Check out this article from the Omaha World-Herald the hometown daily newspaper of Conagra who is headquartered in Omaha. The article presents an interesting look at the challenges of Conagra’s acquisition of Private Brand manufacturing giant Ralcorp.
Store brands are ‘runway’ for growth, ConAgra says
Costs related to the acquisition of store-brand food manufacturer Ralcorp knocked ConAgra Foods’ profits down 57 percent in the third quarter, the Omaha packaged food maker reported Wednesday, but executives reaffirmed their faith in Ralcorp’s long-term contributions to the bottom line.
Despite some softening in the store-brand foods market, Chief Executive Officer Gary Rodkin said, “This short-term flattening on private brands is exactly that; the long-term trajectory is very strong.”
ConAgra research shows that 74 percent of consumers are more open to buying private-label foods than they were two years ago, and store brands are evolving, with some competing for share with “top-tier” branded foods. Rodkin said store brands have just half the market penetration in the U.S. that they have in some European countries, and he sees a “big runway ahead” for growth.
The acquisition of the St. Louis private-label foods business closed Jan. 29 and contributed to ConAgra revenue for just 27 days in the quarter. Total ConAgra sales grew 13 percent to $3.85 billion, including $292 million from Ralcorp. Sales grew in both ConAgra’s commercial and consumer foods divisions.
ConAgra reported net income of $120 million, for earnings per share of 29 cents, compared with $280 million, or 68 cents per share, in the third quarter of 2012. Adjusted for items affecting comparability, ConAgra said earnings per share were 55 cents, compared with 53 cents the year before.