(Reuters) -Campbell Soup Co on Thursday warned it expects customers to feel a bigger pinch from price rises in the coming year and that its older consumers were shunning its soups and broths for cheaper store-brand alternatives amid a rise in cost of living.
Shares of the more than 150-year-old U.S. company fell about 6% after it also forecast full-year profit largely below estimates on supply chain snags and soaring costs.
Demand had held up so far in the face of multiple price increases on everything from cookies to beef jerky by packaged food makers looking to insulate their margins from higher costs of labor, ingredients and transportation.
The increasing prices, along with higher borrowing costs, have now squashed household budgets and forced a shift to more affordable private-label alternatives.
“We’ve been very focused on which consumers are trading down within soup, and they tend to be our baby boomer consumers, who historically are a bit more sensitive to price gaps,” Chief Executive Mark Clouse said.
Campbell picked out its condensed soup and broth among the products hardest hit by market share losses.
Campbell, which reported fourth-quarter net sales and adjusted profit in line with estimates, has ramped up promotions to better compete with cheaper rivals.
“Investors (are) concerned that Campbell’s promo spending in snacks was a 4% headwind to the top line, by far the biggest number the segment has seen since FY ’16,” J. P. Morgan analyst Ken Goldman said.
The maker of Prego pasta sauces and Pepperidge Farm cookies expects fiscal 2023 adjusted earnings per share between $2.85 and $2.95, compared to expectations of $2.92, according to Refinitiv IBES data.
Net sales for the period is projected to grow between 4% and 6%, higher than estimate of a 2.7% rise.