As children, many may remember their parents reciting to them the price of Coke, Burger King and milk “back in the days before you were born.” Most consumers over the age of 40 years may fondly remember the price of consumer purchases, such as candy bars (only a dime), gas (under a dollar per gallon), and a movie (perhaps only two dollars). Surprisingly, one product that has not risen dramatically in price is soup. One market leader, Campbell Soup Company, reminds its customers of this fact, as it touts the relative value of soup in its promotional efforts.
The Mintel report, “Soup–U.S.–September 2008,” points out that, while food prices across the board, including commodities, are generally on the rise, the price of condensed soup has increased by only nine cents a serving from 2003-2008. In comparison, the Bureau of Labor Statistics reports that in the same period, the cost of a dozen eggs increased from $1.01 to $1.93, a pound of cheese increased from $3.81 to $4.40, and a gallon of milk increased from $2.69 to $3.76.
The Soup Bowl
The $5.4 billion market for soup in the U.S. is dominated by two major players at the retail level; Campbell Soup has close to half of the market at some 49% FDMx market share, followed by General Mills at about 13%. Private label appears to be making inroads, with a current 11% share. The remaining 27% market share is scattered amongst smaller market players, including Toyo Suisan Kaisha Ltd. at 4.9%. (Source: Mintel, based on IRI, 52 weeks ending May 18, 2008. Total U.S. FDMx includes supermarkets, drugstores and mass market retailers; excludes Wal-Mart, club stores and gas/c-stores.)
Campbell Soup Company had experienced a slight share loss, which it has worked to recapture with expansions in the gourmet and organic markets. A major step in this direction was announced on July 1, 2008, through the acquisition of the Wolfgang Puck soup business from Country Gourmet Foods. Introduced in 1997, Wolfgang Puck offers three main product lines--its original “red label” ready-to-serve soups, organic and natural “green label” ready-to-serve soups, and natural and organic stocks and broths. Campbell also entered into a master licensing agreement, in which it obtained the option to extend the brand into other related categories and channels. According to Mintel, though Wolfgang Puck’s ready-to-serve wet soup sales of $30 million are dwarfed by Campbell’s $800 million in sales, Wolfgang Puck offers gourmet and organic credentials, as well as brand loyalty to Campbell.
The second largest player, General Mills, is a tough competitor. The company’s 2008 annual report highlights the company’s creation of a light segment in the ready-to-serve soup category. Its Progresso Light soups have contributed to nearly three points in market share gain in the ready-to-serve soup category.
The next largest company may surprise many, as it is less of a household name. Toyo Suisan Kaisha Ltd. is a Japanese company specializing in ramen noodles. It owns the brand Maruchan and operates two companies in the U.S.: Maruchan Inc., in Irvine, Calif., and Maruchan Virginia Inc., in Richmond, Va. Interestingly, Toyo Suisan’s fresh noodles command the top share of the fresh noodle market in Japan, and thus may bring a certain degree of “authenticity” to products offered here in the U.S.
Private label’s growth has been fueled by an expansion in the number of private label soup offerings and the better quality of private label products. Consumers also are more willing to try private label items. According to The NPD Group’s report, “Private Label Perceptions, Usage Patterns and Intentions,” consumers do not necessarily perceive the quality of private label items to be any different from name brand items. Private label growth has been strongest in the ready-to-serve broth and refrigerated fresh soup categories. Refrigerated soups are a small, but growing, presence in the market, notes Mintel. These soups are typically a premium item and are stocked near other premium bakery and deli items.
Ready-to-serve wet soup, conveniently requiring the very least preparation of any soup format, leads sales, as shown in the chart, “Soup Segments.” Not far behind, condensed wet soup offers value-minded consumers an attractive alternative. Ramen noodles, ever popular with college students and other value-minded consumers, are responsible for driving growth in the dry soup category.
