You’d expect chilled soup to be out in the cold given the fragile state of the economy. But it's actually the fastest growing sub-category – despite the price tag. Peter Cripps finds out why
There's nothing like the chilliest cold snap in 31 years to send soup sales soaring.
Last winter, many manufacturers reported record-breaking sales. Heinz sold 57 million cans in January alone. If sales hadn't tailed off over the summer the category might have more to show for itself than a volume uplift of just 0.4% and a value rise of 4.9% much of which can be attributed to commodity-driven price rises [KantarWorldpanel 52w/e 8 August 2010].
Unfortunately, it doesn't, which goes to prove that seemingly recession-proof categories aren't always so. But while that's true of soup overall, one sub-category has been bucking the trend. And it's the smallest and most expensive soup sub-sector.
Sales of chilled soup have risen 9.4% year-on-year in value and volumes are up 10.1%. Of the £24m growth in the soups market over the past year, £10m has been generated by sales of chilled products. Conversely, volume sales of wet ambient were virtually static and volumes of powdered soup fell 3.5%. So how have chilled soups defied the downturn while their cheaper ambient cousins have been feeling the heat?
On the face of it, it would seem counter-intuitive that the priciest sub-category should be outperforming the cheapest. But something interesting has been happening on the price front. Some 53% of chilled soups have been sold on promotion [Kantar]. Meanwhile, ambient soups have borne the brunt of commodity-driven price-rises. The upshot is that the price gap between the two sub-categories has narrowed (the average price of chilled soup has fallen 1p to £1.39, although typically chilled soup is still twice the price of ambient).
This, coupled with the consumer perception that chilled products offer higher quality than ambient, has persuaded more shoppers to shell out extra for chilled. Yorkshire Provender is just one chilled soup brand that has benefited. Sales have leapt 60% over the past year to £2.1m, it says, crediting promotional activity with helping it secure listings in Waitrose and other supermarkets. If chilled soup players hadn't increased their promotional activity, they wouldn't be enjoying the success they are now, says Yorkshire Provender joint MD Belinda Williams.
"We have to do promotions otherwise we are not in the game," she says. "We have found ways to take cost out, which has allowed us to offer even better value without compromising on quality."
One of its tactics has been to increase pack sizes from 500g to 600g while sticking to the same price. It has also prioritised NPD (see right) and claims to be one of the few brands to offer two distinct seasonal ranges every year, one for the summer and one for the winter.
Another factor behind its success is its size. It has arguably been much fleeter of foot than some of its bigger rivals, notably New Covent Garden Food Co, which is one of the few chilled soup brands to have struggled over the past year. Its ubiquity and the increased competition are partly to blame, suggest experts.
Andrew Ovens, the company's group marketing manager, admits sales slowed down a bit over the summer, which was quite warm. However, he adds: "I anticipated this would happen. We will see a strong winter this year because of innovation."
Given the strong growth of chilled, it is surprising that Heinz exited the sub-category two years ago when it pulled its chilled Farmers' Market lines. But the market leader has more than made up for things with increased NPD, marketing activity and promotions in ambient. It has launched reduced salt Classic soups (see box) and alternative formats to the can such as its microwaveable Taste of Home pots. It has also produced award-winning ad campaigns (see p40), kicking off this year's soup season with a £2m ad push and multibuy deal. And it has returned to levels of promotion not seen since the height of the recession, with more than 51% of its sales on deal this year, up from 36%.
"We recognise there has been upward pressure in commodity areas but we always try to offer great value," says Heinz Soups marketing controller Matthew Cullum. "There are some great promotional offers out there to reward our consumers. We've been promoting our soups, particularly the Classic brand, more last year than the previous year." The three-pronged strategy is clearly working. Heinz has seen its soup sales grow 7.8% to £206.2m over the past year [SymphonyIRI 52w/e 7 August 2010].
Other ambient brands, however, are struggling not least because commodity and steel prices have risen to such an extent that the average price of powdered soup has increased from 68p to 73p per unit and wet ambient soup from 61p to 63p.
The dry ambient sector is doing particularly badly, perhaps because shoppers view it as lower quality and less healthy. Sales of Batchelors, for example, have fallen 15.7% [SymphonyIRI].
Some wet ambient brands have also fared badly. General Mills delisted the pouch version of its Green Giant soup brand in March this year, and sales of Loyd Grossman pouch soups have fallen 28.2% by value [SymphonyIRI].
Those that have succeeded boast premium or quality appeal. Take Look What We Found!, which despite its price tag and coming in a pouch format like Green Giant grew its value sales by 9.8% year-on-year [SymphonyIRI].
Ainsley Harriott introduced new flavours to its dried cup soup range, winning a silver 2010 Grocer Food and Drink Award in the process. This and MugShot are attracting new young consumers to the category, claims Symington's, which makes both.
Other soup brands particularly chilled are thriving because they appeal to the desk-bound worker. "Fresh soup is just about the same price as a sandwich but much more filling and tasty," says Matthew Stephenson, marketing manager of Glorious! "There is a real opportunity to tempt lunchtime snackers."
The key next summer will be to make sure there's a decent level of NPD and to persuade retailers not to cut back too much on their soup ranges, say manufacturers. "We saw a lot of retailers cut back on space and ranging to make way for barbecue and summer products," says Ovens. "It's a mistake consumers buy other things when they can't get what they want."
Fortunately, innovation is exactly what the likes of New Covent Garden and Yorkshire Provender plan to provide next summer. Meanwhile, Positive Weather Solutions which predicted last year's Arctic snap is forecasting similar weather this winter. Just the thing to ensure people reach for a warming bowl of soup.
