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Campbell Soup sees stronger broth sales as interest in cooking grows

In this Wednesday, Jan. 8, 2014, photo, cans of Campbell's soup are photographed in Washington. Campbell Soup reported a higher quarterly profit on Friday, Feb. 14, 2014, as U.S. soup sales rose 5 percent. (AP Photo/J. David Ake)

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In this Wednesday, Jan. 8, 2014, photo, cans of Campbell's soup are photographed in Washington. Campbell Soup reported a higher quarterly profit on Friday, Feb. 14, 2014, as U.S. soup sales rose 5 percent. (AP Photo/J. David Ake)

NEW YORK, N.Y. - When people take an interest in cooking, broth sales apparently get a bump.

Campbell Soup has been struggling to boost sluggish sales of its famous condensed and ready-to-eat canned soups. But there is a bright spot in its U.S. soup division: broth.

The company on Friday reported a higher quarterly profit as U.S. soup sales rose 5 per cent. The bump was largely a quirk of the calendar, however; Thanksgiving fell later in the year, meaning the higher shipments associated with the holidays were pushed back to its fiscal second quarter.

In fact, Campbell said consumer purchases for its soup division were actually down 1 per cent in the period. People bought more of its Swanson broth, but that was offset by declines in purchases of its condensed and ready-to-eat soups.

In a call with analysts, Campbell CEO Denise Morrison noted that the growth in broths is being driven by "an increase in homemade soup behaviour" and people cooking more with broth in general.

Mark Alexander, president of Campbell North America, added in a phone interview that people often buy broth to make homemade soup, but start using it for other purposes over time. That could include boiling vegetables or making stir fries.

"Broth is for people for whom cooking is a big deal," Alexander said, noting that Campbell targets a customer it refers to as a "passionate kitchen master."

The growing interest in cooking is why Campbell recently introduced a line of flavoured broths, which let people make homemade dishes while greatly reducing the amount of work they have to do in the kitchen.

The strategy of catering to people's desire for both convenience and homemade meals can been seen in other parts of Campbell's portfolio. The company's new "Skillet" sauces, for instance, are positioned as a way to make a quick homemade dinner. All people have to do is add some vegetables and meat to the sauces, which come in flavours such as Green Thai Curry and Creamy Chipotle.

The packages are intended to appeal particularly to people in their 20s and 30s, a group referred to as Millennials by marketers. As Campbell's head of innovation Darren Serrao explained in 2012, "Their definition of cooking is different. Assembly is cooking."

Last fall, Campbell even introduced a "Why I Cook" marketing campaign for Swanson to encourage people to use broth in a variety of ways.

What the growth in broth and cooking means for canned soups isn't clear.

The latest quarter's 5 per cent sales increase for the soup division includes a 4 per cent increase for condensed soups, flat sales for ready-to-serve soups and a 21 per cent increase for broth.

But those results are a bit skewed by the timing of Thanksgiving. Results for the first half of the company's fiscal year paint a better picture of the trend:

—Sales of condensed soups are down 1 per cent.

—Sales of ready-to-serve soups such as Chunky are down 5 per cent.

—Broth sales are up 10 per cent.

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Follow Candice Choi at www.twitter.com/candicechoi

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