ConAgra Foods Lamb Weston is a company for all seasons. In late October, for example, visitors at the company’s Pasco, Wash., french fry plant can see a receiving room full of potatoes - the last fall crop from fields throughout the Columbia Basin. Later, it will be time for Pasco and other potato operations to draw winter stocks from raw material storage houses.
No matter what the time of year, it’s always a prime growing season - in business terms - at Lamb Weston’s sales and marketing office in Eagle, Idaho. During the past three years this ConAgra Foods subsidiary has completed five major transactions (acquisitions or joint ventures) and one 85,000-square-foot plant addition.
For the record, the 59-year-old business is a leading global player in french fries and other potato products with 20 plants in the United States, Canada, Europe and South America. Moreover, this billion dollar-plus business posted a double-digit increase in net sales during its last fiscal year ended May 25, 2008.
“Lamb Weston is our biggest brand,” noted ConAgra Chief Executive Officer Gary Rodkin, in the company’s 2008 annual report. “Lamb Weston led an outstanding year for our Food and Ingredients segment, with segment operating profit increasing 17.7 percent and top-line sales growing 20.7 percent. At roughly one-third of our food-only portfolio’s 2008 sales, the top- and bottom-line impact of this business continues to be important.”
Interestingly, this performance stands out against a darker industry backdrop of dramatic increases and instability in fuel, raw material and ingredient costs. A recessionary economy also has cooled sales in the more upscale restaurant sector, a core market for Lamb Weston.
Suffice it to say that it hasn’t been “business as usual” inside Lamb Weston.
“The biggest issue on everybody’s mind today is inflation,” admits Lamb Weston President Jeff DeLapp. “Being this close to the point of production on the agriculture side of the food business, inflation in some ways is a reflection of the cost of growing a crop. It’s a big deal. It tests everything: your brand strength, your customer relationships, your engineering team and their ability to compensate for inflationary effects. The amplitude and number of inflationary impacts is so big that I don’t think anybody in the food industry has been able to completely accommodate it.”
He continues, “You have to look at your business model and say, ‘Do we have the right customer relationships?’ ‘Can we be more strategic with our customers and our input providers?’ In a way, it has helped us redefine our business model. We have become more strategic both at the customer level and the input level, which is a great thing. The food industry has been so cyclical for so long, you could be a player without a strategy. I don’t think that’s the case today.”
DeLapp also credits publicly traded parent ConAgra Foods, Omaha, Neb., for its continuing investment.
“The support of ConAgra’s leadership has been ongoing and we have a constant connection,” he says. “Gary [Rodkin] is a great businessman and has been a quick study of what we’ve been doing. He sensed that our vision is viable and has supported our strategic push.”
To that end, DeLapp has emphasized (1) product innovation, particularly involving entirely new product platforms and better-for-you offerings; (2) expanded processing capacity as well as new capabilities; and (3) a deeper, more diversified executive team.
“While we can’t sacrifice the focus on our core business and our ability to service customers, there’s a new dialogue and it’s based on the future and what we do to position ourselves for that future,” says DeLapp. “We benefit from the fact that the average salaried employee has 15 years of experience. Meanwhile, people in new positions are contributing as well. The teamwork that this requires is easy to talk about but hard to ‘do.’ Yet I already can say that this has been successful based on the quality of ideas coming out.”
Never before has Lamb Weston’s leadership team included so many faces from outside the potato business. These include new officials in R&D (see sidebar, p. 14), consumer insights and marketing.
Twenty-three-year food industry veteran Andy Johnston joined the company in August 2007 as vice president of marketing.
“The complexity of this business is changing quickly and you need to be able to react,” says Johnston. “However, you also need to be thoughtful in your approach. This is a big business now and - while we don’t want to lose its entrepreneurial spirit - there is a need for greater discipline because the stakes are higher.
“We’re bringing more marketing discipline to our approach but not to the detriment of what’s made us successful in the past,” he continues. “It’s an evolution and not a revolution. My group is taking the lead in identifying trends and new product opportunities. Then, we’re working with R&D and the sales organization to make sure we’re delivering products and support tools that are relevant to customer needs.”
