The news: Campbell’s expects profits to hit a 17-year low this fiscal year as it struggles to get shoppers interested in its snacks, soups, and sauces.

• The company forecast earnings per share of $2.15 to $2.25, a sharp decrease from its prior estimate of $2.40 to $2.55. That would be the lowest profit since 2009.
• Organic net sales are now expected to fall 1% to 2%, compared with previous expectations for between -1% to 1% growth.

The situation: While some pressures Campbell’s faces are outside its control—such as storm-related shipment delays, which delivered a 1% hit to sales in the previous quarter—the company’s biggest problem is its struggle to communicate a clear value proposition to shoppers.

• Pricing remains a challenge, which Campbell’s hopes to address with a “surgical” promotional strategy that helps narrow the gap with competitors like PepsiCo that have been visibly aggressive on lowering prices.
• Innovation is also lagging, which is limiting interest in Campbell’s salty snacks as competitors lean into new flavors, better-for-you formulations, and premium products.

The implications: Campbell’s woes underscore weakening loyalty to name brands. Nearly two-thirds (62%) of grocery shoppers trust the quality of private label foods as much as name brands, according to a February Ibotta survey. As a result, national brands’ share of grocery sales is diminishing as more shoppers see private labels as viable—and even desirable—alternatives, a trend which is being amplified by retailers’ investments to premiumize and expand their own brands.

To avoid falling further behind, foodmakers like Campbell’s need a healthy pipeline of innovation to maintain an edge over private labels and entice shoppers to buy. Sharper pricing strategies can help prevent competitors from stealing shelf space and consumers’ attention.