Category Archives: soup

Absence of Discounts Confirms Tomato Soup Inflation

Campbell's Condensed Tomato Soup has long been our favorite way to visualize the effects of inflation over time in the U.S. economy. That's because the product is defined by its iconic packaging, a No. 1 size steel can that contains the same amount of condensed tomato soup as it did when the product was first introduced to the public in the late 1800s.

This relative stability in packaging however means Campbell Soup (NYSE: CPB) cannot hide the price increases is passes along to its customers through shrinkflation, which many other food producers exploit by keeping the same prices on their goods, but diminishing the amount of goods within them. When inflation drives up the costs of what they have to pay to make and transport their goods to consumers, Campbell's must increase their prices to compensate.

That's what's happening now. Campbell Soup has confirmed it is increasing prices across its product lines:

Get ready to add a few dollars to your monthly canned soup budget, because thanks to rising supply chain costs, Campbell’s is planning to raise its prices. On Wednesday, Campbell’s announced its last-quarter earnings were weaker than the company had expected. Compared to the same time period last year, profits had fallen 5% to $160 million.

“Our results were impacted by a rising inflationary environment, short-term increases in supply chain costs, and some executional pressures,” said CEO Mark Clouse....

Clouse assured investors that the company is taking steps to recover from the slump, including a new pricing strategy, which will roll out over the current quarter (which ends in early August). Across the company portfolio Campbell’s net sales decreased 14% over the last quarter, so expect this pricing strategy to affect more than just canned soup—Swanson broth, Pop Secret popcorn, Cape Cod chips, Pace salsa, Snyder’s of Hanover pretzels, V8 juice, Prego tomato sauce, SpaghettiOs, and Pepperidge Farm are all owned by Campbell’s.

Whether or not you, personally, will be paying more for these products is yet to be seen. Though retailers will be paying more for Campbell’s products, it’s ultimately up to them whether or not to absorb the higher costs, or pass them onto consumers.

The markup between wholesale and retail prices give retailers some flexibility in how they might choose to pass their increased costs along to consumers. And that is where we can show how that works, because we've tracked the prices consumers have paid for Campbell's Condensed Tomato Soup since the product rolled out onto grocery store shelves in the late 1800s.

Unit Price per Can of Campbell's Condensed Tomato Soup at Discounted Sale Pricing, January 1898 - July 2021

For products like Campbell's Condensed Tomato Soup, retailers pass along their cost increases to consumers by offering fewer and smaller discounts. This marketing strategy lets them hold their shelf prices relatively stable, but only until inflationary pressures rise enough to force retailers to increase their shelf price. Once they do, their higher markups allow them to regain the ability to offer larger discounts.

You can see that dynamic playing out in this chart as prices have periodically stepped upward in 5 to 10 cent intervals since the U.S. government ended its failed attempt to stop inflation through price controls in 1974. As prices have risen, deep discounting becomes much less common and eventually the low prices consumers were once able to pay becomes a thing of the past.

In 2021, the price of Campbell's Condensed Tomato Soup is converging near a shelf price of $1.00 per 10.75 ounce can. In July 2021, the trailing twelve month average discounted sale price is $0.95 per can, which has fallen from a seasonal peak of $0.99 per can in December 2020 thanks largely to some unique pandemic-driven supply and demand dynamics. We think we'll start seeing higher retail shelf prices in the very near future to confirm the permanence of 2021's inflation.

Shrinkflation and a New Tool to Track Price Inflation in Real Time

Consumer prices are rising rapidly these days. Just last month, we found the discounted sale price of Campbell's Condensed Tomato Soup had risen to $0.96 per can, a rise of 13% above pre-pandemic levels.

One reason we track the price of Campbell's iconic tomato soup because the product itself has proven to be remarkably stable over time. If you stepped into a time machine and traveled back to nearly any point in time from January 1898 to the present, you could likely find the same 10.75 ounce size can of condensed tomato soup stocked for sale in American grocery stores.

That makes Campbell's iconic soup unlike other products, whose producers engage in a market tactic called shrinkflation, where they keep the sale prices the same, but shrink the size of the goods they sell. If the phrase sounds familiar, it is because the topic is increasingly popping up in the news.