For that matter, DeLapp says customer needs contributed to Lamb Weston’s purchase of potato plants in Boardman, Ore., and Prosser, Wash., as well as a joint venture potato processing deal with Ochoa Foods’ potato plant in Warden, Wash. Last February, Lamb also purchased Watts Brothers, a Kennewick, Wash., processor of frozen vegetables and organic dairy products. Watts Bros. also has significant agricultural farming interests.
“We are in an ensured supply model - meaning that customers cannot run out of french fries,” says DeLapp. “Knowing that we have these requirements, we realized that it’s not just a matter of capacity on the manufacturing side but capacity in the raw material side as well.
“Growers have other options today that weren’t there yesterday,” he continues. “So having access to the crop - to the potato pile itself - was key to an acquisition such as Watts Bros. That deal also meant having more manufacturing capacity in the Columbia Basin, which is one of the most consistent growing areas. Expanding the [operations] footprint is key to our ensured supply model and is strategic, as well, to support business growth in the Pacific Rim.”
It’s important to note that Watts Bros. gives Lamb Weston a new production competency - frozen vegetables - and expands the company’s product development platform.
It’s here that DeLapp picks up the product development theme.
“If I’m an operator seeing inflation run through my cost side - just raising my menu prices is not clever marketing,” he says. “I need to change the value perception of the meal and redefine what I mean to my customer. During times of inflation or adversity of any type, the best marketers will be the ones who win.
“For us, innovation has to lead any sales opportunity or we can’t drive the agenda. We’re using consumer insights and showing our customers new and interesting products that help them drive the bottom line. And we want to do it fast. It’s terrible to see restaurants go out of business.”
Johnston says Lamb Weston has pushed new product innovation across two major platforms: flavorful appetizers and better-for-you potato products.
Building on its core broad line of frozen potato offerings (french fries to mashed and everything in between), in 2008 Lamb Weston completed the conversion of its entire product line to zero grams trans fat. In 2006, it launched its “My Fries” product, a premium, full-flavor fry made with a proprietary “i3 advantage” coating to deliver 25 percent less fat.
This year Lamb introduced Alexia all-natural and organic potato offerings (borrowing on the popular Alexia Foods retail business) and expanded its Sweet Things sweet potato line (currently nine SKUs) with medium-thick crinkle cut french fries, sweet potato “chips” and mildly seasoned battered dices. Nutritionists say sweet potatoes are naturally fat free, high in fiber and rich in beta-carotene, potassium and vitamin C.
“Sweet potatoes are a little adventurous and different - and their popularity, in new formats like fries and chips, is really growing; even among consumers that don’t think they like sweet potatoes,” says Johnston. “Most importantly they have a health halo as one of the ‘super foods.’ We’ve done extensive research to understand the market and have brought our technology and innovation to bear in this other potato category.”
Lamb Weston also has concentrated those resources toward its ever-expanding Tantalizers appetizer portfolio. This year it launched four new varieties of Stuffed Spudz chopped-and-formed potato bites; and World Rings, a line of four flavorful breaded onion rings.
Actually, flavor is the driving theme across both lines. New Stuffed Spudz offerings are Broccoli & Cheese, Chipotle Cheddar, Fully Loaded Potato (including smoked cheddar, sour cream, butter and chives) and Country Biscuit & Gravy. Another product, World Rings onion rings, comes in such varieties as Baja Lime (chili pepper and lime), Island Breeze (coconut curry), Tandoori (Indian spice) and Steakhouse Peppercorn (cracked black pepper).
“Our consumer insights show us that the consumer palette is becoming much more sophisticated in terms of flavors and ingredients,” says Johnston. “Their food ‘I.Q.’ is quite high and there’s growing demand for bold flavors.”
It’s here that Johnston reflects on the company’s progress.
