ConAgra buys natural foods company

By Karen Willmer

- Last updated on GMT

Related tags Conagra Whole foods Organic food

ConAgra has expanded into the natural and organic markets with the
acquisition of Alexia Foods, the company announced yesterday.

US-based Alexia Foods manufactures natural and organic frozen potato chips, artisan breads, pizza snacks, and appetizers for natural, gourmet, club and grocery stores. Gary Rodkin, ConAgra's chief executive officer, said the purchase would help the company gain a bigger presence in the increasingly important natural and organic foods segment. With the organic sector predicted to surpass $86bn (€62bn) in sales by 2009, ConAgra is following other major companies in catering to consumers searching for more natural foods. "Recent outbreaks of food scares and heightened awareness of the health benefits of organically produced ingredients are thought to be behind the dramatic turn from unhealthy ingredients,"​ according to a report published this month by Global Industry Analysts. Established in 2002 by founder and chef Alex Dzieduszycki, the Alexia brand generates $35m (€25m) in annual sales, which are available at natural, gourmet, club and grocery stores, including Whole Foods and Sam's. The move into natural forms part of the ConAgra's strategy to expand its margins through new product introductions, particularly focusing on products marketed under its "Healthy Choice" brand. "A number of these products are already in the market and are generating favourable customer and consumer feedback that confirms the company's assessment of their potential,"​ ConAgra said in its quarterly report last month. ​The company said Alexia will benefit from ConAgra's marketing and operating infrastructure. Alexia will continue to operate from its existing offices in New York with the current staff, who will become ConAgra Foods employees. The organic food market within the US is growing, and according to Datamonitor's Productscan Online service, in 2006 alone there were approximately 1,200 launches of products labelled 'natural', nearly 600 'fresh' product launches and 560 'organic' products. The major push towards healthy living has been felt most dramatically in Europe and the US, with both countries holding 80 per cent of the overall world market. In the US, sales in the category are predicted to reach over $43bn (€31bn) by 2010. For the quarter ended 27 May, ConAgra's sales in its consumer foods segment were $1.6bn, a 3 per cent increase on the same quarter the previous year. However, this did not account for the peanut butter recall and the sales of a refrigerated pizza business, the company said. Sales for priority investment brands increased 2 per cent, representing approximately 75 per cent of total sales for the consumer foods segment. The food and ingredients segment represented 29 per cent of sales for fiscal year 2007, with sales of $913m for the quarter, 11 per cent ahead of last year. The segment focuses on sales of specialty potato and milled grain products for the food services.

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