Conagra eyes a frozen food future | WARC | The Feed

Conagra eyes a frozen food future

Conagra Brands reported a 10.5% jump in frozen food sales in a Q2 earnings call and sees significant opportunities in further expanding its frozen portfolio. 

Why it matters

It highlights the impact of changing consumer habits and inflation (Conagra also points to the value of its strong brands). During the Covid period, more people started buying frozen food in order to avoid frequent shopping trips and those habits have stuck. 

At the same time, rising prices have made consumers increasingly cost conscious: “There’s a lot of trade down from eating away from home to eating at home, and frozen food is benefiting from that,” CFO Dave Marberger told Yahoo Finance. 

Frozen food growth

• Growth was driven by a number of key categories, including breakfast sausages and single-serve meals, which both experienced double-digit retail sales growth compared to last year.
• Conagra claims to have accounted for around 90% of the growth in the frozen single-serve meals category over recent years and aims to replicate that success in adjacent categories (eg multi-serve meals, appetizers, snacks and desserts). 
• It further helps that Conagra sees few private label alternatives, with these products largely confined to categories that are more highly commoditized.

The marketing outlook 

• “We don’t do a lot of in-line TV because we don’t think it’s particularly effective,” CEO Sean Connolly explained in an earnings call.  
• A&P spending stood at 2.4% of sales in Q2, a proportion that is expected to increase in the second half of the financial year as new innovations come to market. “We do want to make sure we get those new products off to a good start with good awareness and good trial,” said Connolly.
• Supply challenges have restricted some promotional activity and the focus is on what Connolly calls “smart promotions … really strategically valuable, high ROI and often seasonal promotions, often holidays, that are emotionally important to our consumers”.

Key quote 

“There are a lot of zip codes in the frozen space that still have the opportunity to be overhauled, the way we have overhauled frozen single-serve meals. And that’s a big part of our go-forward strategy” – Sean Connolly, CEO, Conagra.

Sourced from Seeking Alpha, Yahoo Finance

[Image: Conagra Brands Q2 results]