There are lots of reasons for companies to engage in shrinkflation, but the end result is the same. You get less stuff for the same amount of spending. Whether its toilet paper, cat food, or packages of Hershey's chocolate kisses.

Things that don't change don't have that option. Unlike these other kinds of products, they cannot get away with shrinking the amount of goods inside their packaging. Because these goods cannot get smaller, producers are forced to pass along their higher costs from the escalating prices of the things they have to buy, which consumers see as rising prices. That difference makes these goods very useful for keeping track of how inflation is affecting your personal finances.

Speaking of which, keeping track of those price changes can be a time intensive activity. When we track Campbell's tomato soup prices, we review dozens of weekly ads to identify the prices at which retailers are selling them each time we update our database of monthly price data for the product. Our price database for Campbell's tomato soup extends back to January 1898.

With prices now escalating rapidly enough to become a regularly featured news topic, we were excited to find that Microsoft has introduced a new capability into its Edge web browser, which makes it easy to track the recent price history of products like Campbell's Condensed Tomato Soup. Here's the announcement from the rollout of Microsoft Edge's price history tracking capability:

Before making a purchase, I like to make sure that I’m getting the best deal possible. Because prices on certain items fluctuate over time, knowing when to buy can make all the difference. This is why I’m excited to share that, this month, Microsoft Edge is releasing a new feature called price history.  It shows me historical online prices to help me decide if I should wait a few days before making a purchase. To see an item’s price history, all you have to do is click on the blue tag in the address bar. Learn more about which retailers are supported. This is just another way we’re helping you save time and money.

In our case, it provides a very easy way to track recent price trends for our favorite inflation-tracking product! Here are two snapshots of what we found when we looked at its price history on 28 May 2021 and again, 10 days later, on 7 June 2021.

Shopping in Microsoft Edge: Campbell's Condensed Tomato Soup Price History, Snapshots on 28 May 2021 and 7 June 2021

Recognizing that we're looking at a limited sample of just three large retailers (Amazon, Wal-Mart, and Target), it's interesting to see the historical prices that MS Edge reports over the past month generally agree with what we've documented using our well-established tracking methods.

Obviously, there are more consumer goods than just Campbell's Tomato Soup to consider in assessing how fast inflation is growing in the U.S. At this writing, Microsoft Edge's price history tool pulls its data from products sold at eight large retailers, including Amazon, Wal-Mart, Etsy, Macy's, Nordstrom, Home Depot, Target, and Best Buy.

If you have Microsoft Edge, check out its price history tracking capability out for yourself by picking out a basket of goods and watching their price changes over time. If nothing else, you might get a very good idea of how today's inflation is directly affecting you and your quality of life.


Bonus update! Campbell Soup (NYSE: CPB) is reporting its previously projected profits will be negatively impacted by rising material and transportation costs. That confirmed upward cost pressure will make it less likely for significant discounting of tomato soup prices in the next several months, even as demand declines to its seasonal low.

The Pandemic Price Escalation of Campbell’s Tomato Soup

Campbell's Condensed Tomato Soup is an iconic American consumer good that's been around over 123 years. That means we have over 123 years worth of monthly price data on how much consumers have paid for a standard 10.75 ounce can whenever grocers have put it on sale on their store shelves.

But we're not going to revisit that whole history today. Instead, we're going to look at the price trends for Campbell's Tomato Soup since January 2000, where we really want to focus on the months of the Coronavirus Recession. The following chart shows the individual price per can and the trailing twelve month average Americans have paid for a can of Campbell's iconic soup from January 2000 through May 2021.

Unit Price per Can of Campbell's Condensed Tomato Soup at Discounted Sale Pricing, January 2000 - May 2021

Through May 2021, the trailing twelve month average of Campbell's condensed tomato soup has risen to $0.96 per can, up 13% from an average price of $0.86 per can in February 2020 (Month 0 for the coronavirus recession).

