Simmering down: ready meals & soups category report 2022

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Having boiled over early in the pandemic, soups have lost heat – and canned formats are the main casualty. What’s going on?

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Soup sales have well and truly cooled. Having added around £36m in 2020 – mainly thanks to Brits stocking up on long-life options – the category’s value shrank £24.4m last year [Kantar 52 w/e 31 October 2021]. Essentially, it’s lost two thirds of what it gained during the panic-buying of Covid.

It’s not exactly a major cause for concern. After all, when compared with 2019’s performance, soup sales are still up overall.

But not all areas of the market are performing equally. Kantar analyst Tobias Burke points out the main casualty of the past year has been canned soup, which shed £17.3m as the appeal of long-life options waned. Top two brands Heinz and Baxters are both in the red, losing over £20m between them [Nielsen IQ 52 w/e 11 September 2021].

By contrast, fresh soup has grown its appeal in the post-lockdown world, with a 3.7% rise in value and 2.8% growth in volume.

So how can ambient soups hold on to their sales as life returns to normal? What is behind the growing value of fresh soups? And what trends are driving the strongest players in the category?

First, it’s important to put these figures into perspective. Canned soup may be declining, but it isn’t going anywhere. It remains the largest part of the market, commanding 58.2% value share. Fresh, by contrast, is worth less than a quarter of the category.

Plus, though the £17.3m drop in canned sales may look dramatic, it is simply a return to pre-pandemic levels. “In both value and volume terms for the year to end October in 2019 and 2021, the category is pretty flat,” says Dean Towey, commercial director at Crosse & Blackwell owner Princes Group.

“In both value and volume terms, the category is pretty flat on 2019 levels”

The same point is made by Heinz, whose ambient soup sales fell £15.8m or 8.4% last year [NielsenIQ]. But compared with 2019, value sales are actually up 0.8%, points out Kraft Heinz junior brand manager Emily Wright. “Ambient soups have always performed strongly across grocery,” she says.

It’s now looking to maintain that performance with trend-led NPD. Heinz has invested £2.5m in its Plant Proteinz range, which rolled out in October with three variants: Mediterranean Tomato & Bean, Coconut Curry & Jackfruit and Moroccan Chickpea & Bell Pepper.

“It is important that the ambient soup category keeps up with consumer trends in order to continue dominating the market,” explains Wright. She points to a Euromonitor Health & Nutrition Survey 2020 study, which shows 47% of Brits identify as flexitarian and are trying to reduce their meat intake – especially those aged 18 to 35.

Baxters is thinking along the same lines. Having launched its first plant-based soup in 2020, it expanded the lineup in September with Spiced Red Lentil, Sundried Tomato & Thyme and Thai Yellow Vegetable Curry.

Take-home soup sales have fallen 4% to £588.5m – mostly driven by a £17.3m loss for wet ambient lines, which was the subject of much less stockpiling than in the previous 12 months.

Soup’s performance was also stymied by flat pricing. “Prices remained mostly stable overall in spite of an increase in the share of off-promotion sales,” notes Kantar analyst Tobias Burke.

Contrasting soup’s performance, ready meal value sales grew 6.7% to £4.2bn this year, reflecting shoppers’ reduced time for scratch cooking. The increase was most pronounced in the chilled sector, up 7.8%.

Growth was “especially impressive” in international ready meals such as doner kebabs, plant-based meat alternatives and chicken wraps, says Burke.

Demand for plant-based and healthier fare prompted new launches and reformulations from the likes of Quorn, Sharwood’s and Morrisons.

Future ready meal performance is likely to hinge on lockdown restrictions, supply chain costs, inflation and other economic trouble, adds Burke. Such pressures could lead shoppers back to scratch cooking.

Chilled success

Still, canned lines have sizeable competition from the fresh market in this trend. The chiller is home to entirely plant-based brands such as Bol, which ran a push in the summer focusing on this selling point.

“The aim of the campaign was to debunk the myths that we need to eat meat and dairy products for protein and start a conversation about eating a plant-based diet,” says Bol senior brand manager Jess Vara.

In a continuation of this effort, Bol has launched a Chick’n Soup in time for Veganuary. Made with jackfruit, it provides two of the 5 a day and 13g of protein.

Bol’s sales may have fallen back in the past year – down 9.2% to £2.7m [Nielsen IQ] – but others are seeing stellar growth.

See Re:Nourish, whose plant-based chilled soups soared 48.3% to be worth £1.6m. The brand, which comes packed in a bottle rather than a pot, recently secured £2m in investment and is planning to expand into Europe in 2022.

Re:Nourish CEO Nicci Clark says the relative success of chilled brands is partly down to their efforts to reinvigorate the category. Soup has “always been deemed for the elderly” but that need not be the case, she says. “If we can really demonstrate that soup is convenient, healthy and sustainable, it can really disrupt this category.”

“If we can show that soup is convenient, healthy and sustainable it can disrupt this category”

That view is backed by Amanda Argent, founder of Soupologie. “We’ve always been about trying to make soup much sexier than it was ever in the past,” she says. Which may help explain the brand’s 33.3% rise to £1.3m [NielsenIQ].

Chilled soup makers are also keen to emphasise the healthiness of their products compared to ambient lines – a significant draw for younger and plant-based shoppers. “Chilled soup goes through a lot less of a process,” Argent says.

Soupologie is one of the brands capitalising on those health associations with immunity-focused lines. It added a vitamin D-enriched trio last March to provide Brits with a dose of the ‘sunshine vitamin’ during winter months and extended periods indoors.

Meanwhile, Bol reformulated its Power Soups last June “to ensure they have greater levels of protein, whilst also being immunity and energy boosting”.

Finally, Re:Nourish makes a selling point of its high-fibre, high-protein and vitamin E content. These health associations are so powerful that in the Middle East, the soups are merchandised as a health product alongside juice drinks, says Clark.

Convenience & waste

Success isn’t just about health, however. Convenience is emerging as another key battleground as society emerges from lockdowns – as evidenced by the £263m growth of the ready meals category.

This is another area where innovative brands such as Re:Nourish are winning. The brand makes much of its pack design, which can be heated in a microwave. Large labels on the sides serve as insulation, allowing the soup to be drunk directly from the bottle. This gives it an edge over rivals, claims Clark. “It’s a lot less faff, and with our bottles you don’t need a spoon.”

Similarly ground-breaking is Soupologie’s upcoming launch into frozen, a sector that currently accounts for just 0.5% of the category. In February, the brand will release Souper Cubes, 150g cubes that can be heated in either a saucepan or a microwave.

This format will not only be convenient but also help eliminate food waste, since portions can be selected according to appetite, Argent argues. “We’re entering an era where costs are going to go up, things are going to become more expensive and wasting food is going to be in people’s minds. If people had larger freezers than fridges in their home, you’d eliminate food waste.”

Furthermore , by rejecting the plastic pots usually used by fresh soups, Souper Cubes are also more sustainable, she adds.

This is one area where canned has a natural advantage over fresh soups. Princes’ Towey argues that, as the war on plastic continues, alternatives such as aluminium cans will prove “instrumental” in the choices of eco-conscious shoppers.

The real question for canned is whether this selling point alone is enough to revive its fortunes. Or whether the category will need some fresh thinking to generate growth.