SOUP DU JOUR 2008

JULIE GALLAGHER

Healthier reformulations may turn up the heat on simmering soup sales.

Better-for-you ingredients steeped in lower-sodium broths are enhancing the canned category's low-cost, low-calorie appeal. Converging economic pressures — including higher product input prices and lower food budgets — may also spur sales, industry observers note.

“Consumers are less likely to indulge themselves when they've got tighter budgets, so staple food products like soup for home consumption may see an uptick,” said David Morris, research director of food and beverage for Mintel, Chicago. “We've seen same-store sales at restaurants stagnating because value-conscious consumers are pulling back.”

Although dollar sales of soup climbed 25% from 2002 to 2007, with ready-to-serve broth and refrigerated soups showing the most growth, much of the jump is attributed to packaging innovations in 2005, according to Mintel's latest soup study. Since then, growth has been modest due to competition from frozen entrees, refrigerated food and foodservice. Still, Mintel forecasts that total sales of soup in the U.S. will increase by about 26% to $6.3 billion by 2012.

Private-label soups in particular will also continue to thrive. In food, drug and mass channels excluding Wal-Mart, sales of store-brand soups increased 48.3% between 2002 and 2007.

“Soup is the perfect shelf-stable private-label product to develop,” said Morris. “Consumers see the parity between major brands and private label, and they don't think that the differences that exist are worth the higher prices.”

Springfield, Mass.-based Big Y leveraged the popularity of frozen entrees to help drive “quite significant” soup sales earlier this year. Its promotion was part of a health-themed “Living Well Eating Smart” display, Big Y's registered dietitian, Carrie Taylor, told SN. The two-week promotion — themed “Healthy You, Happy You!” — featured Healthy Choice soups in Chicken with Rice, Old Fashioned Chicken Noodle and Country Vegetable Soup varieties at half off. Barilla Whole Grain pastas, Baked! Lays chips, Chilean Hass Avocados and Big Y's World Classics Trading Company Sparkling Juices occupied other shelves on the display. A separate endcap in the frozen food section featured Healthy Choice Healthy Selection Paninis, also priced at 50% off.

“One of the main complaints I hear from people who would like to eat healthy is that it takes too much time,” said Taylor. “Soup is easy to heat, and I suggested [in an article distributed at the displays] that the Healthy Choice soups and paninis be used to fulfill a goal to bring lunch to work and save money and calories, rather than ordering out.”

Big Y shoppers heeded Taylor's advice. Although she's not authorized to provide specifics, Taylor noted that the lift in soup sales was more substantial than other items featured in this and other Living Well Eating Smart displays, which are featured regularly.

GETTING THE CAN OPENED

Grocers could reap similar outcomes by cross-merchandising canned soup with freshly baked bread for bread bowls, or by presenting consumers with meal solutions that include soup, suggests Mintel. The research firm recognizes that canned soup usually stays on consumers' shelves for extended periods of time. In fact, 45% of Mintel study participants agreed with the statement: “In my household, soup often sits in the pantry/cupboard for weeks or longer before it's eaten.”

Campbell's Soup often works with retailers to customize promotions that center on meal solutions featuring its condensed cooking soups, according to Lisa Walker, vice president for soup innovation at Campbell's, Camden, N.J.

“Retailers tend to merchandise meat along with these soups, because it involves their own brand, and typically, higher margins accompany [foods merchandised around] the perimeter,” she said.

Retailers also pair Campbell's Cream of Mushroom soup with store-brand green beans and French's French Fried Onions for green bean casseroles during holiday periods. “Over 40 million homes make green bean casserole for Thanksgiving,” Walker said.

Big Y plans to include the latest versions of Campbell's Reduced Sodium Soups in a health-themed display when they hit shelves this fall, Taylor said. Varieties included in the Campbell's line have garnered a good bit of consumer attention thus far. With total year-one dollar sales of $101 million across food, drug and mass channels, items in the line topped Information Resources Inc.'s list of the most successful new brands of 2007.

