Dive Brief:
- Campbell Soup said sales of Goldfish crackers, Cape Cod potato chips and other snacks played a major role in helping the food giant increase sales in its most recent quarter even as growth in its meals and beverages segment was largely flat.
- The New Jersey-based food and beverage manufacturer said its snacks business posted a 9% rise in fourth-quarter organic sales, while meals and beverages rose only 1% as increases in foodservice and Prego pasta sauces were partially offset by declines in beverages, U.S. soup and Canada. Overall, Campbell’s total organic net sales grew 5% during the fourth quarter.
- Campbell is aiming to accelerate growth in its meals and beverages segment through its recently announced deal to buy Sovos Brands, the maker of fast-growing Rao’s sauces, for $2.7 billion.
Dive Insight:
While Campbell is best known for its iconic soups, the CPG giant has doubled down on today’s shopper’s insatiable demand for snacks — and it’s paying off.
Not only has the company invested in innovation for core offerings such as Goldfish, but Campbell dolled out $4.9 billion in 2018 for Snyder’s-Lance, known for snack brands such as Cape Cod potato chips, Archway cookies, Snyder’s pretzels and Pop Secret popcorn. It was the biggest deal in the company’s 154-year-old history.
In its most recent fiscal year, snacks were responsible for just under half of the company’s $9.357 billion in sales. During its fourth quarter, snacks topped meals and beverages by $200 million as Campbell saw more consumers trade down to private label options, most notably in soups. Both segments posted declines in volume/mix of about 5%.
In the coming year, Campbell said it expects volume declines to continue in the first half of its fiscal 2024 year with positive trends in the second half. This should help offset lower contributions from pricing and promotional activity.
In its outlook, Campbell forecast a 0.5% decrease to a 1.5% rise in net sales in its fiscal 2024 to $9.306 billion. This includes the loss of $51 million in net sales tied to the recent divestiture of its Emerald nuts business to private label CPG manufacturer Flagstone Foods earlier this year.
“Within Snacks, we continue to expect accelerated growth and to build on the margin trajectory from this year; and in Meals & Beverages, we expect to continue to strengthen the business with sequential and steady improvement throughout the year,” Mark Clouse, Campbell’s CEO, said in prepared remarks. “This story will only be made stronger following the completion of the Sovos Brands acquisition, adding the most compelling growth story in food to Campbell’s portfolio.”
The Sovos deal will allow Campbell to further strengthen and diversify its meals and beverages business with high-growth, premium brands. Sovos’ flagship Rao’s brand grew organic net sales by more than a third compared to the prior fiscal year. In its most recent quarter, Sovos posted a 16.3% jump in organic net sales, with volumes rising despite higher pricing.
