Campbell Soup CEO Mark Clouse joins Yahoo Live to unpack the company's slowdown in soup sales and surge in snack revenue. Campbell Soup saw a 12% increase in snack sales from products like Goldfish after partnering with Snyder’s-Lance.
JULIE HYMAN: From GameStop, now to soup. Our Brian Sozzi is back with an interview for us.
BRIAN SOZZI: Yeah. Busy day, indeed. All right. It was a somewhat good quarter for Campbell's Soup. Sales of snacks like Goldfish surged 12% from a year ago. But consumption of its classic chicken noodle soup came out, well, a little cold.
Campbell's Soup roughly 12% boost to prices during the quarter helped heat up sales. But volumes came under pressure due to more cautious US shoppers. Let's serve up some analysis of the quarter with Mark Clouse, Campbell Soup CEO.
Mark, always great to get some time with you here. Really tale of two stories in the most recent quarter for Campbell Soup. Let's start with the soup business. Sales were down. Why did that happen? And how long should investors think that will continue?
MARK CLOUSE: Well, I think, Brian, one of the things that you always try to do in a quarter, like we were walking into in Q3 is to help people understand the context and the backdrop. And the story really for the quarter begins last year when our supply chain really started to recover. And if you think about the soup business and our meals and beverage business, more broadly, we went a couple of years coming out of a COVID into high demand periods, where service and supply was a real challenge, not just for us, but for many in the industry.
But I do think because of the desire and the need for us to really address some of those issues, we hit those very, very hard a year ago. And we were able to replenish and get retailers back in inventory in a major way. And that was about a seven-point help to us in the meals and beverage business.
Soup, it was 10 points. And, again, yesterday, we got to lap that and explain that difference year-over-year. So I think the most important thing is to look at the market results, which certainly, we're a little bit slower as pricing as contributors come down a bit. But when I look under the hood at the parts of the soup business that we've talked about before as really being the bellwethers for the future, whether that's within our condensed business, our icons or cooking behavior, both of those continue to do very, very well.
And if you look over the last four years, our icons have added almost five share points. And that gives us that strong foundation where our point of difference is strongest. And then the added value of the versatility of condensed with cooking has been a great build. And that's been even stronger with millennials, which was always a little bit of a question for condenser. Can we get younger consumers into the franchise?
And then Chunky is the next big bet for us in that business. Although, a little bit more competitive pressure in the quarter as others were recovering on supply. Latest four weeks, we're right back up to share growth, where we're averaging about 8% growth on that business over four years. Complete transformation from what used to be low price traded on promotion to a very, very compelling proposition with protein, convenience, and still good value.
So those two are in great shape. And then the last one that really is important for the future is Pacific. That's our more premium better for you soup brand. And that continued to grow in the quarter very strongly. We saw share gains there. It was actually the fastest growing ready-to-serve soup business in the quarter. And so I think for soup as a category, there's really no debate. We're in a much stronger position today than we were in the past.
We did cycle some things we needed to get through. But as I look forward, I feel great about the contribution and the continued runway for our soup business.
BRIAN SOZZI: There was some concern, Mark, out this morning. A lot of the analyst coverage about the rise of private labels in the soup business. Have you and your team tried some of these private labels? Are they making tastier stuff? Are the cans cooler? How would you explain them grabbing some share from a brand like yours?
MARK CLOUSE: I think, in a world of tough economic backdrop, and certainly as consumers are working to stretch their dollars the furthest, the temptation of a lower priced offering. And that's really what the dynamic is with private label is it's really about value.
There are pressure in certain parts of our business that we have to continue to make sure that the value, not price alone, but the equity, the value we're doing a good job on. That's why, for example, in condensed, where we've seen some of that pressure from private label, it's not coming through on the parts of the business that really we have the most compelling point of difference. And so for those other parts, some of our flankers like, Healthy Request or our more expensive condensed offerings, we've just got to make sure that we're providing a great proposition for consumers.
But as far as like, long-term migration into private label due to quality, I'm not concerned about that at all. We continue to be the winner in the categories we participate in. And I do think that in the fights that we've really made sure our most critical, we're continuing to win.
BRIAN SOZZI: Soup, of course, Mark, is in the corporate name, Campbell Soup. But the snacks business for your company has been on fire. Some of the best operating margins since you went out and bought that Snyders-Lance business a couple of years ago. Should investors be thinking more of Campbell's Soup as a snack forward brand? And to that end, do you have to go out there and make some acquisitions to really lean into this growth?
MARK CLOUSE: Brian, it is, perhaps, an area where if you ask me what do I wonder or wish, look, we love soup, we love the soup business. Our meals and beverage business-- we've got a lot of confidence. And remember, this is a business that we have decided and committed to focus on in a different way than how the business was positioned five years ago.
But half of our business is the snacks business now. And as you point out, it is literally been on fire. And to me, what's so powerful about this quarter and, perhaps, in the detail and the bridging-- this got lost a little bit in the story-- but the reality is that this is probably the strongest proof point behind the thesis of why we acquired the Snyders-Lance business. We saw a great set of brands that with our marketing and innovation expertise from Pepperidge Farm applied to it, we could drive growth. And you have seen that across all of the businesses in market, share, all of the above. We are growing these businesses in a steady state.
And what made this quarter so impactful to the thesis is we've now begun that margin journey that we've been talking about. And as we've navigated through some tricky macroeconomic environments, we're now in a position where we're up 150-basis points on margin for the year. We've crossed 14% operating margin. And I really feel good about the momentum and our ability to sustain that progress going forward.
And so with half of our business in this terrific on trend leading snacks business with a self-help margin story that gives us fuel into the future, I really do think it's something that investors need to think about as they digest what's the potential and trajectory for our company.
BRIAN SOZZI: And Mark, Campbell headquarters in Camden, New Jersey-- and right now, I'm coming to you from New York City. We're both probably looking at orange skies that smell like smoke. Have you and your team taken a step back and thought about the next 25 years for Campbell's Soup? And how climate change might impact your business? And what changes you and your team have to make starting today?
MARK CLOUSE: Yeah. Brian, it's absolutely a conversation that is alive and well within the walls of Campbell. We really do believe that there is an opportunity to both be good and do good at the same time. And as we think about our ESG strategy more broadly, as it relates to the environment, as it relates to our energy use, our waste, all of the things that we not only are going to help us be a better company, but are also going to protect our consumers and our businesses into the future.
And so I can tell you, that as a company, I do think that I inherited a great history and heritage of doing the right thing and being a great corporate citizen. But as the world demands more, we're going to demand more also. And we're continuing to move that bar up as we see our role in being able to contribute not just to the business, but also to the communities and the planet at large is a responsibility we take seriously.
And a day like today, as you point out, it's a reminder to us that we've got work to do.
BRIAN SOZZI: Well, stay safe out there. And good luck this quarter. Mark Clouse, Campbell Soup Company CEO. Always great to see you. We'll talk to you soon.
MARK CLOUSE: Thanks, Brian. Talk to you later.