“Our game plan for the year was to grow share, stabilize volume and grow profit. We’re delivering on that” and planning three more ways to grow sales, Tom McGough, president of the firm’s Consumer Foods segment, said during the firm’s third quarter earnings call March 26. He noted the segment’s operating profits are up 5% to $282 million in the quarter and they have improved in the last two quarters as well.
In addition, the segment is making progress on topline with share gains and volume that is holding steady, added CEO Gary Rodkin.
Despite these successes, net sales in consumer foods fell 2% to $1.8 billion in the quarter compared to the same time last year due to flat volume, a 1% decline in the price mix and a 1% drop due to foreign exchange rates, McGough acknowledged.
“While this is a challenging environment, there is growth in our industry” and the consumer foods segment intends to capitalize on the trends driving growth in the long term by improving channel distribution, being more transparent and authentic and being more convenient, McGough said.
1: Evolving channel distribution
The company is “already redirecting investment to faster growing retail channels and that strategy is working. We’re now outpacing the growth rate in club, dollar and convenient channels” where consumers increasingly shop for food, McGough said.
ConAgra will continue investing in these evolving channels to secure “at least a fair share of growth in the stronger channel and these stronger performing channels on an ongoing basis,” he added.
2: Increased transparency
The firm also is addressing consumers desire for more transparency by moving to all natural protein and no artificial ingredients in its Healthy Choice and Simply Steamers brands, which have “hit the sweet spot of what consumers desire,” McGough said.
He added that other brands in the company’s portfolio, such as Heinz Tomatoes, already "epitomize simple and wholesome" foods that consumers now want.
3: Increased convenience
Finally, McGough said that ConAgra’s consumer foods segment is making its products more convenient with improved packaging and market positioning.
For example, it re-positioned its P.F. Chang’s product line to create a complete meal option by marketing new appetizers and side dishes that launched in the fall with meals and rice together, McGough said, adding the change “has had very good results so far.”
Other gains in the frozen aisle include extending ConAgra’s leadership in frozen single-serving meals with ongoing sales of Marie Callender’s meals. Reddi-wip also became the No.1 selling whipped topping in the frozen and refrigerated segments, McGough said.
This drop in marketing spend was one reason profits were up for the quarter even though sales for the segment were down.
Overall, the company’s net sales for the quarter reached $3.9 billion, about 2% lower than the same time last year. The earnings per share also fell $223 verses an increase of 52 cents per share in the year ago period.