MW People are turning to Campbell's as they cook more at home. But they're shying away from its snack brands. Here's why.

By Bill Peters

'The snacks division 'has been negatively impacted by consumers cutting back on discretionary purchases, and, in our view, growing usage of GLP-1s,' TD Cowen analysts say

In the first half of 2023, Campbell's Co. executives were bragging about sales growth in the company's snacks division, helped in no small part by higher prices and its Goldfish crackers brand, which benefited from new flavors and popularity among teenagers. Last year, even as trends shifted, they said Goldfish had crossed $1 billion in sales, as consumers gobbled up new offerings like Goldfish Crisps.

But after Campbell's $(CPB)$ third-fiscal-quarter results on Monday, analysts now say the company's snacks division - home to Goldfish - is holding it back, as anxieties related to tariffs and inflation wear down consumers and more people gravitate toward weight-loss drugs.

"Though we view [Campbell's] as having solid snacking brands, the category continues to struggle to find the right value price points for consumers to feel that snacking, a more discretionary purchase, is 'worth it,' " BofA analysts said in a note on Tuesday.

After grocery prices jumped in 2022, some executives said there were signs that customers were still willing to spend on snacks. Starbucks Corp. $(SBUX)$ said coffee was an "affordable luxury." But more recently companies like PepsiCo Inc. $(PEP)$ - which makes drinks and snacks including the Pepsi, Mountain Dew, Doritos and Ruffles brands - cited greater pessimism about the state of the consumer.

Executives at Campbell's - known for its namesake soup, as well as such supermarket staples as Prego pasta sauce - said on Monday that the current economic backdrop had led to the highest level of meals cooked at home since early in the first pandemic year, 2020.

They also said that shoppers were buying more ingredients that helped "stretch tighter food budgets," as shoppers navigate higher costs of living. But they said that while cheaper options remained important, customers were still willing to "selectively splurge" on healthier options.

But executives cited tougher competition for Campbell's snacks division and said they expected a "slower-than-anticipated recovery" in the category. As a result, they said they expected full-fiscal-year adjusted earnings to come in at the low end of their prior forecasts. While sales overall were up 4% during Campbell's third quarter, they were down 8% in snacks, as lower sales for Goldfish and Snyder's pretzels weighed.

"Condensed soup, broth, and pasta sauce have benefited from consumers cooking more at home from scratch and stretching their meals," TD Cowen analysts said in a note on Monday. However, the Cowen team added, the snacks division "has been negatively impacted by consumers cutting back on discretionary purchases, and, in our view, growing usage of GLP-1s."

Campbell's management, according to the Cowen analysts, said they have "more work to do" to reinvigorate the Goldfish brand.

Executives, during Campbell's earnings call, said "reduced overall consumer sentiment" had hurt consumption of the crackers it makes. That decline, they said, "was partially driven by lapping the significantly supported Goldfish Crisps launch in the prior year, which peaked in Q3."

"While there were bright spots within Goldfish, especially related to the Harry Potter Butterbeer limited-time offering, we have more work to do to reinvigorate this brand and get it back on its historical growth trajectory," Chief Executive Mick Beekhuizen said during the call.

"We plan to focus on core relevancy through marketing support, strategic promotional activity, and the critical back-to-school season," he continued.

Management said retaliatory tariffs from Canada and U.S. tariffs on the aluminum and tin it uses for soup and beverage cans could also ding profits.

Shares of Campbell's were up 0.2% on Tuesday. Over the past 12 months, the stock has fallen 22.3%.

-Bill Peters

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June 03, 2025 15:24 ET (19:24 GMT)

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