Marketers take stock of tepid soup sales

There's an old Yiddish saying that goes 'Troubles are easier to take with soup than without.'...

There’s an old Yiddish saying that goes ‘Troubles are easier to take with soup than without.’

If that’s true, then one can only conclude that ours is a society with a heap of troubles.

According to the Web site Condensedsoup.com, purveyor of information on all things soup-related, North Americans consume more than 10 billion bowls annually. In Canada, 1999 soup sales topped $493 million, according to ACNielsen MarketTrack figures.

Yet all is not warm and cozy in the world of soup. Retail soup sales have slowed steadily over the last five years, as consumers turn to an ever-increasing array of other quick, convenient meal options. ACNielsen numbers indicate that sales of canned soup in Canada grew just 2% between 1998 and 1999.

‘[Soups] are competing with lots of other products that can provide light meals for people,’ says Colin Flint, deputy head of planning with Toronto-based BBDO Canada, the agency that handles the Campbell Soup Company account.

The result is that a fierce marketing battle is simmering in the soup business. In addition to declining sales growth, national brands such as Campbell’s and Lipton face increasing competition from their own retail partners, as grocery chains introduce new private-label products in a bid for market share. In Canada, for example, both Loblaws and Sobeys are out to scoop up a bigger spoonful of soup sales.

The pressure now is on national brands, both in Canada and the U.S., to boost their ad spending and launch new products in the hope of maintaining an edge.

Market leader Campbell Soup, for example, increased its ad spend in the U.S. by 14% last autumn – a move that helped boost its falling sales, but put a drag on total profit.

Nick Evans, business director of soup with Toronto-based Campbell Soup Company, which controls 38% of total sales in Canada, says the business on this side of the border remains ‘stronger and healthier’ than in the U.S. Still, the company is acutely aware of the need to evolve.

The condensed soup segment of the market – the core of Campbell’s business – is quite flat at present, Evans says. The real growth area is the ready-to-serve (RTS) segment.

Campbell recently consolidated its three RTS brands – Home Cooking, Classics and Healthy Request – under the banner of Campbell’s Ready-To-Serve soups. The new cans hit store shelves in October.

A television spot promoting the line began airing nationally in early November. A second spot for Campbell’s condensed soups breaks the week of Jan. 1. Both spots, which run in female-targeted programs such as Ally McBeal, play up the notion of soup as a good, nutritious meal for both moms and kids.

In a further effort to gain advantage, Campbell recently introduced its top-selling tomato soup in a re-sealable plastic container, and its chicken broth in a re-sealable tetra pack. (The latter is being positioned both as a soup base and as an ingredient to add to mashed potatoes, putting it in the same competitive arena as butter and other cooking staples.)

‘We’re going to need to significantly change and innovate to meet customer needs and meet the new competition,’ Evans says. ‘Is the status quo acceptable? Absolutely not.’

Lipton, whose 11% share makes it the second-largest player in the prepared soup market, is also taking an aggressive stance.

Mike Welling, vice-president of brand development for foods at Toronto-based Unilever Canada, which markets Lipton, says the brand will be very visible in the marketplace during the winter months. (Not surprisingly, winter accounts for the largest volume of soup sales, making it prime time for brands to focus on building top-of-mind awareness.)

Lipton’s television campaign for its Chicken Noodle Soup, which aired to great acclaim last winter, is back for a return engagement. The spots, which emphasize the product’s appeal to youngsters, show kids getting up to mischief with whoopee cushions, ice makers and drum sets. The tagline is, ‘Kids don’t get bored of what they like.’

Lipton is also stepping up the marketing support for its SoupWorks line of premium dry soups, which includes direct mailings targeted to women, along with ads in magazines such as Canadian Living and Chatelaine.

In addition, Unilever has been promoting its soup brands – which include both Lipton and the Knorr line of dry soups, acquired in the company’s October buyout of Bestfoods – by setting up ‘soup bars’ in grocery stores. These offer customers the opportunity to sample the product as they shop.

The grocery chains, meanwhile, can be expected to continue turning up the heat on the national brands.

Loblaws, which already had a selection of condensed soups, added a line of President’s Choice ready-to-serve products last year. And Sobeys is planning expansion of its Smart Choice condensed and Our Compliments ready-to-serve soups (brands that it inherited following a buyout of the Oshawa Group two years ago). The introduction of an Our Compliments dry soup is also in the works for the New Year.

‘Most of the major grocery chains are spending a lot of time and effort building up their retail brands,’ says Janelle Cameron, a spokesperson for Sobeys.