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Center store soup sales are flat, but here’s what may help

Aggressive marketing could change things

Inflation is proving to be a potent enemy of the shelf-stable soup sector. With category activity highly dependent on product pricing, retail sales are stagnating as consumers seek more cost-effective alternatives.

The $1.70 average unit price of soup for the 52 weeks ending Dec. 4 was up 13.8% from the year-earlier period, reports Chicago-based market research firm Information Resources Inc. (IRI). Segments experiencing the largest price increases include ramen, with a 23% gain; ready-to-serve wet soup (up 19.4%); and condensed wet soup (a 14.1% increase).

Total unit sales were down 0.6% to 4.43 billion with dollar sales increasing $13.1% to $7.52 billion, primarily due to the higher prices.

Despite flat overall activity, some segments within the soup category are becoming livelier as larger numbers of shoppers turn to the more affordable and versatile items, including products that can serve as either an ingredient in a recipe or a standalone meal, said Sally Lyons Wyatt, IRI executive vice president, client insights.

That includes ramen, bouillon, and dry broth/stock, which had unit sales increases of 5.9%, 3.5%, and 37.9%, respectively.

Because large numbers of shoppers stocked up on condensed soups earlier in the pandemic, it will be difficult for retailers to match previous sector growth rates.

But with aggressive merchandising, such as utilizing frequent promotions and in-store displays, along with co-merchandising soups with complimentary products, such as bread and cheese for soup and sandwiches, operators are likely to jumpstart activity, according to IRI’s Wyatt.

Consistent category expansion, meanwhile, will require a boost in consumption frequency, which currently averages only a few times a month for each consumer, reports Mintel Group Ltd., a Chicago-based market research firm.

But with 88% of U.S. adults already eating or using some type of soup, attracting new customers may be difficult.

“Category players will need to open occasions and usage for soup products by showing consumers how soup fits into a variety of soup and non-soup recipes, as well as investing in more snack-sized and portable formats that can be enjoyed on-the-go or while multitasking,” Mintel said.

Retailers also can spur activity by merchandising a wider range of options, according to Russell Zwanka, director of the food marketing program at Western Michigan University in Kalamazoo.

Zwanka said that includes offering three tiers of typically lower-priced private label selections: opening price point options, national brand equivalents, and value-added selections like unique products foraged from around the globe.

In addition, it is crucial that retailers leverage shelving planograms that make it simpler for shoppers to locate their preferred products, Zwanka said. “Easier to follow assortments means higher purchase rates,” he said.

Indeed, because many shoppers only spend seconds within a category, shelves that are simple to navigate are essential, said Kristen Hanson, vice president of center store for Tops Friendly Markets, a Williamsville, N.Y.-based chain of about 160 outlets in upstate New York. “Consumers also want to know how much the item costs and to get out of the store quickly,” she said. “Eliminating noise at the case makes it easy for them.”

Hansen said that Tops’ soup unit sales are down by double-digits because of a category inflation rate of more than 20%, which is significantly above the 12% store-wide rate.

Higher product costs also are preventing Tops from running historically popular promotions, such as offering 10 cans of condensed soup for $10.

“When you have to change it to three for five dollars, you are decreasing the unit sales,” Hansen said.

Nevertheless, while overall category activity is down, unit sales for Tops’ private label selections have increased. “It is important to showcase solid value price points to the consumer to get them down the aisle,” Hansen said.

Because Tops positions itself as an everyday low-price retailer, Hansen said that “we fight for every promotional funding dollar that we can get because we know how important that is to our customers, to basket sizes, and to having repeat consumers.”

Tops also merchandises complementary items on endcaps to further attract and slow the pace of shoppers, she said, such as soup and oyster crackers or Saltines.

While a wide and attractive range of soup options will help sustain interest in the category, the optimal SKUs to offer in each store will differ in accordance with such factors as available shelf space and the unique interests of each location’s shopper base, Hansen said.

She added, however, that “the price-driven consumer is still number-one for soup, so we try to promote it as much as we possibly can.”

And despite the higher prices, there still is strong category growth potential as many shoppers continue to perceive soup to be an affordable and nutritional option, Zwanka said. “As inflation hits, consumers look to those foods that can stretch value for the entire family, like pastas, rice, breads, and soups,” he said. “There’s a customer for all types of soups.”

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