Thursday, November 11, 2010

Campbell’s Soup a Luxury Item?

There was a surprising notice yesterday from Campbell Soup Co.: Its fall advertising for soup wasn’t enough to increase sales. Sales fell 1 percent in spite of an unusually broad advertising campaign from Campbell.

To be fair, it would be hard to boost sales for canned soup over the levels of the last two years, when consumers cutting back on their restaurant spending turned to canned soup and fast food to fill the gap. By this year, people were starting to get tired of Big Macs and ham and bean soup — and perhaps realizing that these shortcuts weren’t a substitute for real food.

The long-term trend for Campbell has been inexorably downward as consumers look for healthier food, a trend that a soup factory cannot easily participate in.

But this latest downward tick in Campbell sales came as a surprise, and suggests structural changes in consumer spending. For example, it may be a sign that consumer advertising is not as effective as it used to be. It may also be that consumers are starting to view canned soup, or at least Campbell’s soup, as a luxury item, something they cannot afford to buy regularly.