The recession has proved a boon, but to stay dominant the company is launching new products and wooing the Russian market
CEO: Doug ConantRank: 100Super Bowl: The idea is to make sure soups don't slump when people eat out again
In tough times, comfort sells. And few brands evoke a warm and fuzzy feeling more than Campbell's, whose soup has been a staple since the late 19th century. The cost-conscious climate has been a boon for soup sales, which rose 5% in the U.S. in fiscal 2009, way better than the 1% growth of 2008. That performance launched Camden (N.J.)-based Campbell Soup (CPB) into the ranks of the top 100 brands, where it joined food giants Kellogg (K), H.J. Heinz (HNZ), and Nestlé (NSRGY).
But as the recession recedes, CEO Douglas R. Conant will need to prove that Campbell's name still resonates with American consumers, many of whom will venture back into restaurants once the economy improves. To stay on top, he's launching new products, recasting old favorites, and aggressively pushing into emerging markets. "We've developed a much better understanding of how to keep our brand relevant," says Denise Morrison, president of Campbell's North American soup, sauces, and beverages.
Consider Campbell's Chunky line of soups. Last year the company neglected the brand, focusing instead on Select Harvest, a new offering aimed at women over 35. Select Harvest became one of the top food launches of 2008. But Chunky suffered as a result: Its ad budget got slashed 25% last year, according to data tracker TNS Media Intelligence.
Now Campbell's is revamping Chunky, the first major overhaul of the product in a decade. The company wants to make the soup more nutritious without sacrificing its perceived heartiness. More than half the line now has an extra dose of vegetables and lean meat. "We're not talking about tofu here," says Morrison. The company also plans to advertise Chunky in women's magazines, a departure from testosterone-laden marketing efforts of the past that featured pro football stars.
China and Russia present a bigger opportunity—and a bigger challenge—for Campbell's. The two countries account for more than half the world's consumption of soup. But nearly all of it is homemade. If the company can capture just 3% of the at-home consumption, says Larry S. McWilliams, president of Campbell's international group, the size of the business would equal that of the U.S. "The numbers blow your hair back," he says.
To break into those markets, Campbell's has been conducting extensive on-the-ground research over the past few years, interviewing thousands of consumers in Russia alone. McWilliams even asked the mother of Campbell's local marketing director for her feedback. (She wanted to see more fat medallions floating around.) Their findings led them to develop a broth-like product that Russians can use as a base for their own soups. Next year the company will sell 14 different soups in the country, up from three this year.
Campbell's has had more success in Russia than in China, where tastes vary by province. But the company says it could start showing a profit in those countries by next year. If so, the gains could guard against a U.S. soup slump. Says UBS (UBS) analyst David Palmer: "The make-or-break time for them is now."
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