ConAgra Foods Inc. has undergone several transformations in its 94-year history. It was simply a grain miller, Nebraska Consolidated Mills, until 1971 when a visionary CEO charted a new course for the company, changed its name and began acquiring branded products. The new ConAgra defined the better-for-you products category when it created the Healthy Choice brand in 1988. With the acquisition earlier this year of Ralcorp, ConAgra Foods is transforming again, into the nation's largest private brand manufacturer – without neglecting the more than 45 brands that have brought it to this point.
When you consider CEO Gary Rodkin's vision for the company – "creating everyday food in extraordinary ways" – the new acquisition fits perfectly. Nothing fancy, just the everyday stuff. But done well.
It will be interesting to see how this new chapter in ConAgra Foods' life plays out. But that will take years. Rather than wait to see how it all settles, we decided to stop the clock at this juncture, to honor more of what ConAgra has been and to use that as the lens through which we peek at the evolving ConAgra. ConAgra Foods becomes our ninth Processor of the Year.
Evolving through acquisitions
Former CEO Mike Harper's brand-buying spree began in the 1970s and culminated in the acquisition of Beatrice Foods in 1990. That one deal doubled ConAgra's sales, making it a $17 billion company and brought the Hunt's, La Choy, Orville Redenbacher's, Snack Pack, Wesson, Swiss Miss and Reddi-wip brands. But ConAgra also became a disparate collection of brands and products ranging from meats to peanut butter and popcorn to frozen meals. The portfolio had mass but no unifying identity.
The current transformation appears to be the culmination of the plan brought in by Gary Rodkin when he joined the company as CEO in 2005. He had been chairman and CEO of PepsiCo Beverages and Foods North America.
"This was a diverse business with considerable untapped potential," Rodkin says of his first impressions. "There were a number of things going well, but those things were happening in particular areas, not necessarily across the entire company as a standard way of working. So the opportunity was to build one operating company and begin to leverage the scale of ConAgra Foods."
To leverage, yes, but also to focus. A year after Rodkin's arrival, the meat, seafood and cheese businesses were sold (including brands Armour, Butterball, Eckrich, Louis Kemp and Swissrose). A year after that, the trading and merchandising operations were jettisoned. In 2010, it was the Gilroy Foods & Flavors dehydrated and vegetable product operations.
On the other hand, there have been acquisitions. Key ones in Rodkin's tenure have been Lincoln Snacks, Alexia Foods and a number of private label manufacturers. In 2012, the company bought the popular P.F. Chang's Home Menu and Bertolli frozen meals businesses from Unilever, as well as Odom's Tennessee Pride in the growing frozen breakfast category.
"What we mean by 'creating everyday food in extraordinary ways' is that we make food that people trust and turn to each day," Rodkin continues. "Being able to provide food that is a true part of peoples' lives is privilege that we always need to work hard to uphold. Extraordinary ways refers to innovation, creative thinking, going the extra step for a customer or a consumer. While we believe we currently make everyday food in extraordinary ways, it's an ongoing quest to continue to improve."
In early 2011 – a challenging late-recession year for all food & beverage companies – Rodkin wrote in the annual report: "We understand how consumer behavior is changing … We know that people want great-tasting, everyday food for every dollar they spend. And we don't think this particular consumer mindset is going away – value is here to stay. We sell more than 140 high-quality meals for $3 or less and are staking our claim as the value leader in a variety of core categories.
"Initially, the industry reacted slowly to this sea change in consumer behavior, thinking that things would go back to normal as the economy improved," he continued. "But it soon became apparent there was a ‘new normal,' and we realized we were at that proverbial fork in the road."
In its fiscal 2012 (ConAgra Foods' fiscal year ends around May 31), Rodkin & Co. introduced the "Recipe for Growth," a "comprehensive, aggressive, five-year strategy following years of foundational work in which we improved our capabilities, operations, internal wiring and culture, and refocused our portfolio." It identifies five cornerstones: