How Conagra uses M&A to stay ahead in the snacking sector
ANAHEIM, California — Conagra Brands’ smaller M&A deals have paid off in a big way and there could be more to come, the company’s snacking chief told Food Dive.
At the Natural Products Expo West show, the food giant is showcasing a variety of its recently acquired brands, including Angie's Boomchickapop and Duke’s meat snacks. Both of those brands were acquired in 2017 and have since seen exponential growth, Burke Raine, vice president and general manager of Conagra's snacks and sweet treats division, told Food Dive ahead of Expo West.
"The latest Nielsen results for the last four weeks show double-digit growth for both Angie's as well as Duke's," he said. "We're pleased that these are our sources of growth for our company, and we remain open to additional M&A in the future, and we'll evaluate them in the same principal manner."
After divesting its private label unit and spinning off frozen potato maker Lamb Weston in 2016, Conagra has been focusing on its core brands and using acquisitions to build its portfolio in trending areas.
Conagra acquired Thanasi Food, the startup behind the Duke’s meat snacks brand, in 2017 for an undisclosed amount and Angie’s Boomchickapop for $250 million. Angie’s and Duke’s both align with growing trends in the broader industry: healthier foods and meat snacks. The brands also fit into the company's existing line of products. Conagra also owns meat jerky icon Slim Jim, as well as popcorn stalwarts Orville Redenbacher's and Act II.
But Conagra hasn't only acquired smaller companies. Last year, the company bought Pinnacle Foods for $10.9 billion. With this purchase, Conagra not only added Bird’s Eye and other well-known brands to the fold, but it gave the company a meaningful presence in the meatless trend with Gardein; clean label and organic with EVOL; and gluten-free with Udi's and Glutino, the latter of which was on display at Conagra’s Expo West booth.
Raine said the company has two types of M&A deals it looks for. One is synergistic, like Pinnacle Foods. In that acquisition, he said, Conagra took on a broad business that overlapped with other channels like frozen.
"The other kind of discipline approach is what we would call a modernizing acquisition, which would tend to be smaller, aligning with emerging trends and provides a platform for expansion," he said.
"The snack brands that are forming an emotional connection with consumers are the ones that are best positioned to win the next generation of consumers, and those companies that have a purpose and a mission."
Vice president and general manager of Snacks & Sweet Treats, Conagra Brands
Sean Connolly, Conagra's CEO, told Food Dive last fall that the company was looking to pause on major M&A following the Pinnacle deal to focus on paying down debt and integrating the purchase.
In December, Conagra said Pinnacle struggled during the second quarter with performance challenges across some "significant brands" as it lost shelf space to competitors. Connolly told analysts the challenges were "not structural ... in nature" and Conagra was taking steps to fix them. Investors will be closely watching to see how Conagra is digesting the deal when it reports third quarter earnings on March 21.
Snacks have become an increasingly popular target for M&A in big food, especially smaller brands, as consumers have changed their eating habits. With almost $2 billion of sales in snacks, Raine said Conagra is "one of the faster growing snacking companies in America."
Raine said snack brands that keep an open dialogue with consumers through social media and are honest about their offerings will be the ones that outperform the rest of the market.
"We're accessible and we're out there connecting with our consumers every day, and that helps us stay close to what their needs are and how those needs evolve over time," he said. "The snack brands that are forming an emotional connection with consumers are the ones that are best positioned to win the next generation of consumers, and those companies that have a purpose and a mission."
Correction: In a previous version of this article, the Conagra executive interviewed was misidentified. Food Dive spoke with Burke Raine, vice president and general manager of Snacks & Sweet Treats.
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