Faced with pressure from stockholders to turn the company around, new CEO Douglas Conant has pledged to analysts that Campbell will rev up advertising and consumer spending for its U.S. sauces and prepared-foods brands next fiscal year, just as it did this year with soup and Pepperidge Farm. Spending for those brands suffered a cumulative 44% decline over the past three years, he said, and now it's time to "restore sufficient spending in order to generate competitive vitality."
In 2000, Campbell spent a mere $3.3 million on its Franco-American brand, $1 million on its Pace brand, and just $489,000 on its Prego brand, according to Competitive Media Reporting.
Campbell will triple that total for just one line, the $15 million launch this May of Prego Pasta Bakes, a new four-variety line of concentrated pasta sauce that, paired with water, uncooked pasta and cheese, makes an easy-bake eight-serving casserole. The extensive TV and print campaign behind the launch, from WPP Group's Y&R Advertising, New York, will break in May, likely touting the easy 1-2-3 process of the all-in-one meal. The effort marks the first major national advertising for Prego in at least two years.
Aside from the introductory campaign for Prego Pasta Bakes, Campbell hopes to continue the momentum of the $250 million base brand-sales of which grew 6.2% last year-through general brand advertising.
In late November, it began a six-market test of a spot from Y&R called "Talking pasta" that features animated spaghetti strands boasting of Prego's ability to cling to pasta. Plans for extending the campaign have yet to be determined, a company spokesman said, but marketing teams are working now to develop extensive efforts for Campbell's first fiscal quarter, which begins in August.
Campbell's Pace Picante Sauce, too, has recently begun to dabble in TV advertising-the first for the brand in a number of years-with a campaign that recently began airing in 15 markets, mainly in the Midwest and Southwest. The spot, also from Y&R, aims to re-establish the brand's Southwestern heritage with consumers.
Campbell's Franco-American brand will also be buoyed by incremental spending, although Campbell wouldn't specify figures. Print and radio ads earlier this year touted a strong nutrition message for new SpaghettiOs with Calcium.
"This year is a year in which we're moving back into TV and becoming more visible, but it's just the beginning," said John Faulkner, Campbell director of corporate and brand communications. "There is a lot of growth potential in our brands, and part of the equation is putting the right advertising program behind them."
As incentive to drive advertising on its nonsoup businesses, Campbell credits the recent 5% gain in its soup business in large measure to the 10% increase in ad spending and the revival of the "M'm M'm good" campaign during its second quarter (which ended Jan. 31), said Jeremy Fingerman, Campbell's VP-U.S. Soup. From 1998 to 2000, overall ad spending on soup brands was cut by $50 million, Mr. Conant said in remarks to analysts. Pepperidge Farm, meanwhile, grew sales 6% in the same second-quarter period after its own stepped-up ad effort.
Now, Campbell is extending the soup campaign to go more aggressively against Pillsbury's Progresso with ads that counter the fast-growing brand's two-year attack on Campbell soups. Beginning last month, Campbell launched new ads for Chunky New England Clam Chowder, Campbell's Select Grilled Chicken with Sundried Tomatoes, and Campbell's Red & White Minestrone in Boston, New York and Philadelphia, that directly compare the varieties against similar Progresso soups. Y&R handles Chunky while Omnicom Group's BBDO Worldwide, New York, handles the flagship condensed-soup lines and ready-to-serve lines.
"We're trying to set the record straight regarding the quality of our Campbell soups, and we want to make sure consumers are fully informed and have a basis of comparison that's accurate," Mr. Fingerman said.
Campbell's sales for its second quarter ended Jan. 28 were up 2% to $2 billion, although earnings declined to $271 million from $280.9 million from the same period the prior year. Its stock price, as high as $60 in 1999, closed March 9 at $31. It has a market capitalization of $13 billion.