Conagra, General Mills Square off in Battle to Revive Packaged Foods
June 24 2018 - 11:29AM
Dow Jones News
By Annie Gasparro
Investors will learn this week whether Conagra Brands Inc. is
still outpacing General Mills Inc. in the race to revive older food
brands.
General Mills Chief Executive Jeff Harmening is banking on a new
low-calorie, high-protein yogurt to stem losses in its Yoplait
business, where sales plunged 14% in the first nine months of the
company's fiscal year.
At rival Conagra, Chief Executive Sean Connolly has focused on
revamping older brands like Healthy Choice and Banquet frozen meals
and Reddi Wip dessert topping.
"Nobody thought Banquet could be brought back from the dead,"
Mr. Connolly said at a conference last month. "The business is
thriving now."
Conagra on Thursday will reveal whether its latest quarterly
earnings confirm that confidence. General Mills reports
fourth-quarter results on Wednesday. Analysts are likely to ask
about the companies' merger outlook amid reports that Conagra is
interested in acquiring Pinnacle Foods Inc. for its frozen-food
business.
Sales of Conagra's refrigerated and frozen brands have increased
in the past three quarters. At General Mills, yogurt sales fell
sharply over that period.
General Mills' stock has fallen 19% over the past year, while
Conagra's shares have risen nearly 4%. The S&P 500's Packaged
Foods & Meats subindex is down 15% over that period.
Analysts expect revenue at General Mills to have risen 2.5% to
$3.9 billion in the company's fourth quarter and earnings to have
fallen 0.5% to 73 cents a share, according to FactSet. Conagra's
sales are projected to have risen 3.5% to $1.93 billion with
earnings up 18% to 44 cents a share.
Conagra earned approval from investors by introducing
higher-quality Banquet meals that the company is selling for more
than the standard 99-cent price for those frozen dinners. It also
reworked Healthy Choice recipes to remove additives and introduced
recyclable, plant-based packaging.
General Mills has tried to bolster its business with a move into
pet food. In February, the company bought Blue Buffalo for $8
billion and said sales in the pet-food aisle were growing faster
than those of established package foods.
But analysts say General Mills needs to turn around its
billion-dollar U.S. yogurt business before its share price does the
same.
General Mills executives have acknowledged that the company was
late to the market with its Yoplait Greek-style yogurt. General
Mills has been selling Yoplait in the U.S. since 1977, but a decade
ago it began losing sales to a budding Greek-yogurt trend that
appealed to Americans because of its higher protein and lower sugar
content.
Now Icelandic, Australian and other exotic yogurt varietals are
putting even more pressure on mainstay brands like Yoplait.
Mr. Harmening has said Yoplait is recovering. At a conference in
May, Mr. Harmening said General Mills had gained market share in
yogurt in the latest 13 weeks. The company says one reason is the
introduction last summer of Oui by Yoplait, a premium yogurt made
without artificial ingredients and sold in glass jars.
"The goal is to keep getting better and to keep changing with
the times, " Mr. Harmening said recently.
The newest yogurt General Mills introduced last week, called YQ
by Yoplait, aims to make up for Yoplait Light, which has lost favor
because of its use of artificial colors and sweeteners.
YQ uses "ultra-filtered" milk that reduces the amount of sugar
it contains and concentrates the protein content to make it
appealing to health-conscious shoppers. Doug Martin, head of
marketing for Yoplait USA, said General Mills wanted to come out
with a new, healthy-oriented yogurt that wouldn't end up "feeling
like new versions of light yogurt."
(END) Dow Jones Newswires
June 24, 2018 11:14 ET (15:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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