Blame the Snow: Soup Sales Rise

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Much of the nation has slowly begun to thaw from one of the coldest and snowiest winters on record, but the snow and perfect soup weather‘s effect can still be felt, and perhaps may have contributed to the first growth in soup sales since July 2009.

For the 12 week period ending January 22, ready to serve (RTS) soup sales grew +2.2%, according to Citi analyst David Driscoll, although the period benefited from an easy comp of 9.2% in the year ago period.

General Mills (GIS) gained dollar share in RTS (+0.4pp), though much of it was attributable to promotionally driven volume gains, while Campbell Soup (CPB) lost share in RTS (-1.1pp) and gained share in condensed (+1.0pp).

“Volumes increased in RTS (+7.5%) over the latest 12 weeks, with high levels of promotional activity continuing to be a factor,” Driscoll wrote in a research note out today. “Contributing to the rise in RTS volumes was growth from General Mills’ (+11.8%), Campbell (+5.1%) and Del Monte (DLM) (+7.5%). In stark contrast, ConAgra‘s (CAG) volumes significantly declined (-5.3%) as its promotional activity and prices were essentially flat compared to the increased promotions and price declines of competitors. In condensed, category volumes increased (+2.6%).”

Pricing was a problem in soups, with RTS offerings dropping nearly 5%, and condensed products down almost 2.5%.* General Mills had the largest drop, with prices falling more than 7%.

Driscoll concluded: “The RTS soup category actually saw positive sales growth over the latest period. However, the category is lapping significant declines from last year, thus the growth is not necessarily high quality. The intense competitive environment in soup continues, as referenced on Campbell’s recent fiscal second quarter conference call. We will be watching the effects from a category and competitive standpoint as Campbell shifts spending towards consumer marketing and advertising and away from costly promotions.”

He noted that Kellogg (K) remained his top pick in food stocks.



Original Article Source by Barrons.com