The first two company presentations at this year’s Consumer Analyst Group of New York (CAGNY) meetings created some interesting contrasts with the same net result. The annual meeting opened this morning (Feb. 20).
General Mills’ talk was pretty ho-hum, filled with past accomplishments, categories it was familiar with, staying the course. Right behind it was Conagra Brands’ presentation, packed with excitement and innovation, revealing a pipeline of dozens of truly novel products in new categories, even a video message from Dolly Parton.
As for what matters, full-year sales, their stories were about the same. General Mills predicts this year’s numbers will be down 1% to flat. Conagra forecasts a regression of 1-2%. Both have fiscal years ending around May 30.
Unless both are planning pricing rollbacks, that doesn’t portend well for volume either.
General Mills, Conagra, Coca-Cola Co., Hershey Co., Mondelez and McCormick & Co. made presentations on the first day of CAGNY, which is four days of presentations by top executives of some of the largest, publicly held food & beverage companies to the nearly 500 financial analysts in attendance.
Every one of those processors came off a great 2023 (thanks mostly to inflation) and promises income growth this year. Every one of them will be repurchasing shares – that’s one way to grow earnings per share. Everyone mentioned artificial intelligence in some way. McCormick, like General Mills and Conagra, forecasts a slight drop in sales this year (-2% to 0%). The other three think sales will grow in 2024. Nobody promised volume growth, but McCormick’s EVP and CFO Mike Smith made it a priority in his talk.
General Mills’ sales increased 5.8%, to $17.3 billion, in its 2023 fiscal year, which ended May 28, 2023. “We’ve been reshaping our portfolio for growth,” said Jeff Harmening, General Mills’ chairman and CEO, “turn[ing] over almost 20% of our business since FY2018.” Divestitures included Yoplait in Europe, (Hamburger) Helper, Jus Rol, Knack & Back and Suddenly Salad. Acquisitions include Blue Buffalo, Top Chews, True Chews and Nudges, all in the pet food category, and TNT Crust (pizzas).
Conagra’s sales jumped 6.4%, to nearly $12.3 billion, in a fiscal year that also ended May 28 of last year. It’s remarkable that sales were just $7.8 billion in fiscal 2017 due to some severe divestitures and the start of a reorganization. Now the company can claim leadership in the frozen foods category, some respectable market share in snacks and stability in pantry staples.
In addition to more coffee in its portfolio, Coca-Cola is looking to grow its global reach with all brands. Over the past five years, the company has averaged 2% volume growth and 8% revenue growth, and believes it is primed for sustained performance moving forward. John Murphy, president and CFO, said the company will continue to investigate partnerships through its refranchising program, as that has proven a successful approach by which the company can invest and drive higher performance across its bottling system.
Hershey used much of its time to share the success story of its North American salty snacks segment and to detail the digital transformation the company is maneuvering through. Salty snacks now represents 10% of the company’s revenues, driven by the SkinnyPop and Dot’s brands. On several occasions across its confectionary, salty snacks and international business units, Hershey touted the benefits of its new ERP upgrade and the potential that the enhancements will bring to the company’s growth strategies moving forward. Not forgetting its candy foundation, Hershey brought onto the CAGNY stage Shaquille O’Neal, NBA broadcaster and Hall of Famer, to tease a partnership in gummy candies, which Hershey is hoping to grow to take advantage of the segment’s strong potential.
McCormick was mostly about heat. Recent acquisitions of Frank’s Red Hot and Cholula make it the dominant player in hot flavors, the entire segment of which remains hot. Executives talked more about the Flavor Solutions segment, its industrial ingredients business, than they have in the past. And its self-developed AI program Sage is not only making the company more efficient, it’s helping develop products for other food processors using McCormick’s industrial ingredients.
