Food and Beverage CEOs Express Optimism at 2012 CAGNY Meeting

Last year's commodity prices behind them, emerging markets ahead.

Last year, commodity prices and emerging markets dominated presentations by food & beverage company CEOs at the annual Consumer Analyst Group of New York (CAGNY). This year they still spoke about emerging markets, but hardly a word about commodity prices.

"We are serious about our international growth," Gary Rodkin, ConAgra CEO, told the audience. "And we intend to double our revenues from outside the U.S. in the next three to five years." That was a goal echoed by most of the food executives.

For Kraft Foods the talk was all about the later-this-year separation into two companies, one focusing on North American grocery products and the other on global snacks. "Our strong operating momentum provides a solid springboard as we prepare to launch two industry-leading public companies later this year," Chairman and CEO Irene Rosenfeld told the analysts Feb. 21-24. She will remain at the helm of the global snacks company.

All three of Kraft's regions – Europe, Developing Markets and North America – are benefiting from what she called a "virtuous cycle" of growth. In 2011, net revenues grew 10.5 percent overall, but growth was particularly impressive in developing markets (up 16.2 percent). Kraft Foods Europe grew 14.9 percent.

Consumers today crave novelty, bolder flavors and foods that help them feel alive, engaged and connected.

– Denise Morrison, Campbell Soup Co.

North America President Tony Vernon, who will become CEO of the grocery company following the separation, said net revenues grew 5.1 percent in his region last year. "Our momentum is palpable," he said. "With the foundation we're laying now, both our grocery and snack businesses will be well-positioned for success as stand-alone operations."

William Johnson, chairman and pres/CEO of H.J. Heinz Co., reiterated the company's longstanding  interest in emerging markets … but he also paid heed to the company's solid base in the U.S. food market. Acknowledging the popularity of dollar stores and noting ACNielsen data that indicate consumer are buying smaller (read that: cheaper) sizes, he told the analysts Heinz was launching ketchup in pouches for 99 cents and Ore-Ida fries for $1.99. He also was reported to have said Heinz would be interested in buying assets from Pfizer's infant nutrition business, if that unit is sold.

Kellogg sounds excited to have landed the billion-dollar Pringles business from Procter & Gamble. "It will be easier to drive growth in the emerging markets through savory snacks than through changing people's breakfast habits and driving cereal," said John Bryant, pres/CEO. "What does the new Kellogg Co. look like after we close the Pringles [deal]? We'll have almost equivalent size between cereal and snacks. Both will be about 40 percent of the company. And then we have some exciting growth in our frozen business and specialty channels in the U.S. We'll be the world's largest cereal company, the world's second largest cookie cracker company and the world's second largest savory snack company giving us a good broad based platform for future growth."

It doesn't sound like General Mills' CEO agrees with Bryant. "We think the cereal category is poised for continued growth, as people around the world embrace the benefits of cereal," according to Ken Powell.

"Two decades ago, the U.S and Canada generated more than 60 percent of global cereal sales. Today, the majority of cereal sales are in markets outside of North America." And he said General Mills expects this split to widen, as international markets continue to grow at a faster pace. Powell also spent some time discussing opportunities in China – for cereal, Haagen-Dazs, Wanchai Ferry frozen products and snacks (Bugles and Trix).

Not long ago, reducing sodium was the mantra for Campbell Soup Co. Immediately after taking over as CEO last July, Denise Morrison shifted gears. "Consumers today crave novelty, bolder flavors and foods that help them feel alive, engaged and connected," Morrison told the analysts. "No company is connected to consumers' lives quite like Campbell, and we are well positioned to respond to the opportunities that the changing consumer landscape will present over the next decade."

She said Campbell is making progress on the three growth strategies:

  • Stabilize and then profitably grow North America soup and simple meals
  • Expand the company's international presence
  • Continue to drive growth in healthy beverages and baked snacks.

"We are focused on rebuilding relationships with our existing consumers and establishing connections to new ones," she said. "Simply put, our mission is to reinvent our products and our company for a new era."

In addition to promising a doubling of international sales, ConAgra's Rodkin also emphasized private label as one of the three key elements of company growth this year. ConAgra always has had a significant private label business, and recall the company tried to buy Ralcorp last year to expand that base. The CEO also promised a Greek yogurt, "different than anyone else's," coming in June under the Healthy Choice brand.