Campbell increased advertising spend during the first three months of the year as the coronavirus pandemic led to a surge in demand for comfort food like soup and snacks. Its marketing expenses jumped 26% from a year earlier, as spending on advertising and retailer promotions rose 29%, CEO Mark Clouse said in a conference call with analysts.
Marketing expenses for snacks rose 11%, and the company plans to boost that spending during the current quarter to retain new customers who have bought brands such as Goldfish crackers made by Campbell’s Pepperidge Farm division.
Campbell’s sales rose 15% to $2.24 billion from a year earlier while earnings doubled to $168 million, per its quarterly report. Sales of U.S. soup increased 35%, but the company lost market share in ready-to-eat soups because factory output couldn’t keep pace with demand.
Campbell’s boosted spending on advertising during the first quarter as the coronavirus pandemic led millions of consumers to stock their pantries with non-perishables and canned goods during lockdowns. The company seeks to maintain that sales momentum by ramping up its marketing spend during the remainder of the year, including campaigns planned for the current quarter.
“We have attracted new consumers to our brands during the COVID-19 demand surge, giving us access to millions of buyers who had not purchased our brands in the prior 52 weeks,” Clouse said during the earnings call. “Many of the households are younger and represent significant incremental growth for our brands. We are now mobilizing behind retaining these new consumers as we look ahead.”
Household penetration for Campbell Soup rose 10% during the first three months of the year, and millennials made up the biggest part of that growth, per IRI data cited in Campbell’s slide presentation. Its snack brands boosted household penetration 5.4 percentage points, including increases for what the company calls its “power brands:” Goldfish, Snyder’s of Hanover, Kettle, Lance, Milano, Cape Cod, Pretzel Crisps, Late July and Pepperidge Farm.
“This quarter, seven of our nine power brands grew or held share,” Clouse said during the call. Its Late July brand of organic snacks experienced the strongest growth with a gain of 2.5 percentage points in market share, followed by Lance’s 1.9 percentage point gain. Goldfish sales rose 11% but lost 0.7 percentage points of market share, while Hanover boosted consumption 21% and lost 0.5 percentage points, Clouse said.
The company expects snacks to be a significant driver of growth for remainder of the year, while consumer and retail trends will continue as people seek comfort food from wholesome brands, quick home-cooked meals, a focus on value and online shopping, per Clouse.
As an example of its recent marketing efforts, Campbell last month kicked off a social and digital campaign aimed at promoting home-cooked meals. Run across mobile video publisher Group Nine’s NowThis Food, Popsugar and Thrillist sites, the New Pantry campaign included custom content and Instagram Stories about how meals at home can bring people together during divisive times.