Feeser s Fall Meeting Soup Overview Soup Promotion Campbell s Soup Company & Key Impact Sales October 10-2014 1
Introduction Soup, a traditional comfort food and quintessential healthy fare, is a significant part of the American diet. Increased emphasis on healthful eating along with the rise of the fast-casual segment and retail prepared foods, both strong channels for soup, have no doubt contributed to their appeal as viable foodservice options. Two-thirds of consumers (67%) patronize restaurants or other foodservice concepts weekly or more often, and 55% order soup at least some of these times. In fact, more than two-fifths of consumers visit certain restaurants specifically because they enjoy the soup (46%) that these restaurants offer. Still, today s consumers report eating soup away from home slightly less often than they were two years ago. Some consumers are reluctant to purchase soup away from home, perceiving these offerings to be options they can easily prepare themselves. Catering to consumers need for variety and striking a balance between craveable but healthy and innovative yet familiar soups that justify foodservice price points will be important in driving away from home purchases. Moreover, operators may have room to ramp up soup orders by positioning these offerings as appealing across dayparts and mealparts. 2 2
Summary of Key Themes 1. Most consumers order soup at least sometimes 2. Packaged retail options compete heavily with foodservice soup purchases 3. The presence of soup on the menu can drive traffic 4. Soup appeals for a variety of dayparts and mealparts 5. Combo meals are ideal for soup on menus 6. Mood and health strongly dictate soup purchases 7. Seasonality plays a key role in soup purchases 8. Overall, consumers prefer traditional ingredients for soup 9. Variety and innovation for soup can pique consumer interest 10. Trends toward unique ingredients and globally influenced flavors proliferate for soup 3
Key Themes & Implications 1. Most consumers order soup at least sometimes Two-third of consumers (67%) purchase foodservice weekly or more often, and 55% order soup at least some of the times they order foodservice. Monthly soup purchases are highest at casual-dining restaurants but are spread across LSRs, FSRs and prepared-foods areas. Implication: In order to drive incremental sales, operators will need to ensure their soup offerings meet consumers needs for quality, convenience and affordability. 2. Packaged retail options compete heavily with foodservice soup purchases More than half of consumers eat soup (54%) at home once a week or more often, and those who do not order soup at restaurants cite their ability to easily make it at home as a key deterrent. Implication: Operators and suppliers will want to offer premium and innovative soups that are not easily duplicated at home in order to justify price points and differentiate foodservice offerings. 4 4
Key Themes & Implications (Continued) 3. The presence of soup on the menu can drive traffic More than two-fifths of consumers strongly agree that they visit certain restaurants specifically because they enjoy the soup (46%) these restaurants offer. Further, soup may fit many consumers needs for a craveable, yet healthy option that provides good overall value all key purchase drivers. Implication: Nearly all consumers expect restaurants to serve at least one soup, suggesting the importance of soup offerings. 4. Soup appeals for a variety of dayparts and mealparts Consumers view soup as most fitting as a lunch entrée. However, consumers are increasingly ordering soup as a lunch appetizer or side. Some consumers, particularly younger ones, even say that they often order soup as a snack in between meals, and that they find these options appealing during morning hours. Implication: Soup can easily be menued in a variety of portion sizes at difference prices in order to appeal to consumers for multiple mealparts. Smaller, lower-priced servings can be positioned as appetizers, sides, snacks or add-ons, while larger portions can appeal as full meals. 5 5
