SOUPING UP A CLASSIC

By Published on .

Thanks to Carl Johnson, Campbell Soup Co. doesn't sell soup anymore.

The chief strategy officer's philosophy that it instead markets easy-to-carry and prepare hot meals has been a guiding insight that's propelling a surprising turnaround at a $7 billion company that has long struggled for growth. Combined with a push to build value by focusing on better-quality products, more-convenient packaging, more-targeted marketing and retail-and consumer-friendly shelving, the master plan is winning over even the most grudging analysts.

"Campbell is actually making some progress," admitted the typically dour Bill Leach, an analyst at Neuberger Berman. He credits the company's "basic blocking and tackling" such as developing easy-open lids and microwaveable packaging. "There is no magic button you push, you just try to do a lot of little things better."

That's exactly what Mr. Johnson has done. While he said he's "not ready to declare victory yet," the company is going into the Food Marketing Institute's convention this week boasting an impressive 8% sales jump in its fiscal first half. Moreover, it's managed to pull off an even bigger feat: 10 months of sales gains for its long-declining condensed soup business.

MANY COMPONENTS

Mr. Johnson, 56, easily rattles off the varied and many key components of what has driven Campbell's long-awaited success. The investments, he said, have "been successful individually, but the real power is in their combination."

Campbell began by improving product quality with investments in plant technology to offer better vegetables and bigger chunks of chicken in its soups, which make up just over 50% of the company's total business.

Next came packaging technology, coupled with restoring marketing support that had fallen sharply in the late `90s. Since 2001, when Mr. Johnson joined the company from Kraft Foods, Campbell has maintained spending levels of roughly $300 million in measured media, according to TNS Media Intelligence/CMR.

Satisfying retail customers was the next hurdle to jump. According to Mr. Johnson, Campbell had fallen out of the top 10 in Cannondale Associates' annual PoweRanking survey and one of the ways they've regained it is the development of a gravity-feed IQ shelving system intended, Mr. Johnson said, to "improve the shopping experience for soup."

So far, 11,000 shelving units are in place for the standard soup cans and Campbell has begun to design additional units that feature new product platforms, among them microwaveable soup bowls and Soup at Hand sippable soups. Those two lines together have grown as of February into a $225 million retail business (excluding Wal-Mart).

The biggest strategic idea, however, was to "take what had been a narrow soup-against-soup positioning and broaden the competitive frame," he said. That's led to changes in advertising, with spots from Omnicom Group's BBDO, New York, making specific reference to the idea of having soup instead of options like hot dogs or macaroni and cheese, and Chunky spots from WPP Group's Y&R Advertising, New York, that play on the idea of soup that eats like a meal.

expansion

The insight has sparked product extensions into arenas such as Chunky Chili, which after a year ranks No. 2 behind chili leader Hormel Foods.

IRI numbers show Campbell's condensed soup up 2.4% to $1 billion for the 52 weeks ended March 20 in food, drug and mass outlets excluding Wal-Mart, the kind of growth not seen on the brand since the '80s, but Mr. Johnson isn't done yet. Among other initiatives, the company is launching its first premium ready-to-eat soups in aseptic packaging in the U.S. under the Select Gold label name this fall backed by advertising that will tout its restaurant-quality taste. It's also introducing microwaveable varieties of its condensed soups.

Credit Suisse First Boston analyst Dave Nelson said the key to success in the food industry is innovation and using technology to become more efficient with trade spending, a formula that has worked for Hershey, Kellogg and now Campbell. He offered that "the investments Campbell was making over the last four years got them to the right point today."

Carl Johnson

Low-key, thoughtful and almost professorial in his manner, according to one Campbell colleague, Mr. Johnson has a knack for recognizing the crucial insights that help to propel business.

In this article:
Most Popular