Dive Brief:
- The Campbell’s Company said consumers are preparing meals at home at the highest level since early 2020 when COVID-19 forced many consumers to forgo visiting restaurants and other establishments.
- The food manufacturer said consumers are favoring ingredients that stretch their tighter food budgets. This is providing a tailwind for Campbell’s condensed cooking soups, broths and Italian sauces.
- While its meals and beverages operations remain strong, Campbell’s continues to face pressure in snacks, most notably chips and crackers. The same inflationary pressures that have pushed consumers to cook more have also led to a decline in snacking, according to the Goldfish maker..
Dive Insight:
As consumers look to save a few bucks amid inflation and uncertainty over the broader economy, foods that can be prepared at home have proven to be a major beneficiary.
Sales in Campbell’s meals and beverages segment surged 15% to $1.5 billion during the third quarter, benefitting from the acquisition of Rao’s owner Sovos Brands in 2024. Campbell’s soup businesses “continued its strong performance” during the quarter, with its wet offerings benefitting from younger individuals who are increasingly cooking at home, Campbell’s CEO Mick Beekhuizen, said in prepared remarks.
The company estimated six of its eight top meals and beverages brands, including Pace, Pacific and Swanson, grew or held share in the third quarter, with consumption increasing by 2%.
“We are seeing improved consumption across all consumer income groups” for meals and beverages, Beekhuizen said in a statement. Consumers are “turning to our brands for value, quality, and convenience.”
As inflationary pressures have led to a renaissance in home cooking, it’s become a dual-edged sword for food companies that also are seeing a decline in snacking consumption. Beekhuizen said the snack space remains soft as consumers become more selective and the category continues to be “increasingly competitive.”
Campbell’s said snack sales slipped 8% to $1 billion in the third quarter. The company singled out its Goldfish cracker brand, noting “we have more work to do to reinvigorate this brand and get it back on its historical growth trajectory.”
“While we are not satisfied with the results of our Snacks division, we remain confident in the strength of our Snacks portfolio and continue to take steps to regain our momentum,” Campbell’s CFO Carrie Anderson said in prepared remarks.
Campbell’s also said it is closely watching to see how tariffs will impact its business. The company, which imports tinplate steel for cans and canola oil for chips, noted trade headwinds could cut into its fiscal-year earnings by 3 cents to 5 cents a share.
Beekhuizen said the company is “actively work[ing] to mitigate as much of the potential direct impact of tariffs as possible.” Anderson added that these steps include inventory management, pursuing alternative sourcing and “where absolutely necessary, consideration of surgical pricing actions.”
