• by Sarah Mahoney , July 2, 2008

In an effort to boost its presence in the organic and gourmet soup business, Campbell Soup Co. says it has acquired the Wolfgang Puck soup line from Country Gourmet Foods, and entered into a separate licensing agreement with Wolfgang Puck Worldwide, Inc. For now, the agreement covers soup, stock and broth products in North American stores, but it also includes an option to extend the Puck brand into new categories and channels.

The high-end acquisition comes at a time when Campbell's soup sales, frankly, aren't so hot. In its most recent quarterly results, the company says total soup sales fell 3% compared to a 10% increase in the comparable period--with sales of condensed soup flat and sales of ready-to-serve soups, such as Campbell's Select and Campbell's Chunky, dropping 9%. (In part, the company says the decline is due to "less effective promotional spending and lower levels of advertising.")

Campbell's best performers include its lower-sodium soups and Swanson broth, which gained "5% due to growing consumer demand for aseptically-packaged broths and the introduction of additional sizes of aseptic varieties."

The Wolfgang Puck line, which also includes aseptically packaged broths, fits nicely into that sweet spot. Puck is one of the leading organic soup brands, a category that Campbell estimates at $150 million in U.S. sales in 2007, with a compound annual growth rate of 23% from 2003 to 2007. Puck soups had 2007 sales of $22 million. Terms were not disclosed.

"We intend to strengthen and grow our business by pursuing strategic acquisitions and partnerships that complement our focus on our core categories of simple meals, baked snacks and healthy beverages," the company says in its release, adding that it already offers several organic products, including Campbell's tomato juice, V8 vegetable juice, Prego pasta sauce, Pace salsa, and varieties of Swanson broth.

Mintel estimates that the total U.S soup market was roughly $5 billion in 2007, a rise of 25% in current terms since 2002. "But since 2005, sales have grown only slightly in current terms and declined in constant terms," it says. "Players in the market face competition from frozen meals, refrigerated foods and food service," as well as increasingly attractive private-label lines. For example, it says sales of private-label soups jumped 48.3% between 2002 and 2007, excluding Wal-Mart.

And consumers are definitely demanding healthier options: Some 70% of those in the Mintel survey say they look for a low-sodium soup. While they don't claim to be brand conscious--only 13% of the Mintel survey agreed that brand was important to them--General Mills' Progresso line has given Campbell plenty of competition.

The Mintel report found that in the 2004-06 period, sales of Campbell soup--while still more than half of the category sales--slipped 1.1%, while Progresso's gained 17% in the same period. Progresso Light also carries an endorsement from Weight Watchers, and General Mills also has Muir Glen, its own line of organic soups.

And IRI reports that the ready-to-serve soups segment "has the highest dollar and equivalized unit volume growth," with dollar sales up 4.8% to $2.2 billion during the 52-week period ending on June 14, 2008, from $2.1 billion a year ago."