“Lamb Weston has been good at new products for a long time. But today, customers expect more. When we meet with key customers, we try to take a holistic look at their business - going beyond simply looking at the categories we play in. The goal is to bring them fact-based ideas that are actionable within their operations. This approach goes a long way in establishing lasting partnerships.
“When we’re talking about what’s going on in a customer’s business at every level, there’s a different level of credibility. Given today’s environment, the smart operators are saying, ‘Which suppliers can I turn to for meaningful insights and support?’ We are really stepping up our efforts in this area and it’s paying off.”
At a glance: ConAgra Foods Lamb WestonHeadquarters: Eagle, Idaho and Tri-Cities, Wash.
Top executive: Jeffery DeLapp, president
Annual sales: More than $1 billion
Products: Frozen potatoes, appetizers, vegetables
Profile: F. Gilbert Lamb founded the Weston, Ore., business in 1950 as a frozen vegetable processor. Lamb invented a water gun knife in 1960 and - the following year - began processing potatoes. ConAgra Foods Inc., Omaha, Neb., purchased Lamb-Weston in 1988. Today, ConAgra Foods Lamb Weston is a leading global supplier of frozen potatoes, appetizers and vegetables with 20 plants in the United States, Canada, Europe and South America.
Appetizers: On the front line of changeThe numbers say it all and Mark Hayden knows it. Lamb Weston has 47 years of potato processing experience versus just five in appetizers.
Even so, Hayden, Lamb Weston’s senior vice president of supply chain management and distributor sales, won’t back down in any sales call.
“People ask about why we’re getting into appetizers. We’re not doing this as just a line extension,” he says. “We believe we can innovate this category to drive new consumption, new volume and better margins for our operators. We want to keep the industry healthy.”
Case in point. Hayden says Lamb Weston’s new World Rings are the first batter-breaded onion rings to keep their eye appeal - and especially their bold flavor even after frying (which typically volatizes flavors). Likewise, Lamb Weston is promoting Stuffed Spudz, a line that mixes unique combinations of cheeses, diced potatoes, chopped vegetables and seasonings into bite-sized shapes.
“The response we’re getting to both products has been tremendous,” says Hayden. “It’s exciting to show we can be relevant and deliver innovation in places where we’re not normally recognized.”
Did you know?Lamb Weston produces all the potato and sweet potato products for ConAgra’s Alexia Foods retail brand. These offerings are all natural, trans fat-free and some also are organic.
Lamb Weston is extending the all-natural Alexia brand into the foodservice channel.
Lamb Weston has its own small retail line of Inland Valley frozen french fry and specialty potato products and is a leading supplier of retail private label frozen potatoes.
Prior to its acquisition by ConAgra Foods Lamb Weston, Watts Brothers, Kennewick, Wash., already was supplying ConAgra Frozen Foods with frozen vegetables for Banquet, Healthy Choice and Marie Callender’s prepared meals and entrees. ConAgra Foods also owns industrial flour supplier ConAgra Mills; and Gilroy Foods & Flavors, a supplier of industrial vegetables (including pureed, dehydrated, controlled moisture, fire-roasted and grilled varieties), seasonings and flavor systems.
Company on the growConAgra Foods Lamb Weston grows through acquisitions, joint ventures and expansions.
October 2008– Expands into South America through “strategic partnership” with Unisur Alimentos Ltda., a frozen french fry and dehydrated potato processor in Llanquihue, Chile.
August 2008– Establishes 50/50 joint venture with Ochoa Foods, Boise, Idaho, to operate Ochoa’s potato processing plant in Warden, Wash.
February 2008– Purchases Watts Brothers, a diversified Kennewick, Wash., processor of frozen vegetables and organic dairy products. Included are Watts Bros.’ cold storage, fertilizer, packaging and agricultural farming businesses.
October 2007– Completes 85,000-square-foot addition (with two appetizer lines) to its Pasco, Wash., plant.
September 2007– Purchases Twin City Foods’ potato processing plant in Prosser, Wash.
July 2006– Purchases Logan International Ltd. potato plant in Boardman, Ore.