FOOD FIRMS COOK UP WAYS TO COMBAT RARE SALES SLUMP BY: JULIE JARGONThe Panthers

PACKAGED FOOD INDUSTRY

They have long thought of themselves as recession-proof.

However consumers are shattering that assumption and causing a frenzy among the supermarket aisles.

In the last quarter food sales fell by 3.9% from the previous quarter. Its steepest drop in 62 years.

Food giants are racing to adapt to this lasting shift.

FOOD GIANTS

Kraft Foods Inc. recently launched an application called iFood Assistant in Apple’s iPhone.

Nestle is offering 5 for $10 deals for their Lean Cuisine meals.

Campbell Soup Co. is coming up with more sophisticated recipes that mimic those offered in restaurants.

CAMPBELL SOUP CO.

Campbell’s has been closely studying consumer spending habits during this recession to see how they can come up with some new strategies.

The 140 year old maker of condensed soups, V8 beverages, and Pepperidge Farm cookies each year interviews 50,000 consumers.

They started noticing behavioral changes about a year ago.

THE READ FAMILY

Vice President of Campbell’s consumer insights, Charles Vila, chose the Read family as a target customer to study.

When they first visited the family last spring, they were not terribly worried about the economy.

By October, the Reads were growing nervous about rising food and gasoline prices.

CAMPBELL HISTORY

They have experience with downturns.

They advertised heavily during the early years of the Great Depression.

The demand for soup was so high they actually had to build a new plant in Chicago in 1930.

CAMPBELL

They have remained one of the best-known and least expensive meal items in the grocery store and faces little threat from cheaper, private-label brands.

However Campbell’s surprised Wall Street by announcing that profits fell 15% from the earlier year, partly because some supermarkets reduced inventories to cut costs.

After years of family-friendly ads Campbell’s is focusing on real-life consumers to inform its strategies.

THE READ FAMILY

The Read family has now started making budgets for how much they will spend for their big grocery shopping.

They have scaled back their restaurant visits from 4 nights a week to 3.

They are now shopping at cheaper outlet stores rather than their favorite clothing stores.

They have added more to their retirement funds and general savings to give themselves a bigger cushion in case of job loss.

CAMPBELL’S NEW STRATEGIES

In an attempt to boost sales Campbell’s was offering 10 soups for $10 in some supermarkets.

They also launched ads promoting their soups as inexpensive meals, a difference from their previous ads playing up quality.

OTHER COMPANIES

ConAgra Foods Inc. launched an ad campaign for their Banquet meals for $1.50. They had not advertised in over a decade.

Kraft began advertising its Kool-Aide powdered beverages on the national radio for the first time in 11 years.

CONSUMER BEHAVIORS

Grocery shopping only on the 1st and 15th of every month. (Traditional Paydays)

Sticking religiously to shopping lists. Avoiding impulse purchases. Trying their best to completely empty their

pantries before restocking. Many consumers are dining less and

therefore using Campbell’s website to print off more recipes.

CAMPBELL’S

Campbell’s has noticed that although people hunt for bargains they are not doing the traditional buy-in-bulk patterns of the past.

Campbell’s president of sales Mike Salzberg says, “People don’t have $10 to spend on one item anymore, they might have $20 and they need to buy all their groceries and household items with that.”

Several weeks ago the company started offering discounts on smaller soup purchases.

CAMPBELL’S

Campbell’s has revamped old recipes and created new, similar ones that call for ingredients that most consumers have in their pantries or freezers.

They also created slightly trickier recipes for consumers that cannot afford to dine out, but who want to create restaurant-like meals.

CONSUMERS

Consumers are now using coupons to buy more ingredients.

There has been a 20% increase in total coupon redemption from the last year.

Campbell’s is now using their in-store displays around products offered with coupons.

The Read family has now drastically cut back on any extensive purchasing and only sticks to the necessities.

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