Key Note Media Centre
Soup Market Both Hot and Cold
According to Soup Market 2012, a new report from market intelligence provider Key Note, the UK soup industry appears to have done well for itself in 2011, experiencing 10% value growth to be worth £562m.This, combined with the fact that consumers in the UK are increasingly eating soups, indicates that the market is hot. However, value sales and profit for many manufacturers are down, denoting a cold market. The Key Note report reveals that this is because soup manufacturers are being squeezed between rising food and commodity prices and the pressure from supermarkets and fellow manufacturers to keep prices low, in order to compete in the saturated market.
Key Note divides the industry into three principle categories: wet ambient soup, fresh chilled soup and dry soup. Wet ambient soups make up the bulk and are currently experiencing positive value growth. The return of Campbell's soups to retail shelves, the increasing use of microwavable and plastic pots and the growing emphasis on the 'healthy content' of the soups have contributed to this. The demand for fresh chilled soup is rising, as these are viewed as the healthiest option and fulfil consumers' desire for quality lunchtime and seasonal soups. However, the brand leader in this category, the New Covent Garden Food Company, is not reaping the benefits of these trends, as it is facing heavy competition from premium, British brands and supermarkets' own products. The dry soup category has struggled recently, due to the perception that these soups are the least healthy. This has resulted in significant innovation in 2011 to reignite demand. Introducing new products has worked well for Heinz, as the sales of its revolutionary Squeeze and Stir soups soared, indicating that new product development (NPD) is the way forward for manufacturers in the industry.
The soup market in the UK is ambiguous. The fact that consumers are spending an increasing amount of their household expenditure on soups and that the market enjoys a penetration of over 82.3% is favourable for the industry and points towards the market being robust. Moreover, consumers are familiar with the major brands, meaning the industry is well-established. Brand names used to bring value to a manufacturer and were seen an asset, since they guaranteed a certain level of quality. However, the Key Note report suggests that brand names are now actually weighing manufacturers down, as supermarkets are offering their own value and premium brands, but at a lower price. Considering the present market conditions, consumers are increasingly browsing the aisles for the best bargains, willing to break consumer loyalty. In response, manufacturers are engaging in active promotions and this is taking its toll on corporate profit and not necessarily preventing a fall in volume sales for certain brands.
Expanding value growth is not all positive for this industry; the future outlook is of a simmering market, growing colder with time, as food and commodity prices continue to rise and price battles wage on. These trends will continue to push down manufacturers' profit. The Key Note Soup Market 2012 report predicts that market growth with slow over the next 5 years and expects the market will hit £710m by 2016.
Press enquiries: Jack Sykes at Key Note at firstname.lastname@example.org or 0845 504 0452. Press/review copies of the report are available on request.