ConAgra Foods fills the refrigerators, freezers, and pantries of most households. The company produces name-brand packaged and frozen foods. Sold in retail outlets of all kind, ConAgra's cornucopia of America's best-known brands includes Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hunt's, Marie Callender, Orville Redenbacher's, PAM, Peter Pan, Slim Jim, and Van Camp's. It is also one of the larger manufacturers of potato and vegetable products, and seasoning and grain ingredients for the US foodservice, food manufacturing, and industrial markets. ConAgra Foods became the nation's largest purveyor of private-label food brands with its purchase of Ralcorp Holdings in 2013.
ConAgra's business is divided between Consumer Foods and Commercial Foods. The Consumer Foods segment, which generates more than 60% of sales, consists of branded, private label, and custom-made food products. The lineup ranges from meals to side dishes, snacks, and desserts (found frozen, refrigerated, or at shelf-stable temp.), and is sold by a variety of retailers and some foodservice operators, mainly in North America. Remaining sales are driven by ConAgra's Commercial Foods segment, comprising commercially branded food products and ingredients used in the kitchens of food manufacturers, as well as foodservice and industrial customers.
ConAgra operates primarily in the US. Beyond the US, no country or geographic region is significant to its business.
Sales & Marketing
Wal-Mart, ConAgra's largest customer, accounted for 17% and 18% of sales in 2012 and 2011, respectively.
In fiscal 2012 (ends May) ConAgra posted an earnings five-year low, dropping roughly 43% over the prior year, on about an 8% uptick in year-over-year sales. The top line, which marked a record high, combined a 5% increase in sales over 2011 in its Consumer Foods segment and a 14% jump in sales in Commercial Foods. ConAgra has raised its prices on its products to counter increasingly higher material costs (for grain, and other commodities) but, despite the contribution from acquisitions, has suffered a slump in volume sales for certain less competitive consumer brands. By contrast, during the year Commercial Foods was fueled by improved demand and pricing for Lamb Weston brand potato products.
ConAgra's disappointing earnings reflects a struggle to shrink its cost structure. The company has incurred a host of charges associated with write-offs, restructuring its Consumer Foods segment, coupled with acquisitions, divestitures, discontinued operations, and settlements, to name a few.
ConAgra's strategy of growth through acquisition aims to reinvigorate the name-brand business, and move into the private-label food business in a big way. To that end, ConAgra Foods in 2013 acquired Ralcorp, the #1 maker of private label food in the US. Previously, the food giant in mid-2012 paid $267 million to acquire the Bertolli and P.F. Chang's Home Menu frozen meals lines from Unilever, including the license for both brand names. The deal followed ConAgra's purchase of Kangaroo Brands' pita chip business. ConAgra also acquired Odom's Tennessee Pride, the #2 producer of frozen breakfast sandwiches in the US.
Mergers & Acquisitions
ConAgra acquired Ralcorp (on its second try) in January 2013 in a deal valued at about $6.8 billion (including debt). The combined company is expected to generate $18 billion in sales, and will make ConAgra the largest private brand packaged food business in North America, with annual private brand sales of about $4.5 billion a year. Ralcorp makes private-label ready-to-eat cereals, cereal bars, snack mixes, cookies, crackers, and other products for retailers under their own brand names.
In 2012 ConAgra bought Toronto-based Del Monte Canada (DMC) from an affiliate of Sun Capital Partners. The move bolstered ConAgra's tomato and vegetable offerings, and added packaged fruit and fruit snacks to its portfolio. In another snack attack, ConAgra took over National Pretzel Company, a maker of private-label pretzels.
ConAgra also in late 2011 increased its stake in India's Agro Tech Foods to 52%. Agro Tech markets food and food ingredients to both consumers and institutional customers, giving ConAgra a dual foothold in a developing country.
ConAgra expanded its branded frozen foods and dessert lineup in mid-2011. The company bought Marie Callender Pie Shops brand from restaurateur Perkins & Marie Callender's for $57 million. The deal was announced a day after Perkins and Marie Callender's filed for Chapter 11 bankruptcy protection. ConAgra, which had been a Marie Callender's licensee since 1994, cited the label was its second-largest after Banquet. As part of the purchase, ConAgra issued a license allowing the Marie Callender's banner at restaurants.
Retailer reluctance to give slow-selling brands shelf space spurred ConAgra in 2011 to sell its frozen handheld snacks business to J & J Snack Foods. – less