29 July 2013 - Campbell Soup Company is facing continuing challenges to its US beverage category but the company says it can rebuild it through focusing on the drivers of demand, cost management and continued expansion in the growth segments of the category.
Speaking at the company’s recent 2013 Analyst Day, the President of Campbell North America, Mark R Alexander, admitted that the company’s shelf stable juices in North America are being challenged from “a number of different directions”.
The category itself is in decline, as consumers switch either to lower cost options or to an ever-increasing abundance of alternatives, such as super premium refrigerated beverages.
One V8 success story for Campbell is its V8 V-Fusion brand, which was launched in 2006 and has since grown to a USD 270 million business.
Mark R. Alexander
Campbell North America
Furthermore, Campbell’s V8 100 percent vegetable juice and core V8 V-Fusion businesses have suffered from inflation in the cost of raw materials and higher merchandising expenses as it maintains competitiveness in the category.
However, Alexander said the company would stabilize and rebuild the category, with Campbell expecting to improve both top and bottom line results in US beverages in fiscal 2014.
According to Alexander, the company will support its V8 100 percent vegetable juice by improving the taste of the products in the range, using appropriate merchandising to appeal to its core consumers, the baby boomer generation, and making packaging changes that will drive down costs as well as enhance the product image on the shelf.
Campbell will also “push the line into new spaces” by testing its new Bloody Mary mix in limited distribution, as well introduce a new chilled offering, V8 Harvest.
The juice offers a full serving of fruits, as well as a full serving of vegetables, and is targeted at women looking to maintain a healthy lifestyle for themselves and their families.
In 2014, Campbell will add two new varieties, black cherry and pineapple strawberry, to its product line.
It will also offer a new brand V8 V-Fusion Refreshers, which are positioned as a juice cocktail with no high fructose corn syrup.
Moreover, Alexander said Campbell now has a “stronger understanding” of V8’s appeal to Hispanic consumers, who he said buy fruit drinks for their kids because they represent both goodness and enjoyment.
For Hispanic consumers, “V8 Splash combines the goodness of V8 with a splash of fun”, he said, adding that the company has created an integrated marketing plan to reach out to these consumers.
V8 Splash is expected to deliver its seventh consecutive year of growth.
Furthermore, Campbell has begun to establish a strong presence in a number of growing shelf stable specialty drink segments and next year, it will build on that foundation, according to Alexander.
V8 V-Fusion Plus Energy line is the company’s first entry into “the fast growing USD 8.6 billion energy drinks market”, Alexander said, and the product has “developed well” since its launch.
Next year, the company will add two new diet varieties, strawberry lemonade and cranberry raspberry, and significantly increase its investment in advertising to continue to build awareness and trial.
Finally, the company’s new V8 V-Fusion kids’ juice boxes launched last year takes the company into another large specialty segment.
“We will build on an encouraging start in this space with a new grape favor, new variety packs and growth in distribution across channels,” Alexander said.