Key Themes & Implications (Continued) 5. Combo meals are ideal for menus Half of consumers (51%) say it is important that soup can be bundled with other items. Additionally, 58% of consumers even say that they are more likely to order soup as a combo meal than as a single item. More than two-thirds of consumers (36%) would be highly likely to order soup with a salad. Implication: Soup and salad are widespread on combo menus, and are often paired with each other or sandwiches. Operators can differentiate by pairing soup and salad with a wide variety of options, such as quiche or flatbread, and featuring them on mix-and-match menus. 6. Mood and health strongly dictate soup purchases Half of consumers (51%) say one of the main reasons they order soup is because they re in the mood for it, making this the leading soup purchase driver. Health is the driving force behind salad purchases; and 31% order soup because it s a healthy option. Implication: Consumers perceive creamy vegetable soups, such as mushroom and broccoli, to be craveable and healthful; therefore, these soups can cater to both mood and diet. A premium callout, which implies quality and therefore some level of health, resonates with soup consumers. 6 6
Key Themes & Implications (Continued) 7. Seasonality plays a key role in soup occasions More than two-thirds of consumers (68%) say that they are more likely to order soup when it is cold outside. Further, 37% would pay at least slightly more for soup that contains seasonal ingredients. The inclusion of local ingredients for which season is a factor can also drive soup purchases. Implication: Consider switching out soup offerings with the seasons for instance, chilled fruit soups such as watermelon gazpacho in the summer or hearty soups in the fall or winter can emphasize uniqueness, variety, quality, freshness and health. 8. Overall, consumers prefer traditional ingredients for soup Chicken noodle, a traditional American staple, tops all other soups measured as consumers most preferred type, followed by potato and beef stew. Implication: Although consumers enjoy familiar soup varieties, uniqueness also plays a role in the value equation. Operators and suppliers will want to offer a mix of both, perhaps by developing options that add an innovative spin to traditional favorites. 7 7
Key Themes & Implications (Continued) 9. Variety and innovation for soup can pique consumer interest No one type of soup out as far more preferred than others, and 50% of consumers are interested in trying new and unique soups. Further, more than a third of consumers (35%) say they purchase soup because they want to try new or unique varieties. Implication: LTOs on the soup menu that showcase ethnic ingredients or interesting flavor pairings may draw in consumers who are looking for variety and unique options. 10. Trends toward unique ingredients and globally influenced flavors proliferate for soup Although familiar soups reign supreme, ethnic and innovative options, such as Asian-style ramen and chilled varieties, are poised for growth; younger consumers, in particular, show interest. Implication: Contemporary soup offerings are associated with health, differentiated flavor and trending ethnic cuisines; therefore, offering an Asian-style soup, for example, may enhance a concept s positioning as innovative and unique. 8 8
Menu Insights 9 Source: Technomic, Inc., The Left Side of the Menu: Soup & Salad Consumer Trend Report (2014)
Soup continues to be the most prevalent appetizers at limitedservice restaurants 10 10
Appearance of combo plates that include salad and/or soup on the FSR menus has remained fairly unchanged 11 11
Chili and soup of the day offerings outpace all other appetizer soup varieties on limited-service restaurant menus 12 12
Tomato, chicken and basil are some of the leading soup ingredients listed on Top 250 LSR menus 13 13
Menu Trends in Action Soup & Salad Lunch Promotions Operators are offering soup and/or salad in new, themed lunch promotions Used in the FSR segment to steal share from LSR lunch occasions Appearing in a wide range of price points, presenting value and variety at every full-service tier Retailers Ramp up Variety, Quality of Prepared Soups Retailers flaunt the quality and variety of the prepared soups Soups offered at traditional supermarkets, specialty food markets and c-stores New soups exemplify the top food and flavor trends including ethnic inspirations and better-for-you ingredients Smith & Wollensky s Liquid Lunch promo features choice of soup Wawa positions its soups as homestyle and high in quality 14 Images: Smithandwollensky.com & wawa.com 14
