ConAgra Foods will spend another $75 million on marketing and R&D next year as it rallies around its core brands.
ConAgra will focus marketing on its nearly $8 billion Consumer Foods division, which includes meals and entrees (about $4 billion in sales), condiments and sides ($2 billion), and snacks and desserts (nearly $2 billion). Key brands include Healthy Choice, Banquet, Marie Callender’s, Hebrew National, Egg Beaters, Chef Boyardee and Pam.
President-CEO Gary Rodkin will take a hands-on role in marketing. “Job No. 1 is to raise the bar on effectiveness of our marketing spending. You’re going to see my fingerprints on key marketing initiatives in the company. There will be a lot more discipline on driving more focused and better marketing, and that’s going to dramatically increase the effectiveness of each dollar that we spend,” Rodkin told analysts last week. The PepsiCo veteran took charge at ConAgra in September.
ConAgra’s other new key player in marketing is Jacqueline McCook, who joins the company next month as chief growth officer and executive VP-International. McCook, who has been running her own consultancy, The McCook Group, earlier was Burger King’s senior VP-worldwide strategic planning & branding, and VP-marketing for PepsiCo Restaurants International (now YUM Brands).
Top brands will get as much as 2.5 times their current marketing budgets next year, and exponential increases for following years, based on brand performance. About 4% of ConAgra’s marketing dollars support a combined $9 billion in business; ConAgra will condense that to spend 10% of the total budget across “priority brands” totaling $4.5 billion.
“We’re going to focus the portfolio and we’ve got ROI basically stamped one everyone’s forehead,” Rodkin told analysts.
Marketing strategy will leverage brand equity and category strength, and build in-store execution as it continues to shift away from trade promotion: “The productivity of our merchandising and shelving will be enhanced dramatically with an ROI mindset that’s now embedded in our sales force,” Rodkin said.
To concentrate on core brands, ConAgra will sell its seafood (including Louis Kemp) and domestic and imported cheese businesses. Those segments, and the refrigerated meats that ConAgra put on the block last month, hold combined sales of about $2.8 billion.
“The old ConAgra philosophy was all brands must grow. The new ConAgra is going to invest against the strongest opportunities that will give us the best payback,” Rodkin told analysts. “We’re going to get a lot better leverage from the scale from being the number three player in U.S. grocery.”
Rodkin acknowledged that ConAgra is behind the curve on consolidating its portfolio: “Most other CPG companies have already done what we intend to do. It’s really just basic blocking and tackling.” He blames ConAgra’s history as a decentralized holding company. “Some people would look at this [growth plan] and call us the ConAgra snake pit. I call it our performance trap,” Rodkin said. “We had size but no scale. … We’re going to go from independent operating units all the way to an integrated enterprise.”
ConAgra’s retail sales were $8.7 billion for fiscal 2005 (ended May 30, 2005), and $4.2 billion for the first half of fiscal 2006 (ended Nov. 26, 2005).
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