ConAgra's new pitch puts its food brands first

The Associated PressJune 2, 2009 

  • Among its many products, ConAgra makes the snack food Slim Jim at a plant in Garner. ConAgra got the plant when it bought GoodMark Foods in 1998. In 2002, the GoodMark subsidiary moved its headquarters operations from Garner to Minneapolis, where ConAgra's snack foods group is based.

— America, meet ConAgra. The maker of Chef Boyardee, Hunt's tomato sauce and Act II popcorn is rebranding itself as stores try to deal with frugal consumers by carrying only the best-performing brands.

The Omaha, Neb., company says it has those top-selling brands, and its new marketing campaign launching this week highlights that by telling people its products are "food you love."

The campaign -- which includes a new logo of a smile on a plate -- marks the first time ConAgra is so overtly advertising its name with the brands it makes. The push also seeks to emphasize deep changes in the company's business away from commodities and toward branded food products.

The company, which has been increasing its marketing, will tout its new image with a national advertising campaign. It will also replace its old logo, just the words ConAgra Foods, with the new one on the back of its packages.

Consumers already are sold on the company's brands, which also include Egg Beaters and Orville Redenbacher, so the campaign's main targets are investors and retailers, Chief Executive Gary Rodkin said in an interview.

Retailers are increasingly looking to use their precious shelf space for only the best products as consumers cut spending. Investors, meanwhile, need to hear that the company's entire portfolio is made of strong brands, he said, and no longer so tied to commodities, which can be volatile.

"We're really trying to change that mentality, because that's really not who we are," Rodkin said. "We're a branded food company. We're more like a General Mills, a Kraft, a Campbell Soup. An identity change, I think, is important for people to understand."

Retailers also want to know that food makers will promote their brands, which drives traffic to stores, since they do not heavily market or advertise their store brands, said Christopher Shanahan, a research analyst with Frost & Sullivan.

"Retailers want strong national brands. They produce a lot of private label products but they want products in their stores that have a lot of marketing dollars behind it," he said.

Cooling view of commodities

Rodkin began shifting ConAgra's focus to food when he took over in 2005, moving it away from being a holding company for its brands to more of a food marketer like Kraft Foods or General Mills.

Rodkin also wanted to shift Con Agra away from commodity-based businesses like meats, fertilizer and flour because they are subject to wide swings in prices. Meat in particular is a low-margin business that is closely linked to commodity prices, so the company has sold off brands like Eckrich, Armour and a seafood business, along with its commodity trading business.

Those moves mean ConAgra's revenue stream has shifted.

In 1998, 24 percent of ConAgra's sales was derived from branded food, while 51 percent was from fresh meat and other commodities, and the rest was from sales of other items like flour and spices.

A decade later, all of ConAgra's sales -- which reached $11.6 billion in fiscal 2008 -- are from branded packaged food products, with about two-thirds from sales to retail customers like grocery stores and the rest to restaurants and manufacturers.

Hitting the ad scene

ConAgra's transformation will be touted in a national advertising campaign with print, TV and radio and in stores and online, where the bulk of the effort will be, said Teresa Paulsen, vice president of corporate communications.

ConAgra declined to say how much it was spending on the campaign but said it was much smaller than its recent relaunch of its Healthy Choice line, also part of its effort to breathe new life into its brands. ConAgra is spending between $90 million and $100 million on that effort.

While the cost is relatively minimal, the effort is big, Paulsen said, and it will include brand tie-ins in back-to-school advertisements and offer promotions like discounts if a certain number of its branded items are bought.

"In the past we would have never put the ConAgra Foods logo in there, but now we are," she said.

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