Beverages show more ‘brand momentum’ than soup for Campbell’s

By Ben Bouckley

- Last updated on GMT

Related tags Campbell soup company

Beverages show more ‘brand momentum’ than soup for Campbell’s
Campbell Soup Company CEO Denise Morrison has told analysts that the firm’s beverage business and other divisions currently have greater ‘brand momentum’ than its traditional soup business.

Announcing its Q3 2012 earnings yesterday, Campbell’s said that US beverages grew value sales to $208m, 5% up on Q3 2011 figures, but operating earnings fell to $45m from $54m.

Overall Q3 2012 sales of $1.8bn were even, the firm said, but net earnings for the quarter ending April 29 were $177m compared to $187m in Q3 2011.

Campbell’s said that US beverage sales growth was driven by double-digit gains for V8 Splash beverages and gains in V8 V-Fusion beverages, while sales benefited from new products such as V8 V-Fusion Smoothies, V8 V-Fusion Sparkling Flavours and energy drinks.

CEO Denise Morrison said: “We continued to advance our strategies to stabilize and then profitably grow North American soup and simple meals, and…continue to drive growth in healthy beverages and bakery.”

‘Profitable’ beverage growth

On a later analyst call, Robert Moskow, Credit Suisse Research Division, noted that Campbell’s had earmarked 2011/12 was an investment year within beverages to “fend off competition”​, and that operating margins had fallen as a result, from 24% last year to 18-19%.

He asked Morrison whether the firm would be looking for higher margins in 2013, but she warned of “weak shelf stable juice category trends”.

Although the beverage business – especially V8 V-Fusion and V8 Splash products – had responded to investments made, Campbell’s recognised this had come at a cost, she said.

“And going forward, we will strike a balance to get back to profitable growth in beverages, with the momentum of new products and continued brand building, which is now our base,” ​she added.

Morrison said that she thought the firm’s beverage, baked snacks and sauce businesses had more brand momentum than its soup business.

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