A row of Tim Hortons coffee cups are lined up for customers at Penn Station in New York, July 13, 2009. Tim Hortons Inc. today began serving its coffee, baked goods and soups and sandwiches for the first time in New York. REUTERS/Brendan McDermid
A row of Tim Hortons coffee cups are lined up for customers at Penn Station in New York, July 13, 2009. Tim Hortons Inc. today began serving its coffee, baked goods and soups and sandwiches for the first time in New York. Reuters/Brendan McDermid

Campbell Soup (NYSE.CPB), the largest soup company in the United States, has elevated its full-year profit outlook after offsetting the slowdown in sales in the canned soups segments and Pepperidge Farm cookies. It also makes V8 juices and Prego pasta sauces. Campbell, now in a reform mode, has also announced changes in its flagship soup recipe to grab bigger market shares.

Fiscal guidance

The company revised its outlook for fiscal 2016 after factoring in the better margin performance and the negative impact from the hard dollar currency. Accordingly, sales are expected to vary by -1 to 0 per cent (previously 0 to +1 percent), the adjusted EBIT (earnings before interest and tax) will grow by 4 to 7 per cent from the previously forecast 3 to 5 per cent. The adjusted Earnings Per Share (EPS) will grow 4 to 7 per cent from the previously calculated 3 to 5 per cent.

The total sales decreased 2.3 per cent compared to 2014, to US$ 2.2 billion (AU$3.06 billion), in line with analyst expectations, because the stronger US dollar lowered the value of sales in other countries, reports The Wall Street Journal.

The company was able to address the issue of sliding revenue by slashing expenses and starting of acquisitions in the less-processed food segments.

Recipe change

As part of the restructuring, Campbell Soup has reworked the formula of its famous soup by using a new recipe in a limited-edition line of cans adorned by Chewbacca and others of the upcoming film “Star Wars”.

In the revised version of chicken noodle soup, there are only 20 ingredients unlike the 30 plus ingredients present in the previous versions, reports New York Times.

“We’re closing the gap between the kitchen and our plants,” said Denise Morrison, chief executive of Campbell. “These are unprecedented times of change” in the food industry, where “consolidation and intensified competition are disrupting and altering the landscape,” Morrison added.

Among the steps to boost sales are introduction of organic soups like tomato bisque, reduction in artificial ingredients and removal of high-fructose corn syrup from the foods. Ever since Morrison took over leadership in 2011, Campbell has been catching up with the new trends to check the decline in unit sales, which is a measure of the cans of soup sold.

Conversation with consumers

The company is also using advertising and social media to have dialogue with consumers on what it is doing.

“Before, when we talked about our business, we talked about how many cases we shipped,” Morrison said in an interview and added that today the talk has changed to the food itself as to what is in it, where it comes from and what impact it will have on the environment.

The industry outlook on soup sales is that it has peaked in 2012 at $16.2 billion (AU$22.5 billion) and is stagnating now. In 2014, the sales decreased to $16 billion, according to Euromonitor and it asserts that sales will fall further in 2015 to a little above $15 billion (AU$20.8 billion). For Campbell, United States continues to be the biggest market for soups.

(The article has been revised on Dec.1 with an extra quote from the CEO highlighting the content of the company's conversation with the social media.)

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