Brief

ConAgra to divest JM Swank, spend $200M on Lamb Weston plant expansion

Dive Brief:

  • ConAgra announced Wednesday its planned divestment of JM Swank, a national food ingredient sourcing and distribution business, to private equity firm Platinum Equity. Specific terms of the deal were not disclosed.
  • ConAgra also announced Wednesday a $200 million investment to expand production at the Lamb Weston facility in Richland, WA, where it will add a new french fry processing line and 128 full-time positions. The company separately announced Thursday it stopped using PHOs in its entire spreads portfolio starting June 2.
  • With the Wednesday moves, ConAgra is slimming down to a more focused portfolio while make strategic expansions to meet and capitalize on growing demand in segments like frozen potatoes, particularly french fries.

Dive Insight:

These Wednesday announcements are the latest in a massive company overhaul for ConAgra. Part of ConAgra's strategy was to spin off Lamb Weston into a separate business rather than divest it, as it did for its private-label brands, Spicetec last month, and now JM Swank. More divestments of smaller businesses like Spicetec and JM Swank could be on the horizon.

This allows ConAgra the space to zero in on the needs of building up its consumer brands while maintaining the promising revenue stream offered by frozen potatoes in the Lamb Weston business. Euromonitor estimates that the frozen potato category will increase by 2.6 billion pounds by 2020, ConAgra said in a news release. ConAgra announced a similar expansion for another Lamb Weston plant in Boardman, OR, in March.

ConAgra has proven that its current strategy is not just about using intensive cost-cutting to become a more profitable company, as other companies have done in recent years with methods like zero-based budgeting. These decisions have and will also involve strategic application of expansion investments in areas of the company with the greatest promise of returns, both inside and outside of the core consumer brands.

Filed Under: Corporate
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