ConAgra Foods fills the refrigerators, freezers, and pantries of most households. The company makes and markets name-brand packaged and frozen foods that are sold in most retail outlets. 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, Reddi-Wip, Slim Jim, Snack Pack, and Van Camp's. It is also one of the biggest producers of seasoning and grain ingredients for the US food service, food manufacturing, and industrial markets. ConAgra Foods sold its private-label food business to TreeHouse Foods for $2.7 billion in February 2016.
ConAgra's business is divided into three reporting segments: Consumer Foods, Commercial Foods, and Private Brands.
The Consumer Foods segment, which generates more than 45% 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 temperature), and is sold by a variety of retailers and some food service operators, mainly in North America.
ConAgra's Commercial Foods segment comprises commercially branded food products and ingredients used in the kitchens of food manufacturers, as well as food service and industrial customers. The segment brings in nearly 30% of sales.
ConAgra Foods sold its Private Brands segment to TreeHouse Foods for $2.7 billion in February 2016. After acquiring Ralcorp, the company had established its rapidly growing Private Brands segment, which generated about 25% of sales. The segment produced private branded and customized food items (cereal, condiments, baked goods, etc.) which are sold in a variety of retail and foodservice channels, primarily in North America.
ConAgra operates mainly in the US from more than 30 domestic manufacturing facilities across states mostly in the Midwestern, Sunbelt, and New England regions. It has international manufacturing facilities in Argentina, Austria, Canada, Mexico, the Netherlands, and the UK. ConAgra also operates general offices in China, Colombia, Italy, Japan, Mexico, the Netherlands, Panama, Puerto Rico, and Singapore.
Sales and Marketing
Wal-Mart, ConAgra's largest customer, accounted for 18% and 19% of sales during fiscal 2015 (ended May) and FY2014, respectively. Beyond its physical retail channels, the company also operates ReadySetEat.com, an interactive recipe website.
ConAgra spent $344.2 million on advertising and promotion in FY2015, significantly less than the $414 million and $463.4 million it spent in FY2014 and FY2013, respectively.
Note: ConAgra's FY2014 financials were restated in FY2015. The figures below are not restated.
ConAgra's revenues have been trending steadily higher over the past five years thanks to key acquisitions (particularly its Private-Brand-related acquisition of Ralcorp in 2013) and growth in the company's Commercial Foods business.
The company's business reversed course in fiscal 2015 (ended May) however, with revenue falling by 11% to $15.83 billion mostly as its Private Brands division shrank on weak volumes stemming from an "intense" bidding environment and "executional challenges." ConAgra's Consumer Foods sales also decreased due to unfavorable foreign exchange rates and higher prices (stemming from higher commodity costs during the year). Offsetting some of this top-line loss, the company's Commercial Foods net sales improved thanks to higher domestic sales volumes in the Lamb Weston specialty potato product lines and growth in the company's Food Services business.
Lower sales combined with higher commodity and sales, general, and administrative costs caused ConAgra's bottom line to continue its downward trend in FY2015, with the company suffering a net loss of $252.6 million for the year. Conagra's operating cash levels also dipped slightly to $1.48 billion mostly due to lower earnings.
ConAgra has been known to revamp or sell less-profitable lines of business, with particular focus on its Private Brands business in recent years. With a focus on recovery and stabilization during FY2015, for example, the company announced its plans to exit the Private Brands business after disappointing results from the restructuring of its Ralcorp operations through its Supply Chain and Administrative Efficiency Plan (SCAE Plan), which aimed to optimize supply chain networks and slash costs across its selling, general, and administrative operations and through productivity improvements. Indeed, by February 2016, fellow food company TreeHouse Foods paid $2.7 billion cash for its Private Brands business.
Shortly thereafter, ConAgra announced a separation into two companies: ConAgra Brands and Lamb Weston. ConAgra Brands will include the companies well-known food names Chef Boyardee, Healthy Choice, ROTEL, Hunt's, PAM, Slim Jim, and Marie Callender's as well as other businesses like the seasoning and ingredients lines. Lamb Weston will spin off and take the frozen potato, sweet potato, appetizer, and vegetable products with it.
In 2014, ConAgra sold snack business Medallion Foods for $32 million, while in 2013 it sold its small Lightlife Foods brand of vegetarian burgers, hotdogs, and other meatless frozen and refrigerated items to Brynwood Partners.
The company often enters joint venture partnerships to efficiently expand its product lines and geographic market reach. In 2014, ConAgra partnered with Cargill to distribute its ACT II microwave popcorn and Hunt's condiments products across Brazil. That year ConAgra also formed a joint flour-milling venture with Cargill and farmer-owned cooperative CHS. The three partners combined their flour-milling operations to form Ardent Mills, the largest flour miller in North America, with annual sales of more than $4 billion.
Mergers and Acquisitions
In May 2015, ConAgra expanded its Consumer Foods product line with the purchase of family-owned Blake's All Natural Foods, which specialized in natural and organic frozen meals such as pot pies, casseroles, and pasta dishes. The deal also positioned ConAgra to seize the fast-growing organic and natural foods consumer markets.
In July 2014, the company further broadened its Consumer Foods line with its acquisition of China-based TaiMei Potato Industry Limited, which processed frozen potato products.
In September 2013, it purchased the frozen dessert producer business of Harlan Bakeries, which made frozen fruit pies, cream pies, pastry shells, and loaf cakes.
In early 2013, ConAgra acquired Ralcorp, the nation's #1 maker of private-label food, in a deal valued at about $6.8 billion (including debt). The combined company was expected to generate $18 billion in sales, and made ConAgra the largest private-brand packaged foods business in North America, with annual private brand sales of about $4.5 billion a year. The private brands segment makes private-label ready-to-eat cereals, cereal bars, snack mixes, cookies, crackers, and other products for retailers under their own brand names.
Previously, it had acquired Bertolli and P.F. Chang's Home Menu frozen meals lines, the Kangaroo Brands line of pita chips, and Odom's Tennessee Pride, the #2 producer of frozen breakfast sandwiches in the US. In the consumer foods segment, the company acquired frozen dessert production operations from Harlan Bakeries for $39.9 million in 2013.