‘Table is set’ for growth at ConAgra Foods
OMAHA — Fiscal 2013 was a “successful and transformational year” for ConAgra Foods, Inc., as the Omaha-based company grew through both acquisition and strong performance in its core businesses, said Gary M. Rodkin, chief executive officer.
After introducing its “Recipe for Growth” roadmap as part of its 2012 annual report, Mr. Rodkin in the 2013 annual report released in late August said the most recent report, titled “The Table is Set,” is an apt descriptor for where ConAgra stands on delivering against five key areas: core/adjacencies, international, private brands, people and citizenship.
“In FY13, we took a big leap forward in delivering on those strategies,” Mr. Rodkin said in a letter to shareholders. “The acquisition of Ralcorp is a transformational move for our company, and a catalyst for our growth. Our Consumer Foods business successfully added the P.F. Chang’s and Bertolli frozen meal businesses to the portfolio, broadening our reach in the frozen aisle.”
Delving deeper into several of the company’s five growth strategies, Mr. Rodkin pointed to private brands as a substantial and sustainable growth opportunity for ConAgra.
“With the acquisition of Ralcorp complete, we’ve increased our annualized net sales of private brand products fourfold, making us the largest private brand food company in North America,” he said. “Having successfully integrated prior acquisitions of private brand nutrition bar, pretzel and pita chip businesses into our existing private brands capabilities, the addition of Ralcorp was a landmark step in transforming our private brands business.”
The first several months of ownership of Ralcorp have opened eyes for ConAgra executives, Mr. Rodkin said.
“Through our new, larger scale, we are better positioned when it comes to product sourcing and supply chain efficiencies,” he noted. “We’ve already begun to realize some of these synergies and expect to continue to identify additional sales-related opportunities as the integration progresses. We expect to achieve $300 million in annual cost savings by the end of FY17.”
Another focus area at ConAgra is “growing the core.” To that end, Mr. Rodkin said the company is leveraging the strengths of its portfolio and accelerating strategies related to innovation and marketing. He cited the integration of the Bertolli and P.F. Chang’s frozen meal businesses as an example of how the strategy is taking shape. The company currently is expanding its facility in Russellville, Ark., where the two brands are made.
“We’re excited to apply our transformational approach to innovation to these great brands, while taking advantage of opportunities to expand brand reach through strategic adjacencies such as desserts,” he said. “We’re applying what we’ve learned through the Marie Callender’s dessert pie business — where we’re driving category growth of 5% annually — to reach new consumers.”
ConAgra also succeeded in its goal of expanding internationally, Mr. Rodkin said. In the fiscal 2013 annual report, he noted that net sales of Act II popcorn increased 10% in the 13 weeks ended March 24, according to data from Information Resources, Inc., a Chicago-based market research firm.
“The brand underwent a package redesign and reformulation to address its value position in U.S. markets and premium position in international markets, applying successful strategies from Mexico throughout Latin America,” he said.
Two other international success stories were ConAgra’s affiliate, Agro Tech Foods, Ltd., in India, and Lamb Weston.
Agro Tech in fiscal 2013 launched peanut butter under the Sun Drop brand and is in the process of building a facility to locally produce the peanut butter in India. Meanwhile, ConAgra is expanding its Boardman, Ore., Lamb Weston facility to meet growing demand, especially from international markets. Mr. Rodkin said Lamb Weston sells to 2,500 customers in more than 100 countries, and in fiscal 2013 Lamb Weston’s international sales increased nearly 9%.
“We’re projecting continued, dynamic international growth in the future,” he said.