Conagra Foods Essay

ConAgra Foods Inc. is one of the largest food companies in the unite States in operation(p) in such segments as Consumer Foods (66%) and commercial Foods (34%) which are divided into 3 significant line of credit trading operations segments agricultural products, packaged foods and refrige arrayd foods (Table 1). Table 1. Net sales (in millions USD) 20102009% attach/decrease Consumer Foods 8,002 7,979-%. commercialized Foods 4,077 4,447(8)% Total12,07912,426(3)% Source Annual cut through 2010 Consumer Foods The Consumer Foods segment includes sworded, private label and customized food products, which are exchange in various retail and foodservice channels. The products include a mix of categories, such as meals, entrees, condiments, sides, snacks, and desserts across frozen, refrigerated and shelf-stable temperature classes.The confederacys major grades include Alexia, ACT II, Banquet, Blue Bonnet, Chef Boyardee, DAVID, Egg Beaters, Healthy Choice, Hebrew national, Hunts , Marie C e real last(predicate)enders, Orville Redenbachers, PAM, dig Pan, Reddi-wip, Slim Jim, Snack Pack, Swiss Miss, Van Camps and Wesson. As of July 22, 2010, it had 39 domesticated manufacturing facilities in Arkansas, California, Georgia, Illinois, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee and Wisconsin.As of July 22, 2010, it also had four international manufacturing facilities in Canada and Mexico (one 50% owned) and one in Arroyo Dulce, Argentina. Commercial Foods The Commercial Foods segment supplies frozen potato, sweet potato and other vegetable, spice and grain products to a variety of restaurants, foodservice operators and commercial customers. The products are sold under fall guys, such as ConAgra Mills, Lamb Weston, and Spicetec Flavors & Seasoning.As of July 22, 2010, it had 41 domestic production facilities in Alabama, California, Colorado, Florida, Georgia, Idaho, Illinois, Minn esota, Nebraska, New Jersey, Ohio, Oregon, Pennsylvania, Texas, Utah and Washington one international production facility in Guaynabo, Puerto Rico and Qingdao, China one manufacturing facility in Taber, Canada one 50% owned manufacturing facility in each of Colorado, Minnesota, Washington and the united Kingdom one 67% owned manufacturing facility in Puerto Rico, and three 50% owned manufacturing facilities in the Netherlands.Company is mainly engaged in operations in the fall in States which count for more than 90% of get along income (Table 2). ConAgra Foods Inc. owns approximately 50 brands (Table 3). Table 2. Pre-tax income from continuing operations (in millions USD) 201020092008 United States1,040. 3872. 1631. 9 Foreign 66. 6 64. 3 69. 6 Total1,106. 9936. 4701. 5 Source Annual Report 2010 batch and mission The vision of the confederation set by current CEO Gary Rodkin is One party. One goal. fashioning the food you love. It shines the overall corporations system to make food people want in their lives every day. The mission is reflected in companys profile Preparing great food, being a strong partner to our customers and thinking round all of the people who enjoy our food and the difference it makes in their lives fuels our passion making the food you love. Goals Like every public-held company listed on NYSE (ConAgra Foods Inc. has ticker CAG) ConAgra Foods Inc. aims to increase earnings per share.The goal of the company is to achieve long-term harvest through supply kitchen stove productivity, practicable efficiency, innovation, selling, securities manufactureing and sustainability of great brands . Increase in supply chain productivity and operational efficiency lets the company to reduce its manufacturing, finance, administrative, transportation be. Innovation and marketing orientation enhances the clientele processes and expands profit margins. enrol 1. Formula for wrenchth Source Annual Report 2010 ConAgra Foods Inc.operates un der three principles while achieving its strategic goal simplicity, collaboration and accountability. employ their resources rationally, nourishing employees and creating positive image within the community are the objectives which lead the company to be candid for you, good for the community, good for the people . Strategic priorities The company focuses on the following business product groups. In each strategic group ConAgra Foods Inc. possesses significant manufacturing and innovation capabilities. reckon 2. Strategic priorities.Source Annual Report 2010 Strategy ConAgra Foods is focused on growing sales, expanding profit margins, and improving returns on capital over time. To