The Greatest Wealth is Health
As reported by Mintel, the market for soup in the U.S. has been challenged for the past several years by the trend toward healthier eating and more convenient preparation. Consumers now have a vast array of convenient choices (e.g., frozen snacks, pizzas, QSR meals), all of which cannibalize the soup market to some extent. However, soup is well-positioned to benefit, as Baby Boomers age, and the American public becomes well aware of the relationship between health and nutrition.
Americans know they should be eating a healthier diet to promote and maintain their health. The number of adult respondents who agree they are “trying to eat healthier food these days” increased from 59% of the population to 65%, during 2003-2008. This represents an increase of 20 million Americans trying to eat healthier foods these days (Mintel, based upon Simmons and U.S. census data).
As pertaining to health, consumers’ top concern with soups is that of sodium intake (see chart “How Low Can You Go?”). Mintel notes that consumer worries about excessive sodium intake have led many to feel uneasy about how soup fits into a balanced and healthy diet. Early versions of low-sodium soups met with mixed success, due to taste concerns. Campbell is persuading consumers that its healthy alternatives to traditional soup feature reduced sodium levels, without sacrificing taste. How are they doing this? Campbell has improved its lower-sodium soup offerings by using lower-sodium sea salt, a natural ingredient said to provide more flavor with less sodium. Campbell’s reduced-sodium soups contain 25-50% less sodium than its regular alternatives, from 410mg/serving in Campbell’s Healthy Request soups to 650mg/serving in Campbell’s 25% Less Sodium soups. Consumers like the flavor of these new products, and sea salt evokes a more premium perception of canned soup. Successful consumer acceptance is evidenced by the fact that Campbell’s reduced-sodium soups were the best-selling new food and beverage brand in the U.S. in 2007 (FDMx sales data from IRI), with sales of $101 million last year.
“Sodium reduction continues to be Campbell’s number one strategic priority,” notes Juli Mandel Sloves, senior manager, nutrition and wellness communications at Campbell. “We have lowered the sodium in more than 90 of our soups and are evolving from offering lower-sodium choices to taking down the sodium level in our top-selling soups. For example, our iconic condensed Tomato soup will now contain 32% less sodium.” Sloves shares that in-home consumer testing in all 50 states showed that people liked the lower-sodium tomato soup as much as they did the original.
More “Less is More” Products
Beyond sodium, other consumer health hurdles include the desire for less, or zero, of calories, gluten, MSG, artificial additives--and more of fiber and vegetables. Successfully addressing the calorie question, Progresso partnered with Weight Watchers, starting in 2007, to offer a line of soups to be used in conjunction with the Weight Watchers’ point system. On this system, dieters are allowed a finite number of “food points” per day. Each food has a point value. Progresso’s Light soups are low in points, and, with 50% fewer calories than regular ready-to-serve soups, dieting consumers may find this brand easier to choose in a crowded soup aisle. The company’s website explains, “Progresso Light Soups are stocked with hearty flavor, yet contain only 60 calories per serving with a POINTS® value of zero and are endorsed by Weight Watchers.” Progresso Light also launched a line of soups with one POINTS value per serving; they contain meat.
Progresso Light is the first consumer packaged product in any grocery category to carry the Weight Watchers endorsement, with zero POINTS value per serving. This partnership has paid off for General Mills, as Progresso Light reached $100 million in sales in its first full year of sales.
Progresso also has a line of low-calorie soups of its own. The company’s website touts its nutritional soups with the tagline, “Progresso offers 44 delicious soups that can play a key role in your weight-loss plan, with 100 calories or fewer per serving. Research shows that soup can be a satisfying choice and help curb your hunger on fewer calories.”
The gluten-free sector is targeted towards several segments of the population: those who suffer from celiac disease, consumers with a self-diagnosed wheat or gluten intolerance, or simply those who believe gluten-free is a healthier way of eating. Celiac disease, in particular, is on the rise. In fact, in the July 2009 issue of Gastroenterology, a study led by Mayo Clinic gastroenterologist Joseph Murray M.D., notes that celiac disease has become more common in the last 50 years (Rubio-Tapia, A, et al. 2009. Gastroenterology. 137:88-93). Since human genes have not changed, it is believed that environmental factors have contributed toward making this disease more common.