Much of that increase has been driven by higher demand, where retailers have been much less likely to discount their sale prices over the last 15 months. The only exception to that came in January and February 2021, when the second wave of the coronavirus pandemic in many parts of the U.S. prompted a temporary shift in consumer demand in favor of Campbell's Chicken Noodle Soup, which many believe helps relieve cold, flu, and COVID symptoms. That shift in consumer demand led to a relative oversupply of tomato soup on retailers' store shelves, which in turn, prompted them to discount their prices to sell relatively more tomato soup during these months.

With the decline in COVID cases since January 2021, that relative imbalance in consumer demand has ebbed. Discounted sales have ended, but sale prices for tomato soup remain elevated.

The potential for the escalated prices of tomato soup to continue is high, with higher inflation having taken hold in the U.S. in recent months. The test for that will come this summer as seasonal demand for tomato soup declines, where the absence of discounted sale pricing would effectively lock in the pandemic price increase.

Just for fun, we'll close by pointing to exactly where the price data in the chart during the coronavirus pandemic comes from! Follow the links below to see the advertisements from the indicated retailers seeking to sell Campbell's Condensed Tomato Soup during the months of the Coronavirus Pandemic Recession:

How Much SARS-CoV-2 Coronavirus Is There in the World?

What if you could collect all the particles of SARS-CoV-2 coronavirus there are in the world together in one place. How much space do you think it would occupy?

Mathematician Kit Yates ran a back-of-the-envelope calculation to find out, where the final result might surprise you. The basic math has been described in the following short video:

In U.S. terms, 160 milliliters is the equivalent of 5.4 fluid ounces, which would better fit in a 5.5 fl. oz. V-8 juice can, the smallest size container in which this particular product may be purchased! Or if you prefer to reference another popular Campbell's product, all the coronavirus in the world would fit in just about half of a single iconic 10.75 fluid ounce can of Campbell's Condensed Tomato Soup.

For our regular readers, if the name Kit Yates sounds familiar, it's because we've been linking to a BBC Four radio interview he gave in April 2020, in which he describes how back calculation may be used to identify the specific timing of events that have changed the trends for coronavirus infections. We've been employing that method as an integral part of our series exploring Arizona's experience during the coronavirus pandemic. In case you missed it, here is the previous entry in that series.

The Price of Campbell’s Tomato Soup in the Coronavirus Pandemic

The average discounted sale price of a Number 1 can of Campbell's Condensed Tomato Soup jumped 13 cents per can during 2020, rising from $0.86 to $0.99 from March through December as the coronavirus pandemic worked its way to, then through the U.S.

In essence, what happened is that increased consumer demand for Campbell's Tomato Soup during the pandemic led grocers to stop discounting their sale prices for the product as reflected in their weekly ads. Here's the latest update to our chart tracking the average discounted sale price of Campbell's iconic cans of tomato soup from January 1898 through January 2021.

Unit Price per Can of Campbell's Condensed Tomato Soup at Discounted Sale Pricing, January 1898 - January 2021

That situation may be starting to change in 2021, but in a way we think is very specifically attributable to the pandemic. In January 2021, we noted weekly ad circulars putting Campbell's tomato soup on sale at a 50% discount compared to their shelf pricing, with the 10.75-ounce cans carrying a unit price of 50 cents.

Winter months typically represent the peak season for purchases of Campbell's tomato soup, so these sales represent a very atypical event. We quickly found the reason for the discounts after visiting several grocery stores in a region that has been greatly affected by the winter surge in COVID-19 cases, where we found the coronavirus pandemic has prompted a shift in consumer demand:

Political Calculations: Relative Supply of Campbell's Condensed Tomato and Chicken Noodle Soups, January 2021

As you can see in the this picture, Campbell's Chicken Noodle is sold out, while there are ample supplies of Campbell's Tomato Soup. What this indicates is that consumers in this coronavirus-hit area have developed a strong preference for Chicken Noodle soup, which many perceive help relieve cold and flu symptoms.

The pandemic-influenced shift in consumer preference accounts for the relative oversupply of tomato soup with respect to chicken noodle soup, and thus, the atypical sale prices for Campbell's Tomato Soup at this point of the pandemic.

Altogether, all this means is that the pandemic has not changed the laws of supply and demand.