STIRRING THE POT

WILLIAM SMYTH

Winter is soup season, with Americans consuming about 57 million bowls of soup in January alone, according to Campbell Soup Co.

Scan data from Information Resources Inc., Chicago, show that wet soup sales in all channels last year were close to $3 billion. While major manufacturers, like Campbell, Camden, N.J., and Pillsbury Progresso Soups, Minneapolis, have followed the lead of smaller natural-food companies in creating healthy alternatives to full-fat soups, the lion's share of the business still remains with conventional varieties.

IRI statistics show that overall sales for wet soup were $2.9 billion for the 52-week period ended Dec. 6, 1998, up 2.4% from the previous year. Campbell's condensed soup alone accounted for $1.3 billion in sales, almost half of the category.

The second-highest variety was Campbell's Chunky soup, with $331 million in sales, up 12.2%. Progresso soups ranked No. 3, with $259 million, up 1.2%.

Clearly, major soup companies like Campbell's and Progresso are paying more attention to the healthy subcategory, as some consumers demand better-for you varieties.

For example, Progresso now has 14 varieties of 99% fat-free soup, and Campbell's has a line of Healthy Request soups. According to IRI figures, Healthy Request garnered $175 million in sales in 1998, but was down 8.3% from last year, while Healthy Choice soup, with sales of $104 million, was down 1.9%

Separate statistics from Spins, San Francisco, which tracks natural-product sales in health-food stores as well as in supermarkets, reveal that natural-soup sales amounted to $64.4 million in supermarkets for the 12-month period ended December 1998. But these figures declined 3.4% from the previous period.

Nonetheless, Todd Waters, a marketing consultant for WatersMolitor, Minneapolis, said that the larger companies are under some pressure from the smaller labels.

"Lifestyles are changing and people are cooking less. Campbell's has begun to focus less on soup consumed in the home and more on soup eaten away from the home," said Waters.

Healthy soups are doing well at Genuardi's Family Markets, according to Emil Oles, category manager for the Norristown, Pa.-based chain. "People are buying more healthy and specialty soups and they account for 10% of soup sales. We have a small assortment of private labels -- 25 from Genuardi's -- and that accounts for 5% of sales," Oles said.

Natural and organic soups sell at Genuardi's, even with no advertising, but Oles says the national brands of healthy soup are doing better because of the money the large companies spend on advertising. "They promote heavily, so they're doing well," he said.

Healthy-soup sales are also on the rise at Fleming Cos., Oklahoma City. Gary Murray, director of grocery category marketing for Fleming Brands, told SN, "We definitely see growth in those areas. Healthy soups are showing signs of gain."

A new category of healthy soups, in aseptic, shelf-stable packaging, is now available from Imagine Foods, Palo Alto, Calif. According to Ellen Weiser, corporate communications manager, the new category is growing.

Many retailers, however, are not experiencing the healthy trend in the soup category. At G&R Felpausch Co. stores, customers buy standard soups and are not gravitating toward healthy choices, according to Bill Drumm, director of grocery, frozens and dairy for the Hastings, Mich.-based chain.

"Customers are leaning in the other direction and are going back to the more fatty soups," said Drumm. "Take for instance, Nabisco green-label products. You can't even find them on the shelves."

Thomas Yarrows, category manager at Big Y Foods, Springfield, Mass., agreed that people are not buying healthy-soup lines. "Healthy soups continue to be slow in sales and some have declined," he said.

Private-label soups are making strides, however, according to Drumm of Felpausch and Murray of Fleming. Murray said that private-label soup sales have seen double-digit increases for two consecutive years.

Marketing analysts agreed that private labels and store brands create competition in the soup industry.

According to statistics from Marketing Management Inc., Fort Worth, Texas, more than 2,000 companies worldwide now manufacture store brands for retailers. A new report issued by Euromonitor, Chicago, called "Prepared Soups: The International Market," found that private-label products have played a prominent role in the prepared-soup category over the last five years.

"The consolidation in the retail arena has created financially strong organizations, with greater resources to invest in new products and promotions. As a result, there has been a large flow of new private-label products launched that are better quality and are now in more direct competition with branded counterparts. This in turn has created greater price pressure within the soups market, as private-label [products] are typically less expensive," the report states.

Tom Berg, director of corporate brands at Spartan Stores, Grand Rapids, Mich., said that the national companies have not been doing a lot of advertising, which gives private labels a chance to compete. "The national brands have not been promoting their products as vigorously as they have in the past," said Berg. "This has opened a window of opportunity for increased sales for the private labels."

The trend at Sobey's, Stellarton, Nova Scotia, is that "The majors are still the big sellers," said Lisa Mackenzie, category manager for the chain. She also noted that Sobey's has seen a 5% increase in soup sales over the previous year.

Berg also pointed out that the soup category has been very successful this year, with "winter returning to the Midwest." February is a time for supermarkets to showcase their products and it couldn't come at a better time to increase soup sales.

Since February is National Canned Food Month, it's also a good time to promote soup. Indeed, Big Y Foods is using the category as a focal point for its canned-food promotion.

"Many of our soups are on sale and we are displaying them aggressively each week, all the time. All our majors with promotions are on display," said Yarrows at Big Y.

Fleming Cos. is using a similar strategy. "All canned goods categories will be involved in [February] promotions, especially soup," said Murray.