Selling soup in China, Russia takes culture shift

Russia and China, where the company launched sales nearly a year ago, slurp a combined 350 billion servings of soup each year--but almost all of it is made from scratch at home.

So instead of asking cooks to scrap their homestyle traditions, the company is trying something more modest: broths that give time-pressed families a head start on a homemade meal.

"The idea of getting them to change their habits completely is a bigger challenge than just getting them to try a new product," said Alton Stump, an analyst who follows Campbell for Longbow Research.

The company learned from an early 1990s foray into condensed soup sales in China that flopped, since the product was so, well, foreign. In that effort, Campbell's had the faulty assumption that because Americans like soups like its cream of mushroom, so would Chinese buyers.

Campbell's went into the markets this time only after doing lots of research and carefully tailoring its offerings with the broths.

In Russia, its ads use a figure known as a domovoi, a household guardian spirit, in an attempt to lend some authenticity. In the Moscow area, the company uses its familiar red-and white-color scheme with the Domashnaya Klassika, or Home Classics, line of broths with chunks of chicken, beef and mushrooms.

Campbell entered China's Guangdong province with Swanson-brand broths that have been sold for more than two decades in Hong Kong.

Western companies are staking out the two nations' booming consumer markets. Russia's retail sector has been expanding 25 percent to 30 percent annually for the past five years and is expected to reach $532 billion in 2009, said Ulyana Tipsina, an analyst at Moscow-based Renaissance Capital investment bank. In China, retail sales growth accelerated to a new decade-high level in July, up 23.3 percent over the same month last year, according to the National Bureau of Statistics.

In both countries, Campbell's is relying on in-store demonstrations, TV commercials and free samples. In Russia, company spokesman Anthony Sanzio said, there have been a million in-store demonstrations.