Campbell’s hiked its sales and marketing spend in Q3

Campbell’s boosted its marketing and selling expenses by 3% year-over-year in Q3, a period that saw growth in snack sales but a decline in meals.

The maker of Campbell Soup, Goldfish, Prego sauces and Kettle Chips says ad spend now represents approximately 9% of quarterly net sales. The increase driven by higher selling expenses, somewhat offset by cost savings initiatives.

Net sales in the quarter, ended April 30, increased 5% versus the prior year to $2.2 billion USD. In this morning’s earnings call, Campbell’s president and CEO Mark Clouse said it was a quarter of strong, consistent results and performance was lead by a “tremendous quarter in snacks.”

The overall net sales increase was driven by strength in the company’s snacking business, where net sales in the quarter grew by 12%, spurred by increases in cookies and crackers. There was particular strength in Goldfish crackers and Kettle Brand potato chips, as well as the company’s pretzel brands.

Snacks has experienced its third consecutive quarter of double digit net sales growth, in part driven by “impactful marketing” and production innovation, Clouse notes. With its marketing, the CPG is “engaging where and when it can have greatest impact.”

Goldfish now a billion dollar brand, Clouse says. Campbell’s has gone after adult snackers with Goldfish innovations, and released LTOs like a Frank’s Redhot collaboration that is driving interest. It also has new air-cooked Kettle brand chips and new LTOs with “strong” results that are taking a page out of Goldfish’s playbook. The company promises it will step up its investment in brand building.

For meals and beverages, organic net sales decreased 1% in the quarter, primarily due to declines in U.S. soup, though it was partially offset by gains in foodservice. According to Clouse, volume trends are expected to improve.

Dollar consumption for soup was flat, reflecting inflation-driven pricing and some share pressure as competitors boost supply. Condensed soup, however, is supporting the growth of in-home meals and attracting younger buyers.

Chunky Soup gained two share points and has been “fundamentally transformed” with a compelling position that focuses on protein and in-home lunches, resonating with younger consumers in a high inflation. It’s been fueled by “great marketing” and innovation like its spicy line, Clouse says.