ConAgra to overhaul packaged foods portfolio

by Monica Watrous
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ConAgra Healthy Choice Simply Cafe Steamers, Peter Pan Simply Ground peanut butter
ConAgra recently unveiled Healthy Choice Simply Steamers frozen entrees and Peter Pan Simply Ground peanut butter made with simple ingredients.

OMAHA — ConAgra Foods, Inc. is transforming its portfolio of packaged foods to deliver on demand for healthier fare. Sean Connolly, CEO, said the Omaha-based company is planning innovation, strategic acquisitions and maybe even a divestiture or two. 

Sean Connolly, CEO of ConAgra Foods
Sean Connolly, CEO, ConAgra Foods

“Looking ahead, we believe we have further opportunity to refresh our consumer foods portfolio in a number of ways, including further premiumization and an enhanced focus on wellness and authenticity,” Connolly said during a Dec. 22 earnings call with financial analysts. “You can see examples of this kind of work in our portfolio right now.”

ConAgra recently unveiled Healthy Choice Simply Steamers frozen entrees, which Connolly described as a “clean label, lower carb version of our successful frozen Cafe Steamers line.” The company also introduced Peter Pan Simply Ground peanut butter made with simple ingredients, including roasted peanuts, sugar, vegetable oils and salt.

“And as you’ve heard us discuss before, within Hunt’s we’ve leveraged our flash steam peeling process that naturally peels tomatoes with steam, on Reddi-wip, with the emphasis on using real cream versus oil, and on Hebrew National, where our all beef hot dogs are free of fillers, byproducts and artificial colors and flavors,” Connolly said.

During the quarter, ConAgra restaged its Banquet brand of frozen meals to feature more premium products at higher price points. Changes include more protein and a shift to higher quality ingredients, including “100% natural chicken breast” and “real” cheese, cream, bacon and fruit.

Banquet frozen meals with real cheese and more meat
ConAgra restaged its Banquet brand of frozen meals to feature more premium products at higher price points.

“As expected, we experienced an elasticity effect on consumer demand tied to the new pricing and reduced trade promotion frequency,” Connolly said. “But we also launched a new consumer marketing campaign late in the quarter to introduce consumers to Banquet’s new value proposition. Not every consumer will transition with the brand because a few are only about price. But given the higher quality, we will attract new consumers to the franchise over time as well as improve the buying rate of brand loyalists.

“While it’s still early in the roll-out, we like the margin expansion we are seeing and this highly disciplined approach to margin expansion is one we feel good about and will methodically apply to other brands with similar opportunities.”

In addition to innovation, ConAgra is pursuing acquisition opportunities to further align with consumer trends. Earlier this year, the company acquired Blake’s All Natural Foods, a Concord, NH-based maker of natural and organic frozen meals.

“While small, it’s a good example of how we also aim to refresh the portfolio through new additions,” Connolly said.

Blake's All-Natural Foods frozen meals
Earlier this year, ConAgra acquired Blake’s All Natural Foods, a maker of natural and organic frozen meals.

The company is seeking to add more brands like Blake’s, he said.

“They tend to be faster growing,” Connolly said. “They tend to be margin accretive. The key is you’ve got to be disciplined in your pursuit of that. So we’re very clear-eyed on the strategy. We will be equally clear-eyed on the economics of these deals.”

ConAgra also may sell businesses that no longer fit within the company’s new strategic focus.

“Big picture, we are reshaping this portfolio,” Connolly said. “We’re reshaping it to be more contemporary, higher margin, higher performing and more consistent. And that will happen over time through a series of organic and inorganic actions, and clearly the tax asset is one of those tools we can leverage in this reshaping process. So there could be divestitures at some point.

“I won’t speculate on when that could happen. I’ll just say we will do what makes sense for the long-term value creation potential of the company.”

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