The humble bowl of soup is having a moment.
That’s according to The Campbell’s Co., whose iconic cans are synonymous with it. The food maker said Monday that customers are increasingly snatching up its condensed soups and mac-and-cheese offerings while shying away from snacks, a spending shift that partly echoes the depths of the pandemic.
“Consumers are cooking at home at the highest levels since early 2020,” Campbell’s CEO Mick Beekhuizen said in a statement.
The company — whose snack brands include Goldfish, Snyder’s of Hanover pretzels and Cape Cod chips — saw snack sales slip 5% in the last three months. Meanwhile, sales of its meals and beverages rose 6%, mainly driven by Rao’s pasta sauces and soup sales in the United States.
While consumers’ outlooks have improved somewhat in recent weeks, many remain deeply pessimistic about the direction of the economy under President Donald Trump’s ever-shifting trade war and are looking for bargains.
Households continue to “focus their spending on products that help them stretch their food budgets, and they’re increasingly intentional about their discretionary snack purchases,” Beekhuizen told Campbell’s investors on its earnings call.
“Snacks are losing ground as consumers, squeezed by inflation, shift spending toward essentials and more purposeful food choices,” analysts at the market research firm NIQ wrote in a recent note. “The era of indulgent, impulsive snacking is giving way to a demand for value, quality, and health.”
In a recent NIQ survey, 42% of consumers reported buying snacks less, and 37% said they’re searching harder for deals. Many indicated they’ve been thinking twice about pricier name-brand snacks, opting instead for more generic alternatives at convenience stores or those sold under supermarkets’ own private labels.
The tightening snack market has seen some friction, with Oreo maker Mondelēz recently suing Aldi, alleging the supermarket operator had “blatantly” mimicked some of its packaging designs for cheaper riffs on iconic snack brands.
While Mondelēz says snack demand remains sturdy, PepsiCo — which makes Lay’s and Doritos chips — has said it’s finding success catering to customers at lower price points. “Relative to where we were three months ago, we probably aren’t feeling as good about the consumer now as we were a few months ago,” PepsiCo CFO Jamie Caulfield said in April. The snack foods giant also lowered its financial forecast for the year.
Food shoppers’ hunt for value is also boosting Dollar General, which Tuesday increased its sales outlook for the year and said it picked up market share in food products. The dollar store operator notched those gains even as other retail giants, such as Target, that sell groceries have struggled to lure budget-conscious shoppers.
The growing focus on home cooking comes as costs of dining out are rising nearly twice as fast as grocery prices. Meals out were up 3.9% in April from a year earlier, federal data show, while at-home food prices rose just 2% over the same period, slower than inflation overall.
That divergence helps explain why many restaurant chains are seeing weaker sales. McDonald’s last month reported its biggest same-store sales decline since the pandemic, with that measure falling 3.6% during the first quarter. Darden Restaurants, which owns Olive Garden, also flagged weaker-than-expected sales around the start of the year, and Chipotle reported its same-store sales contracted for the first time since 2020.
McDonald’s CEO Chris Kempczinski said all but its most affluent diners are increasingly staying away from the burger chain, despite the past year’s efforts to counter its earlier menu price hikes with value meals. Traffic from low-income consumers was down “nearly double digits” compared to a year ago, with middle-income diners’ visits slowing “nearly as much,” he said.
Kempczinski said the split illustrated a “divided” economy in which moderately and less well-off consumers “are being weighed down by the cumulative impact of inflation and heightened anxiety about the economic outlook.”
In the meantime, restaurant operators are doing what they can to try to juice sales. Some are leaning into customers’ growing appetite for chicken, refreshing their locations with sleek new looks, or both.
These efforts could prove an uphill battle against the grocery aisle, where the costs of some key purchases, like eggs, are finally easing. But there are still signs of strain at supermarket checkouts as shoppers adjust to higher overall costs for many of the fridge and pantry basics they can’t easily do without. More shoppers are both financing their grocery purchases with installment loans and falling behind on those bills, a recent LendingTree survey found.
One such “buy now, pay later” service, Klarna, said recently that its borrowers are having a tougher time clearing their debts on the platform. Months earlier, the company became Walmart’s exclusive BNPL provider and teamed up with DoorDash to offer installment loans for takeout meals.
