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, Slim Jim, and Van Camp's. It is also one of the biggest producers of potato and vegetable products, as well as seasoning and grain ingredients for the US food service, food manufacturing, and industrial markets. ConAgra Foods became the nation's largest purveyor of private-label food brands in 2013 when it acquired Ralcorp Holdings.
ConAgra's business is divided into four reporting segments: Consumer Foods, Commercial Foods, Ralcorp Food Group, and Ralcorp Frozen Bakery Products.
The Consumer Foods segment, which generates 59% 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 33% of sales.
The company began reporting two additional segments since acquiring Ralcorp.
Ralcorp Food Group segment includes private-brand food products that are sold in a variety of retail and foodservice channels, primarily in North America. Helping to generate about 6% of sales, these products include cereal products, pasta, and snacks, sauces, and spreads.
Accounting for 2% of sales, Ralcorp Frozen Bakery Products houses private-brand frozen bakery products that are also sold through retail and food service channels, primarily in North America. The segment's primary products include: frozen griddle products, including pancakes, waffles, and French toast; frozen biscuits and other frozen pre-baked products, such as breads and rolls; and frozen and refrigerated dough products.
ConAgra operates primarily in the US. Beyond the US, no specific country or geographic region is significant to its business.
Sales and Marketing
Wal-Mart, ConAgra's largest customer, has accounted for 17% of sales for both 2013 and 2012. In recent years, ConAgra is spending more on advertising and promotion expenses, which totaled $474 million and $364 million in 2013 and 2012, respectively.
In fiscal 2013 (ends May) ConAgra posted a 16% increase in net sales due to rising net sales in both the Consumer Foods and Commercial Foods segments and the 2013 acquisition of Ralcorp. Among the largest segment, Consumer Foods, ConAgra attributes the boost to an 8% increase in net pricing and mix. Net income during the same reporting period rose 65%, thanks to the net sales increase offset in part by the rising cost of goods sold.
ConAgra looks to grow through acquisitions to reinvigorate the name-brand business and move company into the private-label food business. To that end, ConAgra in 2013 acquired Ralcorp, the nation's #1 maker of private-label food. 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.
In 2013 ConAgra formed a joint flour-milling venture with Cargill and farmer-owned cooperative CHS. The three partners are combining their flour-milling operations to form Ardent Mills, the largest flour miller in North America, with annual sales of more than $4 billion. ConAgra and Cargill each own 44% of the newly-formed company, while CHS holds 12%. (ConAgra and Cargill have been told to sell four flour mills to resolve claims by the US Justice Department that their joint venture is anticompetitive and will result in higher flour prices.)
Mergers, Acquisitions and Divestments
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 foods 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. In 2013 the company sold its small Lightlife Foods brand of vegetarian burgers, hotdogs, and other meatless frozen and refrigerated items to Brynwood Partners.