After Campbell’s Q3 earnings call earlier this week, the headline news was the dip in its snacks division, where sales were down 5% for the quarter.
Little wonder there. A McKinsey survey last month found that inflation remains consumers’ top concern (tariffs were second), with more than half of them saying they’ve already cut back on “nonessential spending.” That category clearly includes stuff like cookies, chips and pretzel sticks.
Campbell’s is hardly alone in feeling the pain here. General Mills and PepsiCo, parent to Frito-Lay, have seen declines in snacking in recent months, too.
“Consumers continue to be selective in their spending, largely driven by inflationary pressures and diminished discretionary income,” J.M. Smucker CEO Mark Smucker told analysts during a Feb. 27 earnings call, explaining why Hostess (maker of Twinkies) fell short of expectations.
Yet one dynamic that’s been overlooked in the coverage is how Campbell’s has an edge that its competitors don’t: a 128-year history of selling—and being synonymous with—condensed soup, the go-to ingredient for inexpensive meals that’ll feed a crowd.
Since introducing condensed soup in 1897, Campbell’s has made affordable meal prep central to its marketing. And today, as inflation-conscious consumers curb their spending, the tactic is still proving its worth: Soup is one item that consumers are keeping on their shopping lists.
As CEO Mick Beekhuizen told analysts, “Consumers continue to cook at home and focus their spending on products that help them stretch their food budgets.”
In addition to selling soup as a meal unto itself, Campbell’s realized early on that it could be used as a cost-saving ingredient in home cooking. As early as 1916, the company produced a cookbook that introduced Americans to dishes including Spaghetti á la Campbell, a budget-friendly one-pot meal made with a can of tomato soup.
During the Great Depression, enterprising homemakers knew that a can of Campbell’s tomato soup could stand in for oil in a cake recipe. Green bean casserole—made with a can of Campbell’s condensed cream of mushroom—was a staple in post-war American kitchens.