Menu Trends in Action (cont.) Ethnic Soups Proliferate Asian soups continue to show their versatility and growing popularity The appeal of ramen is spreading as both an appetizer and an entrée: Moroccan soups are moving to the forefront as a hearty and satisfying soup option Miso Beef Ramen at Wagamama Moroccan Lentil Soup, Pret a Manger 15 Images: Yelp & Foodspotting 15
Consumer Insights 16 Source: Technomic, Inc., The Left Side of the Menu: Soup & Salad Consumer Trend Report (2014)
The ease of at-home preparation and restaurant costs are the top deterrents for away-from-home soup purchases Exhibit 23: Why don t you ever order soup from restaurants? Select all that apply. (by year) I do not want to pay extra to order this as 28% 22% I do not like the varieties offered 27% 17% I can easily make this at home 26% 23% Not a good value 21% 14% It is not filling enough 19% 17% Poor selection 18% 9% I will be too full to eat my main meal 17% 16% It is too expensive to order in addition to 17% 14% It is not healthy 7% 4% I will be too full to order dessert 6% 5% 2011 2013 Base: 220 (2011) and 304 (2013) consumers aged 18+ who never order soup away from home; includes terminate data 17 17
Soup can be an effective traffic driver, especially for women Exhibit 31: I visit certain restaurants specifically because I enjoy the soup they offer. (by age and gender, top two box = agree and agree completely) % Overall = 46% 52% 52% 50% 48% 42% 57% 42% 50% 52% 31% 18 24 25 34 35 44 45 54 55+ Male Female Base: 729 consumers aged 18+ who order soup away from home Consumers indicated their opinion on a scale of 1 6 where 6 = agree completely and 1 = disagree completely 18 18
While nearly two-fifths of consumers are satisfied with the variety of restaurant soups, operators still have room for improvement Exhibit 39: Restaurants I visit do a good job of offering a wide variety of soups (by age and gender, top two box = agree and agree completely) % Overall = 36% 27% 33% 56% 39% 22% 46% 28% 27% 33% 47% 18 24 25 34 35 44 45 54 55+ Male Female Base: 683 consumers aged 18+ who order soup away from home Consumers indicated their opinion on a scale of 1 6 where 6 = agree completely and 1 = disagree completely 19 19
Consumers generally expect at least three soup choices at LSRs and four at FSRs Exhibit 40: At the following types of restaurants, how many types of soup do you expect to see on the menu? Means = 3.3 (LSR), 4.5 (FSR) 6% 3% 29% 27% 26% 12% 20% 18% 13% 11% 12% 8% 3% 5% 1 2 3 4 5 6 7+ Limited service Full service Base: 1,316 consumers aged 18+ who order soup away from home 4% of consumers indicated 0 soups for LSR; 1% of consumers indicated 0 soups for FSR 20 20
Many show interest in new or unique soup flavors, particularly spicy and ethnic options, which are appealing avenues for differentiation Exhibit 41: How much do you agree or disagree with the following questions regarding soup? (by age, top two box = agree and agree completely) I would be interested in trying...new or unique types of soup...more ethnic soups at varied-menu restaurants like Chili s or Friday s...more cold soups, like cold cucumber or gazpacho 53% 60% 58% 47% 41% 38% 50% 45% 37% 26% 18% 32% 18% 16% 12% 18 24 25 34 35 44 45 54 55+ % Overall 50% 40% 20% Base: Approximately 700 consumers aged 18+ who order soup away from home Consumers indicated their opinion on a scale of 1 6 where 6 = agree completely and 1 = disagree completely 21 21
Premium and hearty soups garner the highest price points, while more standard, light options have lower price thresholds Exhibit 46: Thinking about the restaurants where you typically purchase soup, how much would you be willing to pay for each type of soup? (by age, means shown) Bisque Stew Chowder Chili Cream-based Broth-based $3.83 $3.57 $3.74 $3.35 $3.62 $3.25 $3.46 $3.21 $3.35 $2.86 $3.13 $2.82 Overall Average Price $3.60 $3.50 $3.40 $3.30 $3.00 $2.90 18 34 35+ Base: At least 700 consumers aged 18+ who order soup away from home and chose these soups among their top four most preferred Base varies because options were reduced 22 22