After skyrocketing commodities prices raised Campbell's input costs in mid-2008, the company was forced to raise consumer prices. As the recession takes its toll, however, Campbell will have a difficult time maintaining demand at the elevated prices. Consumers, looking to cut spending, will trade down to lower cost alternatives, such as private label foods offered by competitors like Wal-Mart. This could prompt a price war in which Campbell will have to lower prices in order to compete.
Campbell's other branches, such as Baking and Snacking, have had profit consistency problems in the past because of tough competition. The combination of low profits from its other branches as well as slow soup seasons could prove to be detrimental to Campbell's profits, as well as its image.
With 25-30% of its sales overseas, Campbell's will be hurt by the strengthening dollar. When the dollar grows in value relative to other currencies, consumers in other countries lose purchasing power for goods imported from the United States and buy less of them. Campbell's expects its sales growth rate in 2009 to decrease by 5% as a result of this. With overseas growth representing a major portion of Campbell's total sales growth, this could greatly slow the company's expansion.
Although Campbell's has released its Healthy Request low-sodium soups, Progresso has already done the same. Campbell's faces a marketing challenge attracting health-conscious consumers to its new style of soup.