CHICAGO (AdAge.com) -- In the great soup war, there was no winner.
The $4 billion canned-soup category seemed primed for growth as recently as a year ago when recession-weary customers appeared ready to embrace soup as a cheap at-home meal. Sales grew 5.3% from 2007 to 2009, according to market research company Mintel, which cited the "rediscovery" of soup.
But following a bruising ad battle last year between category leaders Campbell Soup and Progresso in which the two traded barbs over their ingredients, the category as a whole has suffered.
Overall soup sales fell 5.5% in dollars during the year ended Oct. 31, according to SymphonyIRI. Sales of Campbell's condensed soup -- which accounts for 83% of the condensed category -- dropped 5%. In the ready-to-serve segment, where Campbell leads General Mills in market share by 48% to 36%, Campbell's sales slipped 12% while General Mills saw an 8% slide. "They were going head-to-head big time," said Morningstar analyst Erin Swenson of the ad battle. "It was actually turning off consumers."
With the ceasefire officially declared, this season both companies are accentuating the positive rather than the negative with new products and ways to advertise their way out of a sales rut. Each is running a feel-good ad campaign that puts as much emphasis on taste as health. At the same time, executives are promising new product lines to put the excitement back into a category that analysts say is on track for a disappointing winter.
"This is the big season now for soup sales and, quite honestly, it looks like it's going to be another lackluster period," said Jack Russo, an analyst at Edward Jones.
There's a lot at stake. Campbell, which relies on soup for roughly 35% of its U.S. sales revenue, according to one analyst estimate, recently downgraded its 2011 earnings outlook, citing category-wide price discounting that has not delivered volume gains. On an earnings call last week (Nov. 23), President-CEO Doug Conant suggested that the company neglected innovation as it focused on sodium reduction.
"We have taken care of the long term and now we have got to focus on innovation in the near term, which goes beyond just the elimination of negatives and starts to celebrate the wonderful positives we can do with soup," he said, indicating there will be new products that the company will discuss early next year.
Innovation is also a key part of the strategy at General Mills, which analysts estimate relies on soup for 6% of its U.S. sales. The company this year launched a "World Recipes" line that includes Mexican-inspired flavors such as tortilla and pollo.
"Over the past few years, category-advertising innovation and retail shelf configuration overplayed health and convenience and neglected taste and variety," Ian Friendly, General Mills exec VP-chief operating officer for U.S. Retail, said this month at the Morgan Stanley Global Consumer and Retail Conference.
Campbell's growth was fueled in part by the 2008 launch of its Select Harvest line, which emphasized natural ingredients and lower-sodium sea salt. The company went after Progresso in taste-test ads featuring a blindfolded woman who associated farm-fresh ingredients with Campbell's brands and chemicals with Progresso. Big G shot back with its own comparative print ads depicting some Campbell's soups as containing MSG.
Now both companies are running more-positive messages as they seek to win back consumers that some analysts say left for other categories, such as frozen foods.
Campbell in September launched a more than $100 million campaign that pushes all of its soups instead of singling out particular product lines or brands. "Research and consumer insights indicated that in the 'post-Warhol' period of the 1970s and 80s, the company's advertising had become too focused on the iconic can and few top-selling varieties, rather than celebrating the quality ingredients, variety and great taste of its soups," the company said in a statement.
The new "It's Amazing What Soup Can Do" campaign, by Omnicom Group's BBDO, New York and WPP's Y&R, New York, connects soup with getting consumers to a "happier place." Actor Tim Allen provides the voice-over for TV ads that feature men and women of all ages dancing, running, swimming, playing and enjoying soup.
Progresso is again turning to its "You Gotta Taste this Soup" campaign that debuted last year. The ads, by Publicis Groupe's Saatchi & Saatchi, New York, feature customers using soup-can phones to make calls to a Progresso kitchen, where chefs receive glowing reviews.
The next few months will be key. Last year, 64% of total soup sales occurred from late September to late March, according to data from SymphonyIRI.
Yet try as they might, soup brands might face an uphill battle in reinvigorating the mature category. The share of at-home lunches that include soup was 11% in the first quarter, about where it's been in the past several years, and down from 14.4% in 1985, according to The NPD Group.
Soup has "found its place in our diet," said NPD food industry analyst Harry Balzer. "And it's not moving up and it's not moving down."