Stir Up Soup Sales

A watched pot only seems to take an eternity to boil. But after a lukewarm couple of years, retailers really need to crank up the heat on their store brand soup offerings if they want to finally fire up the category's performance.

As the weather begins to turn cooler, the peak season for soup consumption is at hand. The timing is just right for retailers to take stock of their private label offerings and stir up innovative ideas that include healthful, restaurant-inspired recipes and new packaging structures and sizes.

A bowl of health

According to "Soup — US," an April 2012 report from global market research firm Mintel, innovations in smaller segments such as frozen and refrigerated soups have kept the whole category from sliding further downward and are a good bet for future growth. Refrigerated soups, in particular, are perceived as a healthier, gourmet alternative to basic value-minded shelf-stable options.

And health and wellness are becoming increasingly important to consumers, says Richard Cagley, senior category manager for Oakbrook, Ill.-based TreeHouse Foods, citing the availability and modest growth of organic soups.

Levon Kurkjian, vice president of marketing for Chelsea, Mass.-based Kettle Cuisine, agrees.

Consumers in greater numbers are demanding that the prepared foods that they consume be made with real food ingredients and nothing artificial or unnecessary," he says. "And this carries over to the fresh soup category as more retailers are taking the initiative to partner with suppliers that can deliver 100 percent natural soups."

The soup category as a whole is beginning to expand as different ethnic and regional cuisines are getting attention, mimicking many recipes found in restaurants or even in some fast food chains.

"Southeast Asian flavors and Southwestern American flavors are very hot in the soup category," Kurkjian explains, "but new flavors from Northern Africa, India and South America are emerging as the next frontier for mainstream soups."

Do meet consumer demand for "real" food ingredients and fewer artificial colors and preservatives.

Don't be afraid to think outside the can — consider alternative packaging formats such as aseptic cartons.

Keep balanced

Although overall soup performance is taking a hit, taking a closer look at recent data by segment will help give retailers the clearer picture they need when targeting their next move to grow their own brand soups.

According to data from SymphonyIRI, private label ready-to-serve wet soup took the biggest tumble over the past year. Dollar sales were down more than 7 percent (see the table, p. 30).

The key to a turnaround here, the Mintel report states, is providing the best balance between economical and tempting soup meal/snack possibilities. "Both condensed and ready-to-serve segments offer good nutrition and value," Cagley says, "compared with other easy meal' alternatives."

But retailers must maintain an appropriate price gap in relation to the national brands, he adds, "as well as avoid being too low or too high, which negatively impacts perceived quality or reduces consumer trial or repeat purchasing."

Cagley suggests that retailers consider partnering with "select manufacturers [to] create customized points of difference and strategies to increase sales and profits."

While refrigerated soup may be a small subsegment for now, its potential has not been fully realized yet by retailers.

"For store brands, refrigerated soups really help drive a point of difference," Kurkjian says, "and, when done right, they can elevate the perception of the store brand with consumers." Traditional shelf-stable soups are not up to the task because they "just don't offer an ability to differentiate as much on overall quality from the branded alternatives," he explains.

Think beyond the can

Of all of the soup subcategories, simple and unassuming ready-to-serve broth has become the breakout star in terms of store brand performance. Store brands command the largest share here. And it was the only subcategory to see positive dollar sales growth, increasing more than 4 percent (although unit sales fell during the same timeframe).

According to the Mintel report, ready-to-serve broth seems to have "morphed into almost a new segment with the introduction of concentrated broths to add to skillet dinners." The segment is likely to expand as manufacturers innovate with a focus on healthy meal helpers.

When it comes to packaging, retailers should look for new and interesting packaging formats within both the ready-to-serve broth and other subcategories. In the case of ready-to-serve broth, for example, single-serve concentrated broth and increasingly popular aseptic containers promote ease of use and convenience. Consumers are able to use only what they need and reseal the container to maintain flavor. Other soup segments could incorporate similar convenience attributes as well.

For refrigerated soups, a variety of packaging sizes means that soup is on for just about everyone.

"The highest volume of refrigerated soups [is] migrating to 16-ounce to 20-ounce deli cups," Kurkjian says, "but with new concepts coming in line for single-serve portions and larger family pack portions."

Innovations on the smaller-portion side include "8-ounce servings in no-seal click-lock cups and deli cups with domes that contain add-ons like croutons or tortilla strips," he explains. And "larger packs are being used for promotional purposes and to drive incremental sales for different usage occasions [such as] parties or larger family gatherings," he adds.

Do consider beefing up soup offerings on the refrigerated side, an area poised for strong growth.

Don't forget the importance of merchandising — consider placing store brand refrigerated soups next to hot soup offerings, for example.

Looking good

When promoting their store brand soups, retailers also will have to make sure they invest in efforts to capture the shopper's attention.

That means offering appropriate merchandising in terms of frequency, depth and timing for both store brand and national brand items, Cagley says, "to maintain strong customer interest in the category and increase traffic to drive purchase of secondary, complimentary items."

In addition, attractive and impactful label design will pique interest, he notes.

"One really successful merchandising tactic that we have observed," Kurkjian adds, "is placing refrigerated soups in close proximity to hot soups. Consumers can try the hot soup and, if they enjoy it, then can purchase the refrigerated option for later consumption."

Stay true

Consumers' appetite for soup comes and goes throughout the year. But retailers should not let their commitment to the category be affected.

In the future, the most success will come to retailers that set themselves apart on more than just price, positioning themselves instead as providers of premium-quality, fresh-prepared foods, particularly in the refrigerated soup category.

"We expect the entire fresh soup category to yield double-digit growth into the foreseeable future," Kurkjian predicts, "but the retailers with strong store brands will be well ahead of the average."

Look what’s new

New from Monrovia, Calif.-based Trader Joe's is Trader Quixote's Garden Fresh Gazpacho. Said to be a traditional Spanish soup, the refrigerated product contains no artificial colors, flavors or preservatives. The fat-free, ready-to-eat soup should be served chilled and retails in a 16-oz. plastic tub.

H-E-B, San Antonio, introduced Central Market Organics Vegetable Broth. Free from gluten, artificial colors and flavors, added MSG and fat, the broth is said to contain 1/3 less sodium than the leading vegetable broth. The ready-to-use vegetarian product retails in a 32-oz. aseptic carton.

fresh&easy eatwell Vegetable and Bean Soup with Orzo from El Segundo, Calif.-based Fresh and Easy Neighborhood Market combines garden vegetables, kidney beans and orzo pasta in a savory vegetarian broth. It is said to be a good source of vitamin A and contains no added artificial flavors or colors. The microwavable product is suitable for vegetarians and retails in a 19.8-oz. can.

Source: Mintel's Global New Products Database