that end, the company has significantly changed its portfolio of businesses over a fall of years, foc utilize on branded, value-added opportunities, while divesting commodity-based and lower-margin businesses. Acquisitions Company was founded in 1919 as Nebraska Consolidated Mills and in 2000 changed its name to ConAgra Foods Inc. Acquisitions are the major part of ConAgras strategy.The company utilizeed horizontal and vertical integration strategy after sustaining solid background in flour-milling operations and feed and poultry segment. The time and the trends in the food constancy were crucial to the strategic acquisitions of the company. In 1970-1980s when situation and industrial refrigerators became available for the consumers and packing techniques assumeed , which meant that at once meat and vegetables will non spoil, ConAgra entered the frozen foods market with the acquisition of Banquet Foods in 1980 and other companies in the meat and poultry segment (Armour Foods, Beatrice Foods, Hebrew National Foods, etc.).In 1980-1990s when the welfare of American citizens began to improve and people began to value time the food that was easy to bring in (which means basically just heat and serve) was extremely demanded and ConAgras strategic move was highly comprehended b y the investors in the neckcloth market. The stock price of CAG tripled from 10$ in 1990 to 30$ in 1998. The total amount of get windd brands approximated 30 by the year 2000 (Hunts, La Choy, Wesson, ACT II, Chef Boyardee, etc. ) and company changed its name to ConAgra Foods Inc.to reflect its growing role as a food products manufacturer rather than just the food ingredients supplier.In the beginning of the twenty first century and nowadays when the society became more touched about their health ConAgra Foods Inc. implemented several strategic acquisitions of such companies as Alexia Foods Inc. (natural and organic foods company) in 2007, Elan edible in 2010 and others. The purchases that company makes reflect our acquisition strategyfind businesses that are great fits and enable us to grow by filling a need within our portfolio or giving us an adjacent category blowup. Figure 3. The acquisitions strategy helped ConAgra Foods Inc. to ConAgra Foods Inc. divests the businesses w hich are either too complex to integrate with the core businesses or did not achieve a profit margin greater than the benchmark margin rate. In 2009 the company sold Pemmican (beef jerky business), in 2008 it sold Knotts Berry Farm operations and others. Mostly, the divestitures are low-margin (commodity-based) businesses. market and distribution Almost every American household has a number of ConAgra Foods brand-named products in their refrigerators.The ability to acquire well- ben and customer-loved brands had secured for ConAgra beneficial position. Some of the acquired brands such as Peter Pan and Chef Boyardee had longer history than ConAgra and were so much identifiable in the consumer market that it makes no sense to advance the brand of ConAgra. Even though the company has so many brands in their arsenal many people dont know what ConAgra does. And many consumers dont identify ConAgra as the owner of the brand-named products that they buy.ConAgra is aimed to the better unde rstanding needs of their customers. The health-conscious consumers (whose number is growing) chose nutritious and low-fat food. For increasing nutrition in its products company launched the program on sodium reduction and positions itself as a safe food manufacturer . In 2008 the company launched the program online startmakingchoices. com for people who are concerned with the healthy way of life. The website has several tests and tips on how to keep your life healthier.Also company designs packaging with the safe information to help consumers improve their diet. Taste, health, nutrition, convenience, sustainability and, of course, value are just some of the issues American shoppers are now go about with every time they go to a supermarket and theyre demanding to know more. For the purpose of better serve its customers and help consumers with their choice ConAgra Foods Inc. launched Food News Today with Phil Lempert, a prima(p) consumer trend analyst and Supermarket Guru.ConAgr a Foods Inc. aimed to develop and improve their private labeling strategy. One of the most successful brands that company has, Healthy Choice, has retail sales of about 1 one thousand million dollars. This label is licensed to other companies for use on their products. Company announced the bullion Store initiative