What's going on?

Shares of Campbell Soup, the world�s biggest soup maker, fell more than 8% on Thursday after it reported that sales in its latest quarter fell short of Wall Street�s expectations. It�s the latest sign that �packaged foods� companies are struggling.

What does this mean?

Campbell Soup isn�t just a soup company. It also sells other packaged foods � such as Prego pasta sauces and Goldfish snacks. It�s problematic for packaged food companies that people are becoming increasingly attracted to fresh food, and that sales of food that comes in cans are struggling to grow. Last quarter was the 11th straight quarter that Campbell Soups� revenue declined. Not yum!

Why should I care?

The bigger picture: The packaged foods industry, overall, is struggling.

Competitors like General Mills are also feeling the pinch. The combination of changing tastes (towards fresh food) and new shopping behaviors (like home delivery of meal kits or other fresh ingredients) is putting pressure on sales of traditional packaged foods. The competitive nature of the grocery industry isn�t helping as major grocery stores consistently push their suppliers, like Campbell Soup, to keep the cost of their products down (and Amazon�s acquisition of Whole Foods and subsequent price cuts are likely to make it even more competitive).


For markets: Campbell Soup is also struggling to deliver on its �fresh� initiatives.

Campbell Soup is well aware that the trend is against its traditional products and is focused on shifting its offering to �fresher� and �healthier� options (which currently make up about 15% of sales). However, it�s struggling to deliver on growing this side of its business: fresh sales only grew 1% over the past year. Partly in response to this slow growth, it recently spent $700 million to purchase Pacific Foods, a �natural foods� soup company (Pacific Foods will officially be incorporated into Campbell Soups soon). But, based on Thursday�s evidence, Campbell Soup remains behind the curve.