CAGNY Day 1: Food CEOs Are Upbeat

Feb. 19, 2020
Consumer Analyst Group of New York hears outlooks from General Mills, Conagra, Unilever, Mondelez and Unilever.

General Mills is pursuing topline growth. Conagra is rolling out new products. Unilever is retreating from food and beverage. Mondelez has been exceeding all its financial targets. McCormick is getting familiar with parts of the grocery store outside of the spice aisle.

In five short sentences, that's a summary of food company presentations on the first day of this year's Consumer Analyst Group of New York Conference. Every year, the CEOs and CFOs of major, publicly held food and beverage companies try to "sell" their companies to the financial analysts at the annual February conference, in the process revealing some strategies and news. 

Read about the 2019 Growth Strategies in our CAGNY 2019 Round-Up

First speaker of the day was Jeff Harmening, CEO of General Mills since 2017 and chairman a year later. Big G had several years of dwindling sales, then spent $8 billion to buy Blue Buffalo Pet Products, an expensive but transformational acquisition.

The premium pet food brand is growing nicely, as General Mills distribution gets even the brand's mainstream products into more retail categories. But Harmening sees great potential in products coming out of the pipeline, such as Baby Blue for puppies and kittens and True Blue for specific health problems, such as weight control. "Blue has become a $1.5 billion brand in just three years," he noted.

Harmening says he "feels good" about renewed growth in cereal, which has posted 2% growth so far this (2020) fiscal year (General Mills' year started June 1) but is troubled by tumbling yogurt sales, which declined 3% in the U.S. and 6% internationally. Mixed results are coming from snack bars -- down 3% in North America but up 6% in the rest of the world. Old El Paso, which he claimed is "the world's largest Mexican food brand," is growing at a 5% clip.

Conagra's apparent strategy is to flood the market with new products. The brands are familiar, but the products are not. CEO Sean Connolly unveiled a high-end ramen line from PFChang; Slim Jims extensions into pork rinds, "fries" and jerky; a non-dairy Swiss Miss "cocoa"; Hungry Man Bowls (that are heavy on the meat); Banquet Mega bowls; and Marie Callender's bowls that contain shrimp.

Connolly reveled in being the No. 2 company (behind Nestle) in the suddenly resurgent frozen category. And in having what may be the No. 2 analogue meat brand (Gardein) that predates the Impossible Burgers and Beyond Meats of this world. Gardein, by the way, will soon debut a meatless jerky.

Conagra is going vegetarian in other ways. Birds eye has a vegetarian lasagna and soon will have cauliflower "wings" and fries. Even Chef Boyardee has a veggie single-serve pasta cup.

"The McCormick of the future" is being built in Hunt Valley, Md., and the Reckitt Benckiser Food Group acquisition of 2017 is playing a key role. Lawrence Kurzius, chairman and president/CEO, didn't provide a lot of specifics, but he cited data that showed only 43% of Baby Boomers "seek bolder flavored foods," compared to 61% of Generation X and 71% of Millennials/Gen Z -- which bodes well for the company. He also noted that a "renovation" moved six pouch items from the slow cooker category to the currently hot Instant Pot camp.

Mondelez has "met or exceeded all 2019 financial targets," reported a beaming Dirk Van de Put, chairman and CEO. He said the company is very different now than the one he inherited three years ago. Then the focus was on cost reduction and margin improvement; now it's on "volume-driven profitable growth."

For past couple of years, global brands were growing faster than their categories but "local jewels" were a drag on the company; they grew just 1% in 2017 and 2018 but shot up 3.2% in 2019. Developing markets were all the rage--now developed markets, especially North America and the United Kingdom, are leading the way. And three-quarters of the company's top executives are new.

Nine key executives also are new at Unilever, which has reduced its food and refreshments revenue to 37% of company sales; it was 53% in 2009. Graeme Pitkethly also confirmed that the tea business is under review (and apparently for sale).

Unilever now is more interested in "luxury beauty" and "health, wellness and personal nutrition" ñ which Pitkethly defined as vitamins, minerals and supplements. The recent Olly acquisition is an example.

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