Campbell's Comfort Stock

Amid Monday's market meltdown, just one stock among the Fortune 500 showed a gain: Campbell's Soup.

Some news accounts noted that Campbell's also did well during the last big market drop, in the period after the September 11 attacks when, as Reuters put it this week, "consumers' fear of another attack led many to hunker down."

It was more than just fear, actually. The media made way too much of the country's collective decision stay at home more, spend more time among family, and give more attention to what is "really important." But the retreat to homey pleasures was a real (though short-lived) phenomenon, and what's more homey and safe than a nice bowl of cream of mushroom soup?

There may be something similar going on now, as fears of an economic meltdown make people feel increasingly insecure and in want of simple pleasures. But there is a more powerful, if more prosaic, reason for Campbell's rise, which continued through Tuesday's bounce and Wednesday's anxious volatility: Campbell's is not only a comfort food, but a comfort stock.

People are eating at home more and are spending less on food—trends that began well before the recent market scares. On Sept. 11 (coincidence?) Campbell's reported that earnings had risen 46 percent. And as the year had progressed, people were turning more and more to soup. Campbell's U.S. soup sales were down early in the year, but up 6 percent in its fiscal fourth quarter. The company, like everybody, is faced with higher ingredient costs, but those are relatively easy to pass along to consumers for a low-priced item like soup.

And it's not just soup. Campbell's is well positioned to prosper in a down economy with its other comfort foods, which include brands such as V-8 and Pepperidge Farm.

CEO Douglas Conant was asked about that during a conference call with analysts. He chose to downplay the overarching economic forces that are sending customers his way, and to emphasize the company's own initiatives.

"Anecdotally we're seeing traction for the category and for our business," he said, "but I must say a lot of it is driven by the innovation we're bringing to the category."

Which is fair enough. The company has introduced successful new products under its Select Harvest brand and elsewhere. And it may seem a bit superficial for Conant to cite, as he did, the company's new "gravity-fed shelving systems" as a reason for the successful quarter, but such initiatives do boost sales.

Soup may enjoy a natural advantage in a turbulent economy, but it takes a nimble, well-managed company to prosper in such times.

(Campbells soup image by jeltovski/morguefile.com)