Campbell’s continues to position itself as a leader among the food companies offering mealtime solutions and innovations. Sales of their Chunky soup brand have been a major driver of total sales, along with prepared sauces and their iconic condensed soups.
Select among the beneficiaries to mealtime solutions and innovations is the millennial generation. Mark Clouse, Campbell’s CEO, explained in an earnings call Wednesday, that that generation had most wholly adopted new cooking skills during the lockdowns. Breaking out of the lockdowns to go spend money in restaurants last year, millennials, due to current inflationary pressure, are once again finding their way back into the kitchen, and when they do, they turn to Campbell’s prepared sauces and condensed soups to help them make quick scratch recipes. It should also be noted that recipes and meal ideas are just as integral of a product as the edibles. The company wants to bring truly holistic mealtime help to its customers.
The Chunky soup brand is also well positioned, and well loved enough, to aid the company in that strategy. Dollar shares of the brand rose by 1.6 basis points in the first quarter. Its growth of 13% was nearly double that of the ready-to-serve category’s 7%. When counted among soups, the Chunky brand helped the category achieve an 11% increase in sales.
Other highlights of first quarter fiscal 2023 include a 15% increase in net sales, mostly due to targeted price increases, but certainly helped by recoveries in inventory levels and the supply chain.
“Our strong first-quarter results reflect our continued success in driving the relevance of our brands and improving our execution across our supply chain,” said Clouse. “Through a combination of inflation-driven pricing actions and productivity improvements, we have substantially mitigated significant inflationary pressure in the quarter while continuing to provide quality and value to consumers.”
The confidence gained from such a complete first quarter has given the company reason to increase its guidance for fiscal 2023 sales, from 4%-6% to 7%-9%. Adjusted earnings-per-share (EPS) will go from between $2.85 and $2.95 to $2.90 and $3.00.
Costs for the quarter increased due to a ramped-up marketing campaign and higher promotional spending. Expect this to continue to be the case in Q2, as the company partners with Marvel for Black Panther: Wakanda Forever Goldfish crackers and brings back Frank’s Red Hot Goldfish. Further bullish marketing will favor the Chunky brand and sauces.
“We are investing in the equity of our brands through effective marketing, delivering robust innovation and deploying efficient capital spending to ensure we continue to fuel improving in-market shares and growth.”, said Clouse.