Campbell Soup Co. expects Q1 2018 recovery after sales dip in V8 beverages

21-May-2017 - Last updated on 25-May-2017 at 07:38 GMT

Campbell Soup Co. expects to make a full rebound from its 2016 recall of Bolthouse Farms Protein PLUS beverages by Q1 2018.

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Campbell Soup Co. reported a 2% decline in net sales of its largest division, Americas Simple Meals and Beverages, for Q3 2017, largely due to a drop in sales of V8 beverages and capacity-related challenges in its refrigerated beverage portfolio.

Net sales hit $982m for the quarter, with operating earnings increasing 5% compared to the same period last year, the company reported.

“V8 beverages continued to struggle as the shelf stable juice category remains challenged,” Denise Morrison, president and CEO of Campbell Soup Co., said during a Q3 earnings call.

The products that struggled the most for the quarter were shelf-stable V8 V-Fusion and V8 Splash with weakened performance caused by consumer wide concerns about sugar content, according to Morrison.

However, the company reported growth for its V8 100% Vegetable Juice, Veggie Blends, and V8 +Energy due to continued media investments.

“V8 +Energy also grew as we expanded distribution of new carbonated varieties,” Morrison added.

Struggling ‘C-Fresh’ still a priority

While Campbell Soup’s heritage began with shelf stable products, the company has been scaling up its Campbell-Fresh (C-Fresh) business unit in recent years to better appeal to consumers’ growing preferences for fresh food and beverages.

“I think the refrigerated beverage business is very competitive and we have seen the advent of ultra-premium juice, the fermented juices or fermented beverages coming in,” Morrison said.

“We haven’t had the supply and the capacity to meet that increased demand.”

C-Fresh sales declined 6% in Q3, primarily due to the June 2016 voluntary recall of Protein PLUS beverages, according to Morrison. The company has responded to the sales hit by implementing enhanced quality control and standards processes as well as plans to launch a new beverage later this year.

“We expect continued capacity constraints through the fourth quarter as we fully operationalize our new line and our co-packer starts production,” Morrison said. “Next year we will be at full play.”

Looking to 2018

Morrison expects to reach “normal” production levels by the first fiscal quarter of 2018 as promotional activity around its fresh beverage lines ramp up in 2017.

“On the innovation front, the reception of our new Bolthouse Farms products, including the new plant-based protein milk, has been positive by retailers,” Morrison added.

However, organic sales of Bolthouse Farms declined for the quarter impacted by supply constraints and the Protein PLUS beverages recall.

Campbell also recently invested $13.5m in Juicero, a San-Francisco startup focused on inventing products, services and experiences to help people consume more fresh fruits and vegetables.

“When you peel it back, our top line really needs to benefit from the return to growth of Campbell Fresh, which we expect next year and also continued progress to stabilize our V8 beverage business,” Morrison said.