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Food Firms Cook Up Ways To Combat Rare Sales Slump
By Julie Jargon
21 April 2009
The Wall Street Journal
In the last quarter of 2008, consumer spending on food fell by an inflation-adjusted 3.9% from the previous
quarter. A page-one article on food companies Tuesday gave the decline as 3.7%, which was an earlier
estimate from the Commerce Department.
(WSJ April 22, 2009)
CAMDEN, N.J. -- The packaged-food industry has long touted itself as recession-proof. Strapped consumers
are shattering that assumption, setting off a frenzy in the nation's supermarket aisles and cooking labs.
In the last quarter of 2008, consumer spending on food fell by an inflation-adjusted 3.7% from the previous
quarter -- its steepest drop in 62 years, the Commerce Department said. So, food giants are racing to adapt
to what they believe is a lasting shift in eating and shopping habits.
Kraft Foods Inc. recently launched an application for Apple's iPhone. Called the iFood Assistant, it allows
people to search for recipes and manage their shopping lists. Nestle SA is pushing hard its popular Lean
Cuisine frozen entrees, offering five for $10 in some stores. Campbell Soup Co. is creating more
sophisticated recipes that mimic restaurant offerings, such as Braised Beef with Shallots made with the
company's Swanson beef stock.
Food executives worry that shrunken nest eggs -- along with an overhang of home foreclosures, personal
bankruptcies and credit-card debt -- may cause shoppers to tighten the purse strings indefinitely.
A look inside Campbell's response shows how seriously the industry is taking the sales downshift. Last
summer, consumers were apprehensive about rising food and gas prices. Today, "they're worried about their
ability to support their families at all," said Charles Vila, who studies consumer behavior as Campbell's vice
president of consumer and customer insights. "That's a big transition in six months."
Denise Morrison, Campbell's president of North America soup, sauces and beverages, says the company is
girding for "a long-term shift" in consumer attitudes. "More than ever, understanding what consumers are
going through will inform our strategy."
The 140-year-old maker of condensed soups, V8 beverages and Pepperidge Farm cookies each year
interviews 50,000 consumers. With some, researchers visit homes to peek inside cabinets and refrigerators.
Researchers also go grocery shopping with consumers and attend dinner parties to understand how