Campbell Soup (CPB) reported a loss in its fiscal fourth quarter Thursday, driven down in part by a slowing in U.S. soup sales, despite efforts to attract weight- and health-conscious consumers with a steadily increasing slate of healthier offerings. For eight quarters, the formula had been working, but the bottom clearly fell out in the three months ending July 28, with growth in soup sales easing to 4 percent, down from 14 percent in the last quarter.
The slowdown may be weather related -- demand for soup falls in the summer, after all. But consumers may also be worried that Campbell's Soup perhaps isn't good food. A big part of Campbell's rising success has been their Healthy Request line, a collection of soups that promise to be much healthier than the usual offerings -- and which have the American Heart Association's heart-check mark to back up the claim.
When it came to developing healthier soups, fat was obviously an issue, but sodium was the real bugaboo. Salt, after all, is the dark side of the broth: a highly effective flavor enhancer, it also happens to be far cheaper than vinegar, spices, and other premium ingredients. The trouble is, for health-minded consumers, especially Baby Boomers, salt doesn't just boost flavor -- it also drives up blood pressure. To sell its offerings as heart healthy, Campbell needed to cut the sodium.
In its Healthy Request line, Campbell managed to get sodium down to 410 mg per serving, less than half the level of its standard offerings. For customers in search of a health-conscious food at a low price, the new soups seemed almost perfect. The trouble is, while 410 mg per serving makes the Healthy Request line a healthier alternative to regular soups, it hardly qualifies the soups as healthy. On a salt-to-calories basis, they are still pretty seriously out of balance.
To understand this, it helps to imagine a health-conscious consumer who chose to go on a Healthy Request-based diet. Picture a person who ate three bowls of soup a day -- one for breakfast, one for lunch, and one for dinner: He or she would take in 1,230 mg of sodium, a number that falls well within the Center for Disease Control's guidelines for a healthy diet.
The trouble is, he or she would also be taking in between 180 and 420 calories per day -- basically, a starvation diet. To get up to a normal daily intake of 2,000 calories, the Campbell's soup dieter would need to consume more than fourteen bowls of Healthy Request Grilled Chicken and Sausage Gumbo, which would come with 5,857 mg of sodium. That's more than twice the upper limit that the CDC sets as "likely to cause no risk of adverse health effects."
This apparent inconsistency hasn't escaped the notice of customers: Earlier this month, New Jersey resident Kerry O'Shea launched a proposed class-action lawsuit against Campbell for misrepresenting the health benefits of its soups. If the suit gathers steam, it could short-circuit Campbell's current growth strategy -- in addition to providing a useful lesson to consumers about the dangers of relying too much on endorsements from the American Heart Association.
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