in 2006, which focuses on driving growth by optimizing in-store conditions in three essential areas distribution, shelving, and placement future(a) to the companion products.As part of a plan ConAgras sales efforts are shifting from a strategy that relied heavily on short-term price discounts and couponing in order to iron out sales volume to consumers to a strategy that relies more on ways to draw in consumers. The new strategy hopes to provide a more balanced mix of trade spending, consumer advertising, and product innovation than the company had in the past. Even though ConAgra Foods Inc. owns distribution and transportation businesses wish well J. M. Swank, most of companys transportation equipment, distribution centers and storage facilities are being run by third parties.Wal-Mart Stores, Inc. and its affiliates, accounted for approximately 18% of consolidated net sales for monetary 2010 . ConAgra combines hard data from retailers with its own qualitative research. Gary Rodkin is on a quest to find what he calls the big, singular insight that will drive behavior change. . He is using theories about buying habitsbacked by $399 million a year in advertising, marketing and in-store promotionsto bring over foodstuff stores to provide ample shelves for its 45 consumer brands Leadership.Charles M. Harper The wizard Charles M. Harper who led the company from 1974 to 1993 is long-familiar for launching acquisitions strategy and founding Healthy Choice brand. During his tenure at ConAgra, the company expanded its business operations from flour-milling business to frozen foods, poultry, prepared seafood, fertilizers and the sales rose from $636 m illion in 1974 to $9 billion in 1987. The main reason for making decisions on acquisitions strategy were cyclical profits that company faced in agricultural segment.Mike Harper decided to diversify the company from basic products to packaged goods. His main priority was to acquire companies while they were in their down cycle and he restructured the companies and refocused their marketing strategies. He reintroduced the brands which were highly recognizable by consumers and refocused the product lines. In 1988 Harper boasted that ConAgra was probably the only food products company to accede across the entire food chain. In the early 1990s ConAgra expanded at a rate of about 3-5 acquisitions and joint ventures a year, becoming the leader in the frozen goods industry . During his tenure the P/E ratio of the company was at all times high which means the price of stock was rising faster than the earnings per share or in other words, the investors were overoptimistic about the future of the company. (Figure 4) Figure 4. P/E ratio of ConAgra Foods Inc. Bruce Rhode In 1998 Bruce Rhode was named a CEO of ConAgra and his first steps were to reduce costs by large amount.He instituted Operation Overdrive restructuring program, closing several production plants and storage facilities and bare-ass the workforce by seven thousand employees. The estimated savings from Operation Overdrive were approximately $600 million a year . The other problem that Bruce Rhode faced was strong decentralization of the company. Some of the food-processing and meat-packing companies, which operated under one brand name of ConAgra, purchased the products from the competitors rather than other ConAgras branches.The same uncoordinated actions were in marketing when representatives from several ConAgra divisions, all selling similar products, visited the same restaurants and groceries. Bruce Rhode emphasized team-approach to solve these problems. At the beginning of 2000s many retail grocery st ores would like to promote their own brands in foods processing and packaging segment and that was another problem for Bruce Rhode to solve. He concentrated on product development and marketing, working closely with grocery stores to create displays of ConAgra products.Bruce Rhode continued acquisitions strategy of his predecessors acquiring more brand names in packaged food segment (International Home Foods in 2000) to increase gross sales of the company and he divided company into ten principal operating units ConAgra Foodservice Company ConAgra Grocery Products Companies ConAgra Frozen Prepared Foods ConAgra Dairy Case Companies ConAgra Refrigerated Prepared Foods ConAgra Meat Companies ConAgra domestic fowl Company ConAgra Food Ingredients United Agri Products Companies ConAgra Trade Group.The early years of his tenure coincided with the Asian Financial Crisis in 1997-1998 when the investors were cautious about the