NEW YORK — Although Conagra Brands’ snack portfolio is probably much bigger than people realize, don’t expect the Chicago-based company to take on all the largest categories in the segment.
With about $2 billion in sales, Conagra’s presence in the snacks segment, which the company’s president and chief executive officer called a “vast domain” is strategic.
“Where we play in snacks, our categories there are basically outpacing total snack growth,” Sean M. Connolly, president and c.e.o., said during a May 8 presentation at the Goldman Sachs Global Staples Forum in New York. “So, we play in meat snacks, we play in seeds, we play in popcorn, and we play in sweet treats. And when you look at the growth rate of those sub-ZIP codes of the overall snacking market, you will find the individual growth rate to actually exceed the average. Within those domains, we also have either the No. 1 brand in the space or the No. 1 fastest-growing brand in the space.”
Mr. Connolly pointed to the success of Orville Redenbacher's, Angie’s Boomchickapop, Slim Jim and Duke’s as examples of brands that either are the top-selling brand in their category or the fastest-growing brand.
The key to Conagra achieving its potential as a snacks business, Mr. Connolly said, is to run the brands the way snack businesses are meant to be run.
“That means a much more significant focus on speed and agility, getting products to market faster, getting products off the shelf, creating theater in the store, creating merchandising vehicles, shippers in multiple places within the store, marketing these products in a way that elevates the purpose of the products in terms of social responsibility, things like that, instead of the consumer feeling like they’re being marketed to,” he said. “This is a totally different approach to how we manage snacks.”
The company is focused on creating a snack culture that is all about speed, agility and innovation.
“That’s the way you have to run a snack portfolio,” Mr. Connolly said.
Asked whether Conagra needs to compete in the largest snack categories, Mr. Connolly responded with an emphatic “no.”
“We don’t feel a need to be there,” he explained. “And one of the differences about our portfolio versus some snack portfolios is we are unapologetically a warehouse-delivered snack portfolio. We don’t have a D.S.D. (direct-store delivery) network. We don’t have an appetite to compete in D.S.D. categories like potato chips and things like that. These are not competitive battles we want to get into.
“We have leading market share businesses in smaller subcategories that are not that small when you look at them and they’re growing rapidly. We like that model. We like the brand strength we have in that model. And we think we can continue to pick our spots in terms of extending some of these brands into adjacencies in a successful way.
“Angie’s Boomchickapop was one of the more recent acquisitions that we made in ready-to-eat popcorn, and we believe it is clearly the strongest ready-to-eat popcorn business in the U.S. The business is growing phenomenally, and we’ve got some test markets going on right now, of taking Angie’s Boomchickapop into some other sub-ZIP codes within snacking that’s outside of kind of the D.S.D. realm where we think we can play with a strong margin and continue to add to the top line.”