Processed Food Brands Look for Fresh Makeover
Investors to get a peek at how General Mills and ConAgra are faring since removing artificial ingredients
Makers of processed foods, like ConAgra’s Chef Boyardee Spaghetti and Meatballs, are trying to win back customers who have opted for fresher fare. PHOTO: REUTERS
Hamburger Helper and Chef Boyardee have something in common: both are fighting to win back customers who have dropped processed packaged food for fresher, more natural alternatives.
General Mills Inc. and ConAgra Brands Inc. each own a stable of brands hit hard by big shifts in eating habits. This week, investors will get a glimpse of how they are faring as they make changes like removing artificial ingredients from Trix cereal and create new brands with so-called clean labels, like Wicked Kitchen.
Along with Cheerios and Trix cereals, General Mills also sells Betty Crocker cake mix, Totino’s pizza rolls, Progresso soup, Yoplait yogurt and many other brands. The challenge of staying on top of food trends sweeping each of the aisles where those products are stocked has created one problem after another.
A yearslong effort by General Mills to remove synthetic food dyes from cereal seems to have turned around that business, with retail sales of its reformulated cereals up 3% in the U.S. in the last reported quarter. But now a persistent decline in yogurt sales has General Mills scrambling.
General Mills is adding more organic yogurt and introducing new products like yogurt drinks and snacks that don’t come in the traditional yogurt cup. Investors will be anxious to see if these efforts have paid off. Executives have warned it will take time.
General Mills is expected on Tuesday to report flat earnings of 87 cents per share on $4.23 billion in revenue, according to analysts polled by Thomson Reuters, down from $4.42 billion a year ago.
ConAgra in the past year has sold its private label business and spun off its commercial foods operation, which will make it difficult to compare the upcoming results with last year’s comparable quarter.
Chief Executive Sean Connolly, who joined ConAgra less than two years ago, has argued that whittling down the business will allow the company to concentrate on reviving older brands that had lost their relevance. ConAgra’s stable of products including Marie Callender’s frozen pot pies, Slim Jim jerky and Hunt’s canned tomatoes generate some $7 billion in annual sales.
Reddi-wip is advertising its use of “real cream” rather than hydrogenated oils, and “no artificial growth hormone.” Hunt’s is promoting how it peels its tomatoes with steam, rather than chemicals. ConAgra’s website for Hebrew National hot dogs brags that they have no artificial flavors, no fillers and no byproducts because “the shorter the ingredients list, the better.”
ConAgra hopes reshaping its brands will lead to higher sales volume and profit margins. For now the company has pulled back on discounts, so total revenue has declined.
On Thursday, ConAgra is slated to report earnings of 45 cents per share on $2.11 billion in revenue for its latest quarter, based on the Thomson Reuters poll.
