Pumped-Up Marketing Boosts ConAgra

by Karlene Lukovitz, Jun 26, 2009, 11:46 AM

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"Significantly improved" and increased marketing contributed to strong double-digit growth for Healthy Choice, Marie Callender's, Banquet and other consumer brands during ConAgra's fiscal 2009 fourth quarter, the company reported.

The Consumer Foods segment posted 13.8% sales growth (including 7% unit growth and 8% growth from pricing/mix), to reach $2.14 million during the quarter, which ended May 31. The division's operating profit increased 53%, to $271 million.

Consumer Foods represented 63% of total company sales, which grew 7.5% to reach $3.3 million.

ConAgra upped its marketing expenditures for the consumer business by $16 million during the quarter, which saw the launch of the ambitious new Healthy Choice "Spokesperson Wanted" campaign featuring Julia Louis-Dreyfus. The increased marketing spend was supported by additional revenue from an extra week in this year's fourth quarter.

The Healthy Choice repositioning includes new products such as Healthy Choice Fresh Mixers and All Natural Entrees and redesigned packaging. The Mixers are being supported with a "Working Lunch" Web site offering original comedy events timed for the lunch hour.

Other consumer brands also logged double-digit growth, including Alexia, Hebrew National, Hunt's, Orville Redenbacher's, Peter Pan, Reddi-wip and Snack Pack.

Brands posting sales declines included Egg Beaters, Swiss Miss, Wesson and Wolf.

CEO Gary Rodkin attributed the consumer brand results to recent product innovations, as well as marketing and cost reduction initiatives.

Sales in the company's Commercial Foods division declined by 2.4% to $1.16 million, reflecting lower wheat costs and therefore, lower flour prices.

ConAgra's diluted EPS from continuing operations for the quarter jumped by 129%, to $0.39 (versus $0.17 in fiscal '08 Q4).

For the full fiscal year, net income rose 5.1%, to $978 million. Consumer Foods sales rose 8% to $7.44 billion, Commercial Foods rose 13.9%, to $4.13 billion, and total sales rose 10.1%, to $11.56 billion. Total operating profit rose 14.8%, including a 15.2% gain for the consumer business and 14.1% gain for the commercial business.

ConAgra is projecting fiscal 2010 diluted EPS from continuing operations of between $1.63 and $1.66, excluding items impacting comparability.

Property, liability and business interruption insurance should cover financial losses from the June 9 explosion at the company's Garner, N.C. plant that killed three employees and seriously injured dozens more, ConAgra reported.

Supply disruptions for the Slim Jim brand are likely during the first quarter of fiscal 2010, but the accident should "have no material impact on long-term brand dynamics," according to the company.

Early this month, ConAgra launched a print, broadcast and online campaign supporting a new brand identity, including a new logo featuring a "spoon in plate" icon and the tagline "Food you love."

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