Category Archives: soup

Upward Price Pressure at the Start of Soup Season

On 6 October 2021, we took snapshots of the sale prices of the iconic 10.75 oz can of Campbell's Condensed Tomato Soup at several major grocers around the United States. Shoppers are seeing upward price pressure in the first week of soup season in the U.S.

That pressure is most visible at Amazon, which we've presented in the following screen shot along with Microsoft Edge's records of its recent price history at the online retailer:

Amazon: Campbell's Condensed Tomato Soup (10.75 oz) on 6 October 2021

Here's a summary of prices at other retailers, ranked from high to low:

If you happen to live near one of the 248 Meijer grocery stores in Wisconsin, Illinois, Indiana, Kentucky, Michigan, or Ohio, you should move quickly this week to take advantage of the chain's sale on Campbell's Condensed Tomato Soup, where they've discounted the price from the $1.09 we indicated above to just $0.79 per can from Sunday, 10 October 2021 through Saturday, 16 October 2021.

You should also know it's not just Campbell Soup's prices that are seeing upward price pressure. Consumer prices for food products will be rising across many producers, including ConAgra, Kraft Heinz, and PepsiCo, to name just three major food producers in the U.S. who have announced more price hikes are coming for their products in since the start of October 2021.

Update: As of this morning, Amazon has dropped their price of Campbell's Condensed Tomato Soup to $0.95 per can. Amazing what a little visibility can do! But really, the question is how long will that price last?

The S&P 500 and Campbell’s Tomato Soup

Longtime readers know our two favorite data series are the price histories for an iconic No. 1 can of Campbell's Condensed Tomato Soup and for the S&P 500 stock market index. We're tapping both of them today to answer a burning question we had: How many cans of Campbell's tomato soup could a hypothetical investor in the S&P 500 buy if they cashed in the equivalent of one share of the index.

We're presenting the graphical answer to that question below, where we find that as of the index' all-time record highs in early September 2021, our hypothetical index investor could buy 4,752 cans of tomato soup!

Number of Cans of Campbell's Condensed Tomato Soup per Value of One Share of the S&P 500, January 1898 - September 2021

Expressed a little differently, that's the same as 198 cases of 24 cans each.

Compare that quantity to January 1898, when Campbell's condensed tomato soup first began being shipped across the country. We find the equivalent value of a share of the S&P 500 (actually an an index made up of its predecessor individual stock components) would have bought 46 cans, or rather, just under 2 cases worth of soup.

Now, which would you rather have in your investment portfolio or pantry today: one equivalent share of the S&P 500 or 198 cases of Campbell's condensed tomato soup?

Cases of Campbell's Condensed Tomato Soup

The S&P 500 and Campbell’s Tomato Soup

Longtime readers know our two favorite data series are the price histories for an iconic No. 1 can of Campbell's Condensed Tomato Soup and for the S&P 500 stock market index. We're tapping both of them today to answer a burning question we had: How many cans of Campbell's tomato soup could a hypothetical investor in the S&P 500 buy if they cashed in the equivalent of one share of the index.

We're presenting the graphical answer to that question below, where we find that as of the index' all-time record highs in early September 2021, our hypothetical index investor could buy 4,752 cans of tomato soup!

Number of Cans of Campbell's Condensed Tomato Soup per Value of One Share of the S&P 500, January 1898 - September 2021

Expressed a little differently, that's the same as 198 cases of 24 cans each.

Compare that quantity to January 1898, when Campbell's condensed tomato soup first began being shipped across the country. We find the equivalent value of a share of the S&P 500 (actually an an index made up of its predecessor individual stock components) would have bought 46 cans, or rather, just under 2 cases worth of soup.

Now, which would you rather have in your investment portfolio or pantry today: one equivalent share of the S&P 500 or 198 cases of Campbell's condensed tomato soup?

Cases of Campbell's Condensed Tomato Soup

The Ship of Theseus and Campbell’s Tomato Soup

When we talk about Campbell's Tomato Soup, we often refer to it as a product that hasn't much changed since it was first introduced to American consumers in 1897. But like the metaphorical Ship of Theseus, just about every aspect of the iconic product has been changed over the decades the product has existed. The recipe. The tomatoes. The can. The can's lining.

And also its iconic label, which has just been in the news because its basic design is being changed for the first time in 50 years. Campbell Soup (NYSE: CPB) posted the video announcement of the change on Twitter:

The company described the changes to its label in a press release:

Maintaining the famed red and white color blocking loved by generations, the redesigned Campbell’s label features several new elements to contemporize the brand while respecting its heritage — including a modernized logo scripture, which was based on founder Joseph Campbell’s original signature. Campbell’s fans will be able to spot more hidden elements, including the Campbell’s ‘C’ in the fleur de lis and slanted ‘O’ in soup that pays tribute to the letters from the first red and white label in 1898.

“We’ve been on a journey to reimagine this iconic brand and appeal to new generations of consumers who are cooking at home more than ever, while still honoring our rich history,” says Linda Lee, Chief Marketing Officer, Meals & Beverages, Campbell Soup Company.

What Lee doesn't mention is the 2021 changes in the label will help Campbell Soup save money on printing labels, reducing the complexity of the printing process it has been using during the past five decades. It's a seemingly small change that when multiplied by millions of cans produced per year, will produce significant savings, partially offsetting the inflation in other production and transportation costs Campbell Soup is coping with in 2021.

But only partially, since those other rising costs are larger. What the change means is that the price for consumers will rise more slowly than it otherwise would have had Campbell's not adapted the design of its labels.

Speaking of producing millions of cans of soup per year, we'll close with a 2019 video of Campbell Soup's labelling and palletizing line #3 at its Toronto facility in action.

Producing soup has changed too. At the time the video was posted, Campbell Soup was seeking to sell the featured production equipment.

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 it 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.