US domestic markets and the stock price fell significantly (Figu re 4). Figure 4. free-and-easy stock prices for ConAgra Foods, Inc. (CAG) since 1978 to 2010. Source google. com/finance Gary Rodkin Gary Rodkin, the former CEO of PepsiCo Beverages and Foods of North America division, replaced Bruce Rhode as CEO of ConAgra Foods Inc. in 2005 and began reorganization trying to create one centralized consolidated company that consists of more than 500 subdivisions.As a result of refocusing its portfolio of businesses ConAgra Foods Inc. divested Butterball, Armour, Eckrich and others. Gary Rodkin, while continuing acquisitions strategy, transformed the company into a more unified operating company . With the changes of the new CEO many analysts were concerned that he would try to create ConAgra brand instead of coordinating many different brands. However, during his interview to SmartMoney (Wall Street Journal) in 2010 he said . at that place is no product named ConAgra. So instead, we say, consumers make the brands relevant. We do need investors t o better understand this company.But on the consumer side, we really dont think the juice is worth the squeeze. Performance Internal organization ConAgra Foods Inc. operates in a low-margin industry thus effectively managing its costs is the priority in achieving strategic competitiveness (Figure 6). guidance on cost reduction the company could save 1. 1 billion USD through supply chain rationalization initiatives, the relocation of a divisional headquarters from Irvine, California to Naperville, Illinois, the centralization of shared services, salaried headcount reductions and other cost-reduction initiatives . Figure 6. Heres how the $4.19 you pay for a frozen dinner like one from Healthy Choice breaks down. ConAgra makes 55 cents. Source Forbes. com . Shopping Cart Psychology by Helen Coster. 08. 19. 09 For the financial 2010 year ConAgra Foods Inc. announced net sales of 12,079 million USD with the operating profit of 1,652 USD (Table 4). Table 4. Financial Highlights for th e fiscal 2010 year Source Annual Report 2010 .. Heightened competition, weak demand and inflation hampered food processor ConAgras fiscal first quarter, leading it to cut its outlook, though the maker of Healthy Choice and Orville Redenbachers brand foods increased its dividend.. . The company also decreased its earnings per share outlook from 8-10% growth to 5-7%. External environment ConAgra Foods Inc. is focused on value-added brand companies and private labeling in the food industry where it competes with such giants as kraft Foods, Heinz, Nestle, etc. .. We experience intense competition for sales of our principal products in our major markets. Our products compete with wide advertised, well-known, branded products, as well as private label and customized products. Some of our competitors are larger and present greater resources than we have.We compete primarily on the basis of quality, value, customer service, brand recognition, and brand loyalty. From the next figure it c an be inferred that even though ConAgra Foods, Inc. operates better than overall US industries, it still underperforms the leading companies in food sector. Figure 5. 10-year comparison of ConAgra Foods Inc. , S&P 500, S&P 500 case Foods Index. Source Annual Report 2010 In the Processed and Packaged Goods industry companies operate under very narrow margins (Figure 6) and for that reason severe price competition after the financial crisis influences heavily the profits of ConAgra Foods Inc.Also, the retailers implement backward integration strategy and take away profits from famous brand companies since the consumers are losing interest in the brand-named products. Even though the there are some good news about the industry that the consumers are very conscious about the money and they eat-out less than before the crisis the competition in the industry makes it difficult for analysts to predict bright future for the food companies. In the Figure we can see that the global projecti ons for the industry are either buy or hold rather than strong buy.Figure 7. Analysts recommendation about the industry and ConAgra Foods Inc. Source wikinvest. com Zacks Investment Research, November 24, 2010.Bibliographies 1. Amanda Quick, Company profiles for students, (Thomson Gale, 1999) 2. bigcharts. com 3. ConAgra Foods Inc. Annual Report 2010 4. ConAgra Foods Inc. Corporate office Report 2010 5. conagrafoods. com 6. forbes. com 7. google. com/finance 8. http//www. hbs. edu 9. referenceforbusiness. com 10. wikinvest. com 11. wsj. com.