Taste, cost beat health in prepared-food market: report

Consumers are ditching lower-fat and -salt prepared foods, like Campbell Soup's Select Harvest and other reformulated lines, in favor of cheaper, fattier, saltier meals like Kraft General Foods Inc.'s Tombstone pizzas, ConAgra's Banquet frozen chicken dinners, and boxed macaroni and cheese, which offer better "value and taste," measured in dollars per calorie, complains veteran food-company analyst Jonathan Feeney, of Janney Capital Markets, in a report to clients today.

Are U.S. consumers hypocrites, talking about healthy hearts but buying to fill their greedy bellies? "It's not that people aren't concerned about health and wellness," Feeney told me. "But society cares more about taste." Especially now, when workers' need to keep their jobs, pay their debts, or sell  their homes in a tough market loom as "bigger problems," or more immediate, than blood pressure or obesity.

Noting that Campbell has steadily cut salt content since 2006, Feeney posts data showing "other simple meal categories with superior value credentials have accelerated over the exact time soup has decelerated." In past years "cold weather lifts soup demand," but since 2006 canned soup consumption has mostly fallen, due in part to "less relative concern among consumers on sodium and wellness more broadly."

How do you measure "less relative concern"? Feeney ran a simple search for news stories referencing "low sodium", and found they rose steadily, more than doubling in the mostly prosperous years 1995-2008, to more than 8,000 stories, before plunging below 6,500 last year.

Citing industry data, Feeney writes that consumers are "buying more private label, trading down to cheaper alternatives, seeking out promotions," for foods that, "despite being less healthy, have seen a robust response in consumer demand, leaving soup in the dust... An emphasis on the health and wellness benefits of soup could be the culprit."

So food giants like Kraft and ConAgra are selling more low-cost meals. "Looking at the calories and the price per calorie of chicken-friend chicken, the dollar Banquet frozen meals, you can't beat that for value," he told me. "It's got sodium. It's got fat. Until not too long ago, it would have been looked at by investors as off track. But now, people are thinking, 'For a buck I can get through a meal, two times, three times a week, and I'll enjoy it.'"

For how long? Feeney knows the Center for Disease Control and Prevention and the Food and Drug Administration are pushing to cut salt in processed food - and may push for power to do it by fiat. But for now, Campbell's is still a lot more profitable than most of its rivals - which means higher sales would make it much more attractive to investors. Feeney figures Campbell "can and will orient its portfolio more toward what is working today," boosting popular, less healthy, saltier and fattier soups, at least until the government cracks down, or tastes evolve.

"Consumers are trying to eat better and take better care of themselves," said Campbell spokesman Anthony Sanzio. Kraft, too, has lately "made announcements in the sodium landscape," as has Pepsico. "We're ahead of the trend."