ConAgra Foods' healthy choices
Before he left, you could say Bruce Rohde introduced a “new math” at ConAgra Foods Inc. It was addition by subtraction and – from 2002 through 2005 – the company’s former chairman and chief executive officer led ConAgra’s exit from such commodity-based businesses as fresh beef, pork and chicken, tuna and even agricultural crop inputs.
After he arrived in 2005, new Chief Executive Officer Gary Rodkin kept the same formula and he oversaw the divestitures of ConAgra’s $1 billion-plus refrigerated meats business, ham operations, seafood products and a commodity trading group.
Behind the scenes Rodkin was aligning ConAgra as one company solely focused on the business of food. In doing so, the Omaha, Neb.-based giant reorganized its former companies’ functions (R&D, packaging, marketing, operations, nutrition, etc.) into “Centers of Excellence” (COE) to serve the new ConAgra Foods and its remaining brands.
Meanwhile this CPG veteran (joining ConAgra from PepsiCo.) worked to “rewire” ConAgra from the inside. From 2006 to 2008, Rodkin spoke of creating a culture around three operating principles: simplicity, accountability and collaboration. Through this, the company could leverage its strength and build upon a portfolio of iconic American brands.
Was ConAgra’s new culture taking root? It was still somewhat hard to tell while the company struggled with skyrocketing input costs during most of fiscal 2008. Yet during fiscal 2009 ended May 31, 2009, ConAgra posted an annual 10 percent net sales increase (to $12.7 billion), an annual operating profit increase of nearly 15 percent and an annual increase of more than 30 percent in earnings per share.
In the company’s annual report, Rodkin called out ConAgra’s retail frozen food portfolio – a $2 billion - plus business with Healthy Choice, Marie Callender’s, Banquet and Kid Cuisine – as a rallying point.
“… Following the success of Café Steamers, we reinvented the entire Healthy Choice brand with new products, new packaging and new marketing. That reinvention was a key element of the transformation of our entire frozen foods portfolio.
“We were losing share in this category but now we are taking it back with the intent of regaining more. The frozen meals category – a large and profitable one for us and our customers – is one where we’ll build on our strength. Every day, consumers already buy more than 3 million packages of our frozen food off retailer shelves. With that kind of loyalty and further industry-leading innovation – we’re going to keep them coming back for more.”
How did ConAgra do it? How will the company continue to do it? John Hanson is president of ConAgra’s Frozen Convenience Meals business, which includes the company’s retail frozen food brands. In an interview with Refrigerated & Frozen Foods, Hanson talks about Gary Rodkin’s new math.
“We work much more effectively than we used to,” he says. “In the brand team today, you are still responsible for brand growth strategy, delivering profit and loss reports, business integration and execution. But instead of doing everything yourself, you now have the highly capable resources in the COE personnel on your team that are aligned against the same objectives.
“I think a good example of this in action is our recent work on Healthy Choice,” he continues. “That was a total cross-functional team approach to understanding the consumer and re-designing the positioning, products, packaging, advertising and then flawlessly executing the re-stage with our customers to grow the brand and the category. This is a good example of a collaboration model in which one plus one equals three. Now, all parties involved bring their strong capabilities to the table and – by leveraging those combined capabilities – we’re getting great end results.
That would have been almost impossible to do in the old ConAgra Foods.”
To Hanson’s point, ConAgra Foods – and in particular, its frozen food business – has excelled and grown in every aspect of new product development, packaging, marketing and operations during the past year and a half.
It was for these reasons that R&FF is pleased to recognize ConAgra Foods as the magazine’s 2008-09 “Processor of the Year.”
“I am most proud of the fact that many of our brands continue to grow in sales and share, build the category and stay well-positioned for the future – all within an economy that has been the toughest in decades,” says Hanson. “ I credit our people with getting us there and their drive and commitment to make our ‘frozen transformation’ a success in the marketplace.
“I am very optimistic about the future as well. We will continue to improve how we work by making simplicity, accountability and collaboration a distinct way of life here. By doing this, we are only going to become even more effective.”
AT A GLANCE: ConAgra Foods Inc.
Overview: ConAgra Foods Inc., Omaha, Neb., is the name behind such brands as Healthy Choice, Chef Boyardee, Egg Beaters, Hebrew National, Hunt’s, Orville Redenbacher’s, PAM, and Banquet, among others. Its consumer brands are found in 97 percent of U.S. households and 26 are ranked first or second in their category.
Top executive: Gary Rodkin, CEO
FY ’09 sales: $12.7 billion
Frozen retail sales (estimate): $2.4 billion
Frozen brands: Healthy Choice, Marie Callender’s, Banquet, Kid Cuisine, Patio, La Choy, Banquet Brown ‘N Serve, Alexia
Frozen categories: Multi- and single-serve meals, entrees, appetizers, chicken, breakfast meats
Did you know: ConAgra Foods also has a significant presence in commercial food products and through Lamb-Weston, it is one of the nation’s leading specialty potato providers to restaurants and other foodservice establishments.
AAA performance ConAgra Foods’ 2008-09 retail frozen food awards, achievements and activities.
New products: Information Resources Inc.’s 2008 “New Product Pacesetter Award,” recognizing Healthy Choice Café Steamers’ first-year sales of $95 million between June 2007 and June 2008.
Packaging: Institute of Packaging Professionals’ 2008-09 Ameristar Award for Food Packaging, recognizing frozen tray use of post-recycled content.
Marketing: Ranked second in The Hub Top 12, an annual ranking of leading CPG marketers by in-the-field sales performance and support. The Hub, a best practices marketing journal, said ConAgra leaped seven spots – from a ninth place finish in 2008 to second place this year.
Operations: ConAgra expects by next spring to complete $92 million worth of capital improvements to its Russellville, Ark., retail frozen entree plant. The project will include a new production line as well as new equipment to produce such items as Healthy Choice Café Steamers and Marie Callender’s Pasta Al Dente meals.