SLIDESHOW: What's in store for Conagra Brands?
Oct. 24, 2016
by Keith Nunes
CHICAGO — Two central tenets of Conagra Brands’ go-to-market strategy following its spin-off from Lamb Weston is the development of actionable insights and their application to the company’s stable of brands. These efforts are designed to create added value through innovation, improve margins and drive sustainable and profitable growth. On Oct. 18, attendees to the company’s investor day saw some of the innovation flowing through the company’s new product pipeline and heard about the insights to support the ideas.
Darren Serrao, chief growth officer, said between 2012 and 2015 food retail dollar sales growth has hovered around 2 percent and that it has become weaker in the latest 52 weeks.
|Darren Serrao, chief growth officer for Conagra Brands
“Now while there is some sort of structural changes happening underneath here, such as a decline in consumption per capita as the population ages, we are also seeing some interaction in shifting from in-home to away-from-home, particularly in some dayparts such as breakfast,” he said.
But he emphasized that despite the changes, smaller companies in the industry are driving growth, with the top 25 consumer packaged goods companies driving less than 1 percent of the growth overall.
“While the smaller players, conversely, are driving 6 times that amount and almost two-thirds of the overall growth in the category,” he said. “Now as stunning as that is, it’s important to recognize that there is nothing structural happening here, but there is something that is systemic.
“You are seeing the smaller brands be able to be faster, more iterative. They recognize the opportunities quicker and they take advantage of them more quickly. And they iterate through that process. Perhaps more important than that, they are bringing much more relevant and modern food attributes to these categories.”
A challenge facing the company is to not only innovate, but do so at a pace that allows it to capitalize on new opportunities. Part of the solution, Sean Connolly, president and CEO, said, is to attack complexity throughout the entire organization.
“All (of) that gunk that has crept in over the years, you have to get it back out,” he said. “You also have to obsess over the front line. Are you really being objective around the way the consumer and the customer is looking at your products, vis-a-vis emerging companies, vis-a-vis your competitors? And internally, you have to instill an owner's mindset because being intolerant of waste makes sure that you can take every dollar and either invest it back in the business or return it to shareholders.”
Accelerating innovation also requires an understanding of the consumer landscape and where opportunities lie.
“When I grew up sitting down at the table for breakfast with the entire family and again at the end of the day for dinner was a very commonplace thing,” Serrao said. “Today, I can’t tell you the last time I sat down at the table for either breakfast or for dinner with the entire family. We’re eating at different times and at different rates, which changes the way we eat and what we expect from food and what we expect from the food that we eat.
“But when you dig into it a little bit further, you go a little bit deeper, the granularity of that depth of understanding reveals accessible growth, what we are calling pockets … You see $362 billion in value spread over 150 traditionally-defined categories and you can see the historical performance there hovered in between that 2 and 3 percentage points.”
By disaggregating the 150 categories, they then may be broken down into stock-keeping units and regrouped on the basis of what consumers see and the attributes in the food themselves.
“When you re-aggregate them you see hundreds of what we are calling growth pockets,” Serrao said. “Those growth pockets are fairly substantial in size.”
As an example, he said the company’s analysis showed the vegan attribute showing up inside many of the growth pockets.
“And when you looked at it through a traditional category lens, it might not pop up,” Serrao said. “In fact, if you did see it, you might ignore it and describe it as insignificant or too small to matter now; something we will get to longer term.
“But when you look at it through this kind of analysis and you look horizontally across food, you can see those kinds of attributes popping up again and again and again. When you look at it that way, I think it changes the way you think about that opportunity. You consider it much more of a portfolio opportunity across your business and one that should be leveraged. And you see the smaller brands doing just that.”