Is it milk?

MARK CLOUSE: Well, it's a little bit of personal preference. I will tell you that my preference is milk, but a lot of people love it with water as well. And you got to adjust it to your own taste. That's the beauty of condensed soup. You get to choose.

BRIAN SOZZI: You indeed you do. In recent, I chose some of your spicy, chunky soup and definitely kicked me in the back of the throat in a good way. We'll leave it there. We'll take that offline. I'll shoot you an email. Campbell's Soup--


BRIAN SOZZI: Mark Clouse, good to see you. We'll talk to you soon.

MARK CLOUSE: Great. Thanks, Brian.