ConAgra Chief Gets into Growth Mode

Last Updated Aug 20, 2007 7:07 PM EDT

ConAgra's Healthy Choice Cafe SteamersConAgra, the $11.5 billion packaged foods giant, is shaking off its decade-long somnolence. Historically, the company has pseudo-innovated via acquisitions of growing brands, instead of firing up the R&D kitchen. But Gary Rodkin, who took over as chief executive in fall 2005, has been pushing hard to develop new products internally and reinvigorate growth after net income fell 17 percent last year.

Part of Rodkin's strategy was to consolidate brands and sell under-performers. In the last fiscal year, Rodkin oversaw the sale of Cook's Ham, the divestiture of ConAgra's seafood operations, and the discontinuation of several other major brands. And in October 2006, ConAgra sold its branded meat business to Smithfield Foods.

Now, without all that disparate weight hanging around, ConAgra is introducing an array of new products to ride the converging wave of two mega-trends: healthy lifestyles and convenience. In fact, Rodkin invited two dozen Wall Street analysts to the company's headquarters to show off the new products. A New York Times article by Andrew Martin reports:

On Monday, Mr. Rodkin, a slim and energetic 55-year-old who bears some resemblance to Peter Sellers, shoveled in a Healthy Choice panini sandwich and gave his corporate chefs a satisfied nod. Having spent the last 20 months cutting a bloated bureaucracy, he had invited two dozen Wall Street analysts to ConAgra's headquarters here to show off the first new products under his tenure.
Besides the panini sandwiches, Mr. Rodkin rolled out Healthy Choice dinners that do not get mushy when microwaved because the sauce is cooked in a separate container, Orville Redenbacher popcorn that is low in sodium but retains a salty taste, and Chef Boyardee microwave-ready macaroni and cheese that does not require the addition of water or cheese powder.
"Versus old ConAgra? This is as different as you can possibly imagine," Mr. Rodkin said. "Literally, the cupboard was bare 18 months ago."
The trends have also recently given impetus for retailers to start their own health-conscious labels, like Safeway's "O" Organics. These private labels are now a huge source of competition, and things are especially tricky because the retailer has a vested interest in selling its own higher-margin brand. And despite Healthy Choice, ConAgra's fragmented portfolio is weighted heavily against healthy lifestyles, with brands like Slim Jim and Wesson Oil. We'll see if ConAgra really is what it claims to be: "one company growing by nourishing lives and finding a better way today ... one bite at a time."

(Image of Healthy Choice Café Steamer by Healthy Choice)