It's no wonder the soups have hit a sweet spot with consumers. Low-sodium is the health benefit that interests soup consumers most, according to Mintel. Among the firm's survey participants who consider health benefits when selecting a soup to buy, 70% said they look for such soups. Their popularity could have something to do with older Americans' reliance on the category.

Soup marketers are also winning over consumers who are looking to watch their weight. Progresso's release of its Light soups last year has an endorsement from Weight Watchers and a point value of zero from the organization, giving soup buyers a significant reason to reach for the brand, said Morris.

“Someone who has knowledge of that point system can easily integrate the product into the diet regimen that she's pursuing,” he said. “It gives them an added reason to pick up that product.”

Several Progresso soups also bear Bob Greene's Best Life Diet seal, which is endorsed by Oprah Winfrey.

These symbols help shoppers navigate the hundreds of soups available on the shelf, said Greg Dorazio, spokesman for Progresso.

With marketing promotions that focus on the quality ingredients of its products, Progresso's soup sales grew 17% in food, drug and mass channels from 2004 to 2006, according to Mintel. The firm found that flavor is the No. 1 factor that consumers consider when selecting a soup, followed by price, health benefits and brand.

HEALTHY SOUPS

The better-for-you soups merchandised at Publix stores have spurred moderate sales growth during the past year, noted Maria Brous, spokeswoman for the chain.

“Historically, Campbell's condensed Chicken Noodle and Tomato soups have been the top sellers. However, [Campbell's] Healthy Request, less sodium and weight management ‘light’ varieties are now driving the growth,” she said.

The retailer also carries Progresso Less Sodium soups, Progresso Light soups and 11 store-brand varieties of soup.

“We have not experienced significant growth in the soup category that can be attributed to the economic downturn,” Brous said.

The Lakeland, Fla.-based retailer is gearing up for next month's third annual “Recipes for a New Life Together” Campbell's Soup promotion. As part of the weeklong displays, wedding-themed endcaps will be positioned around the perimeter and in Center Store.

In past years, the displays — which are designed to build the loyalty of couples who are starting out their new lives together — have featured bakery wedding cakes, wedding dresses, wine, champagne and Campbell's products, including cooking soups, Swanson broth and recipe cards featuring Campbell's items.

“We do experience a lift in sales with these types of promotions; however, our goal is to increase our customer count and total store sales,” said Brous.

Pleasanton, Calif.-based Safeway found a creative way to promote the health attributes of soup and other products last month during its “Love Your Heart” events. In honor of heart-health month, free cholesterol, body mass index and blood pressure screenings were hosted across almost 1,200 locations. Coupons for Campbell's Healthy Request Soups, Kellogg's Smart Start cereal, StarKist tuna pouches and V8 Fusion Juices were distributed inside an informational brochure during the events.

“Campbell's Healthy Request soups are 98% fat- free and have up to 50% less sodium,” read the section of the guide dedicated to the soup.

Although sales of organic canned soups, such as those marketed by Amy's Kitchen, are experiencing modest growth in St. Louis-based Straub's Market, sales of frozen and fresh soups there have really taken off, according to Roger McElroy, grocery buyer for the five-store specialty retailer. “They're up about 25% to 30%,” he said. Because they taste like homemade without having to be consumed immediately, SoupMan soups, merchandised in Straub's frozen food sections, do especially well.

“They were new here last fall, and people are going wild for them,” said McElroy. “Normally they're $4.99, but we sometimes promote them for $3.99.” Meanwhile, sales of conventional canned soups in Straub's stores remain flat.

Because it's a specialty retailer, McElroy doesn't anticipate that Straub's shoppers will have to tighten their grocery budgets and “trade down” to canned soup.

“They're less affected by our price point,” he said. “I guess they're still going to buy quality, rather than 99-cent bargain soups.”