Food & Beverage

Campbell Soup is increasing production to prepare for coronavirus demand

Key Points
  • Campbell Soup is increasing production in certain areas to address demand for its soup amid the coronavirus outbreak.
  • Consumers have been stockpiling canned soup and other shelf-stable foods as more cases of the disease are reported in the U.S., according to market research firms. 
  • Campbell's noticed an uptick in demand from both online and brick-and-mortar retailers over the weekend.
Q2 sales not impacted by coronavirus, but by successful holiday season: Campbell Soup CEO
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Q2 sales not impacted by coronavirus, but by successful holiday season: Campbell Soup CEO

Campbell Soup CEO Mark Clouse said Wednesday that the company is increasing soup production in response to the coronavirus outbreak.

"We made the decision last week to up production in certain areas where we're using a little bit the analogy of weather or natural disasters," Clouse said on CNBC's "Closing Bell." "Where do we see demand coming in a greater rate? And we've upped that level of production to be able to maximize our inventory to be prepared for whatever unfolds here."

Consumers, particularly those closest to virus clusters, have been stockpiling canned soup and other shelf-stable foods as more cases of the disease are reported in the U.S. Hand sanitizer and cleaning supplies have also seen their sales surge, presenting a problem for grocery stores and other retailers, who may be unprepared by the sudden swing in demand.

Clouse said the company has been talking with some retailers to better understand what demand could look like. Campbell's noticed an uptick in demand from both online and brick-and-mortar retailers over the weekend, but Clouse said it was still too early to call it a trend.

The food company is also preparing to prevent any supply chain interruptions for products such as Goldfish crackers and Milano cookies. Only about 10% of its products are sourced outside of the U.S., with less than 2% in China. Campbell's is trying to find alternative sources or ingredients where possible, according to Clouse.

Campbell's stock, which has a market value of $15.9 billion, closed Wednesday up 10% after its second-quarter earnings topped estimates and it raised its full-year outlook. Shares have been given a lift in recent days as investors forecast increased demand for its soup due to the outbreak.