Hot soup wells are back in business, as COVID protocols have been essentially lifted, which is good news for supermarket delis.
Lynn, MA-based Kettle Cuisine has reported an upward shift in foodservice at retail and a shift moving some volume from cups to bulk. However, with more workers back in the office, retail cups are still performing well. The company also reports that higher end retailers are starting to bring back seasonal limited time offers that were on hold during the pandemic. Yet, ongoing supply chain challenges for unique materials have stymied LTO (limited time offer) items.
As of Nov. 1, 2022, year over year soups and chili are up more than 24% in the deli, according to the International Dairy Deli Bakery Association (IDDBA), Madison, WI.
“Return of soup bars and self-serve soups are still up 7.6% in the last quarter of 2022 and can be due to weather,” says Heather Prach, IDDBA’s education director. Month over month, deli soups are up more than 10%. “I’m seeing more soups being relevant in the deli, with more stores savvy in carrying soups and more options.”
IDDBA reports there is more grab-and-go soup, both branded and prepacked.
“People are visiting the deli for lunch, dinner and grab-and-go items,” Prach notes. “With people back in the office, convenience is key.”
Due to supply chain issues, the soup category has become about doing more with less.
“In years past, there was a push to bring in a wider variety of items, test new items or experiment with LTOs,” says Kettle Cuisine’s director of sales Paul Nazario. “[Today,] retailers would rather have fewer items on the shelf with consistent supply, rather than attempting to explore more niche items that could result in sourcing challenges.”
Current Environment
With consumers still seeking traditional and familiar options, comfort soups have remained at the forefront.
“It has always been the 80/20 rule with 80% traditional and 20% unique flavors), but the classics as in Broccoli & Cheese, Tomato and Potato and Bacon still are in high demand,” says Mary Shepard, director of sales/partner, Fortun Foods Inc.
In keeping with the latest trends in eating habits, Fortun Foods has expanded its vegan, plant-based soup line to include Thai Coconut Lime and African Sweet Potato & Kale.
Soups are trending, with consumer packaged goods fresh soup sales increasing 98.3% since 2016 and projected to grow another 55% between now and 2026, according to UK based market research firm Mintel.
“Soup has a healthy halo,” says Bob Sewall, chief customer officer/executive vice president sales & marketing, Blount Fine Foods, Fall River, MA. “It’s filling, and in tough economic times people look to soup as a meal replacement since it’s an affordable way to eat.”
Shelf space limitations are the biggest challenge, as real estate is limited in the deli.
“Many customers are putting in more grab-and-go fixtures in stores, and delis can’t get them in fast enough because inventory is low,” Sewall explains. “We’ve had intermittent ingredient issues due to supply chain disruptions but these weren’t as to the scale that they were in the last couple years. Labor is still tight in manufacturing and retail but people are adjusting around that.”
With soups averaging between 12 and15 ingredients, he says these blips are inevitable.
“Trucking, logistics and warehouses have challenges, but we’re working with customers to have plenty of product on hand,” Sewall says, adding that with a 70-day shelf life, Blount’s soups can withstand these delays.
Staples & Launches
Along with old favorites, soup companies are getting creative in launching new and on-trend flavors.
“We’re still seeing comfort varieties like chicken noodle, but also varieties with cultural influences like chicken tortilla soup,” Prach says.
Fortun Foods’ newest product is a robust, fresh Alaskan Seafood Chowder that, when cross merchandised with its New England Clam Chowder and Lobster Bisque, can establish a chowder bar destination.
“Staple deli soups for everyday include Tomato, Broccoli & Cheddar, New England Clam Chowder, Chicken Noodle and good hearty Kobe Beef Chili,” Shepard says, adding that supply chain issues have delayed certain ingredients, and competition in the soup segment remains strong.
“Global flavors, particularly Asian- and Mexican-inspired as well as vegetarian and plant-based soups are gaining placement across retailers,” says Mike Seeger, vice president of mass and club at Kettle Cuisine.
As for staples that should be offered daily, Nazario says Chicken Noodle, Tomato, Broccoli Cheddar, Potato and Chicken Tortilla soups are traditionally the top sellers across all segments.
“Retailers will typically add a chili, lobster bisque and/or clam chowder to this mix as additional core offerings,” he says.
Kettle Cuisine has experienced some supply challenges, with crops requiring substantial water due to the warmer temperatures.
“However, our procurement team has been able to pivot to other suppliers and find solutions quickly, avoiding any significant supply chain disruptions for our customers,” Seeger notes.
In addition, the company is contending with the same challenges as manufacturers in every segment.
“Trucking was a challenge earlier on during the pandemic, with the lack of drivers and the rising cost of diesel,” Nazario notes.
As for what’s new, Blount Fine Foods recently introduced new deli soups in 30-ounce bags and cups. These include Lasagna soup and Tailgate Chili. In addition to providing the convenience of bag in a cup packaging, the soups have a 105-day shelf life.
“We estimate 55% growth will come with these different brands and varieties, including Clam Shack, one of the best-selling brands, and Panera,” Sewall says.
Throughout COVID, the company focused on improving its recipes to be even more flavorful.
“For example, for our baked potato soup we added more cheese and bacon,” Sewall says. “During tough economic times, decadent and unique flavors and larger sizes sell well, since it’s a great way to eat healthy and stay on budget.
Marketing & Merchandising
With soup being a versatile food, there are a number of options to successfully market and merchandise these products.
Blount Fine Foods recently purchased a pot pie company and recommends cross merchandising this 30-ounce product with a 32-ounce soup for a family meal.
“Bundling as a family dinner is effective,” Sewall notes. “It gets more product in the basket [for higher register rings] and for customers they get a complete meal with soup and pot pie. In tough economic times, people are looking to eat affordably.”
Sewall says delis can cross merchandise by placing stickers on sandwiches and salads denoting soup discounts.
“Salads and soups are big for those eating at home,” he says.
The company recently rolled out new packaging in black, gold and green that pops on the shelf with photos that depict individual soup flavors.
“In addition to a chowder bar concept, offer higher quality soups that can be served hot or cold to go with the deli tubs,” Shepard at Fortun Foods recommends.
Instead of plastic tubs for soup, Fortun Foods offers a smaller pouch size for the consumer.
“This enables great sustainability efforts as well as a longer refrigerated shelf life, which leads to better integrity of the soups,” Shepard says.
Product placement is key with soup to get it in front of customers.
“We have seen retailers putting soup in multiple locations throughout the store, from prepared food to merchandising within the seafood and meat departments,” says Nazario at Kettle Cuisine. “Retailers are positioning in prime traffic areas, creating impulse buy opportunities as most consumers don’t know what they’re having for dinner as of four o’clock that day.”
Looking ahead, Shepard predicts concentrated soups will make a comeback.
“Retailers can add water or milk at the store level, call it Freshly Prepared Daily, and save half the freight weight,” she says. “Also, stores can add more fresh vegetables that keep their crunch – not sitting in liquid for weeks to months. This is a huge savings compared to RTE soups for foodservice (hot deli). I hear very often ‘but our staff can’t add water’ – but the staff can certainly make a sandwich or fry some chicken. The savings, quality, less packaging, less freight weight equals advantages and more profits.”
Seeger at Kettle Cuisine predicts continued solid growth as consumers look for healthy convenient ready to eat options.
“Soups cover all those needs, offer a wide variety of flavors and pair well with most center-of-the-plate entrées,” he says.
Blount’s Sewall agrees. “Soups fit any occasion. Sales are way up well over the COVID boom, and the segment is still growing,” he says.
