Campbell’s management signals that promotions can help maintain their soup monopoly

Eric Gardner
3 min readSep 2, 2022

Campbell Soup Co.’s margins stayed relatively stagnant as unit sales continued to decline, while high prices ensured the company posted a topline revenue of $2 billion for the quarter.

Treading water in a difficult environment suggests that management and labor at Campbell’s are doing a solid job.

The New Jersey-based manufacturer of Campbell’s Chunky Soup and Goldfish crackers faces rising input costs, which it mostly passes on to consumers. Gross margin, which measures profitability after accounting for production costs, skyrocketed earlier in the pandemic but came in at 29% for 4Q of fiscal 2022 — a decline of 8% from the same quarter last year.

EBIT, a non-GAPP metric, measures profitability before earnings and taxes. In the last three months, Campbell’s EBIT inched downward from 13.7% to 13.5%. Management said it was primarily due to increased promotional spending.

Like many food manufacturers, Campbell Soup’s management scaled back promotional investment during COVID-19. Promotions are an easy way to spike incremental volume of consumer goods. A combination of unprecedented demand and labor and raw material shortages meant that Campbell could not keep up production. Now that it has returned, they’ll start investing again. “Our improvement in supply chain execution enabled us to invest in our brands through promotional activity in the fourth quarter,” CEO Mark Clouse said. “We were encouraged to see that our increased support helped drive positive results.”

The Campbell Soup Co. is trying to maintain a monopoly in soup

Based on data provided by Campbell’s, with over 50% of all sales, the company dominates the soup market. The numbers are even starker within the condensed category. For every $100 spent on condensed soup at grocery stores, Campbell’s captures $83.

Despite its dominance, the company is losing market share. The category itself is growing at 12%, while Campbells is showing growth of about 8%. Most of that growth is happening at private label companies. Faced with stretched budgets, consumers are switching to cheaper store brand options.