Campbell regularly sends out a gluten-free list, offered at www.campbellswithoutgluten.com. On the soup side, the products highlighted include several SKUs of Swanson® Broth and Stock. In August 2009, Progresso began clearly identifying “gluten-free” soups with a callout on the label.
In addition to gluten, the presence of MSG is an issue for some consumers. MSG is typically used as a flavor enhancer, and has been classified as “generally recognized as safe” (GRAS) by the FDA since 1959. Though officially deemed as safe at usual levels, some people claim to experience symptoms such as chest pain, headaches, nausea, rapid heartbeat and drowsiness. Due to these ongoing types of issues, in 1992, the FDA asked an independent group of scientists, The Federation of American Societies for Experimental Biology (FASEB), to complete a review of available scientific data on glutamate safety. The report reaffirmed the safety of MSG, but did identify short-term negative reactions in some consumers.
Well-known by now, Campbell’s famous “MSG versus TLC” print ads highlighted their clean ingredient statements on the labels of Campbell’s Select Harvest Soups. As of July 2009, Campbell has more than 130 soups without added MSG. In response, Progresso announced in October 2008 that it was removing added MSG from all Progresso soups. The website now features a detailed list of its MSG-free soups (currently around 50 SKUs).
Finally, on the “less is more” side, many consumers do not view “artificial additives” favorably. Beginning in September, Campbell is going natural. Campbell’s Select Harvest will offer 12 100% natural soups, with no artificial flavors, color or preservatives. These soups meet the government criteria for natural and include five new flavorful Mediterranean-style soups, created to showcase the healthful ingredients of the Mediterranean diet, according to Campbell Soup.
While sodium, calories, gluten, MSG and artificial additives are all sometimes desirable in lower quantities, two popular additions to soups are fiber and vegetables. Tricia Kinney, R&D director with General Mills, explains, “Nine out of 10 Americans fail to get their daily value of fiber. Our new Progresso High Fiber soups deliver targeted health benefits, without sacrificing taste. The four varieties of Progresso High Fiber soups provide 28% of the daily recommended intake of fiber.” These products have been on-shelf since July 2009.
Soups can help people get more vegetables in their diet. Sloves comments, “This is important, considering seven out of 10 people don’t get enough vegetables every day.” Campbell’s V8 soups are a line of blended soups that each provide a full serving of vegetables in every bowl. After a successful launch in 2008, a new V8 Garden Vegetable Blend variety is just hitting store shelves. By November, all six of Campbell’s V8 soups will also be lowered in sodium to 480mg/serving, the healthy level established by the government.
Convenience and Value
Lately, the soup category does seem to be dominated by health news. The factors mentioned above, plus general health issues, such as weight management/satiety and heart health, and the management of chronic conditions, offer promising claims (and potential for adding novel ingredients) for this category. Sodium reduction has been and will remain a top priority for consumers and manufacturers alike. However, other important market drivers in the coming years will include convenience and value. Convenience may be seen, for example, in the form of additional packaging innovations highlighting microwaveable and on-the-go options (see chart “Soup Segments”). Value, especially in the current economy, may occur in pricing, pack sizes, or perhaps even alternative packaging or channels for distribution. All in all, the soup category, though mature, is well-positioned for growth. pf
www.PreparedFoods.com -- Type in “low sodium” in the keyword search field
www.progresso.com -- After being rerouted to the Betty Crocker site, select “products” tab and then select “Progresso”; scroll down to “new products” to see the company’s latest light, healthy and reduced-sodium offerings
www.campbellsoup.com/hearthealthy.aspx -- Campbell’s website lets browsers see what is new in the Healthy Request, 25% Less Sodium and Low Sodium segments--click on “Heart-Healthy Soups” and then select the category