Focus On Soup
There's nothing like the chilliest cold snap in 31 years to send soup sales soaring.
Last winter, many manufacturers reported record-breaking sales. Heinz sold 57 million cans in January alone. If sales hadn't tailed off over the summer the category might have more to show for itself than a volume uplift of just 0.4% and a value rise of 4.9% much of which can be attributed to commodity-driven price rises [KantarWorldpanel 52w/e 8 August 2010].
Unfortunately, it doesn't, which goes to prove that seemingly recession-proof categories aren't always so. But while that's true of soup overall, one sub-category has been bucking the trend. And it's the smallest and most expensive soup sub-sector.
Sales of chilled soup have risen 9.4% year-on-year in value and volumes are up 10.1%. Of the £24m growth in the soups market over the past year, £10m has been generated by sales of chilled products. Conversely, volume sales of wet ambient were virtually static and volumes of powdered soup fell 3.5%. So how have chilled soups defied the downturn while their cheaper ambient cousins have been feeling the heat?
On the face of it, it would seem counter-intuitive that the priciest sub-category should be outperforming the cheapest. But something interesting has been happening on the price front. Some 53% of chilled soups have been sold on promotion [Kantar]. Meanwhile, ambient soups have borne the brunt of commodity-driven price-rises. The upshot is that the price gap between the two sub-categories has narrowed (the average price of chilled soup has fallen 1p to £1.39, although typically chilled soup is still twice the price of ambient).
This, coupled with the consumer perception that chilled products offer higher quality than ambient, has persuaded more shoppers to shell out extra for chilled. Yorkshire Provender is just one chilled soup brand that has benefited. Sales have leapt 60% over the past year to £2.1m, it says, crediting promotional activity with helping it secure listings in Waitrose and other supermarkets. If chilled soup players hadn't increased their promotional activity, they wouldn't be enjoying the success they are now, says Yorkshire Provender joint MD Belinda Williams.
"We have to do promotions otherwise we are not in the game," she says. "We have found ways to take cost out, which has allowed us to offer even better value without compromising on quality."
One of its tactics has been to increase pack sizes from 500g to 600g while sticking to the same price. It has also prioritised NPD (see right) and claims to be one of the few brands to offer two distinct seasonal ranges every year, one for the summer and one for the winter.
Another factor behind its success is its size. It has arguably been much fleeter of foot than some of its bigger rivals, notably New Covent Garden Food Co, which is one of the few chilled soup brands to have struggled over the past year. Its ubiquity and the increased competition are partly to blame, suggest experts.
Andrew Ovens, the company's group marketing manager, admits sales slowed down a bit over the summer, which was quite warm. However, he adds: "I anticipated this would happen. We will see a strong winter this year because of innovation."
Given the strong growth of chilled, it is surprising that Heinz exited the sub-category two years ago when it pulled its chilled Farmers' Market lines. But the market leader has more than made up for things with increased NPD, marketing activity and promotions in ambient. It has launched reduced salt Classic soups (see box) and alternative formats to the can such as its microwaveable Taste of Home pots. It has also produced award-winning ad campaigns (see p40), kicking off this year's soup season with a £2m ad push and multibuy deal. And it has returned to levels of promotion not seen since the height of the recession, with more than 51% of its sales on deal this year, up from 36%.
"We recognise there has been upward pressure in commodity areas but we always try to offer great value," says Heinz Soups marketing controller Matthew Cullum. "There are some great promotional offers out there to reward our consumers. We've been promoting our soups, particularly the Classic brand, more last year than the previous year." The three-pronged strategy is clearly working. Heinz has seen its soup sales grow 7.8% to £206.2m over the past year [SymphonyIRI 52w/e 7 August 2010].
Other ambient brands, however, are struggling not least because commodity and steel prices have risen to such an extent that the average price of powdered soup has increased from 68p to 73p per unit and wet ambient soup from 61p to 63p.
The dry ambient sector is doing particularly badly, perhaps because shoppers view it as lower quality and less healthy. Sales of Batchelors, for example, have fallen 15.7% [SymphonyIRI].
Some wet ambient brands have also fared badly. General Mills delisted the pouch version of its Green Giant soup brand in March this year, and sales of Loyd Grossman pouch soups have fallen 28.2% by value [SymphonyIRI].
Those that have succeeded boast premium or quality appeal. Take Look What We Found!, which despite its price tag and coming in a pouch format like Green Giant grew its value sales by 9.8% year-on-year [SymphonyIRI].
Ainsley Harriott introduced new flavours to its dried cup soup range, winning a silver 2010 Grocer Food and Drink Award in the process. This and MugShot are attracting new young consumers to the category, claims Symington's, which makes both.
Other soup brands particularly chilled are thriving because they appeal to the desk-bound worker. "Fresh soup is just about the same price as a sandwich but much more filling and tasty," says Matthew Stephenson, marketing manager of Glorious! "There is a real opportunity to tempt lunchtime snackers."
The key next summer will be to make sure there's a decent level of NPD and to persuade retailers not to cut back too much on their soup ranges, say manufacturers. "We saw a lot of retailers cut back on space and ranging to make way for barbecue and summer products," says Ovens. "It's a mistake consumers buy other things when they can't get what they want."
Fortunately, innovation is exactly what the likes of New Covent Garden and Yorkshire Provender plan to provide next summer. Meanwhile, Positive Weather Solutions which predicted last year's Arctic snap is forecasting similar weather this winter. Just the thing to ensure people reach for a warming bowl of soup.
Focus On Soup
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