ConAgra Foods, Inc.

views updated Jun 08 2018

ConAgra Foods, Inc.

One ConAgra Drive
Omaha, Nebraska 68102-5001
U.S.A.
Telephone: (402) 595-4000
Fax: (402) 595-4665
Web site: http://www.conagrafoods.com

Public Company
Incorporated: 1919 as Nebraska Consolidated Mills Company
Employees: 80,000
Sales: $27.19 billion (2001)
Stock Exchanges: New York
Ticker Symbol: CAG
NAIC: 112112 Cattle Feedlots; 112511 Finfish Farming and Fish Hatcheries; 311111 Dog and Cat Food Manufacturing; 311211 Flour Milling; 311223 Other Oilseed Processing; 311340 Nonchocolate Confectionery Manufacturing; 311411 Frozen Fruit, Juice, and Vegetable Processing; 311412 Frozen Specialty Food Manufacturing; 311421 Fruit and Vegetable Canning; 311423 Dried and Dehydrated Food Manufacturing; 311513 Cheese Manufacturing; 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing; 311611 Animal (Except Poultry) Slaughtering; 311612 Meat Processed from Carcasses; 311615 Poultry Processing; 311711 Seafood Canning; 311712 Fresh and Frozen Seafood Processing; 311830 Tortilla Manufacturing; 311911 Roasted Nuts and Peanut Butter Manufacturing; 311941 Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing; 311999 All Other Miscellaneous Food Manufacturing; 422510 Grain and Field Bean Wholesalers

In 1919 Alva Kinney brought four grain milling companies in south central Nebraska together to take advantage of increasing grain production in the Midwest, and the Nebraska Consolidated Mills Company was born. More than 80 years and two name changes later, ConAgra Foods, Inc. stands as one of the world’s largest food companies, holding the number one position in North America in foodservice manufacturing and the number two spot (behind Kraft Foods, Inc.) in retail food sales. The company’s numerous consumer brands include Hunt’s tomato products, Healthy Choice, Banquet, Armour, Bumble Bee, Louis Kemp, La Choy, Wesson, Country Pride, Blue Bonnet, Parkay, Marie Calender’s, Cook’s, Swift Premium, Butterball, Slim Jim, Chef Boyardee, Orville Redenbacher’s, PAM Cooking Spray, Van Camp’s, Peter Pan, and Swiss Miss. Approximately 80 percent of ConAgra’s revenues are derived from its retail and foodservice businesses. Responsible for the remaining 20 percent of sales are the company’s agricultural products businesses, which are involved in the manufacturing and distribution of food ingredients, seeds, crop protection chemicals, and fertilizers, as well as in worldwide trading of bulk agricultural commodities.

Early History: From Milling to Animal Feed to Poultry Processing

Officially formed on September 29, 1919, the Nebraska Consolidated Mills Company (NCM) was headquartered in Grand Island, Nebraska. At first Kinney concentrated on milling the bumper postwar wheat crops at his four Nebraska locations. But soon, to accommodate his growing business, Kinney added a mill in Omaha, in 1922, and moved the headquarters of the company there. He continued to run a profitable and relatively quiet company solely in Nebraska until he retired as president in 1936.

Kinney was succeeded by R.S. Dickinson. Initially, Dickinson followed his predecessor’s simple but successful policy of milling grain in Nebraska. World War II and the postwar boom kept the demand for grain high and the milling business profitable.

During the early 1940s Dickinson began to use the company’s profits to expand. Other successful milling operations, such as General Mills and Pillsbury, were expanding both the number of plants and the number of products they offered, and NCM followed the same trend. In 1942 Dickinson opened a flour mill and animal feed mill in Alabama. He also promoted research into new types of prepared foods that used flour, which led to the development of Duncan Hines cake mixes, introduced in the early 1950s.

The Alabama expansion was profitable, but Dickinson found that it was more difficult to gain a foothold in the prepared-foods market. Cake mixes, though only a small proportion of the total flour market, accounted for as much as $140 million a year in retail sales by 1947. But the market was dominated by General Mills’s Betty Crocker brand and by Pillsbury, each with one-third of the market share, while Duncan Hines controlled only 10 to 12 percent. Unable to increase its share of the highly competitive cake mix market, NCM eventually decided to get out of prepared foods and use the money it raised to expand in basic commodities: grains and feeds. So, in 1956 the company sold its Duncan Hines brand to Procter & Gamble.

The new president of Nebraska Consolidated Mills, J. Allan Mactier, used the proceeds from the sale to expand aggressively. In 1957, NCM built the first major grain processing plant in Puerto Rico through its subsidiary Caribe Company. The $3 million plant processed flour, corn meal, and animal feeds at Catano in San Juan harbor. Production at the plant did not compete with the parent company’s already existing concerns; none of the flours and feeds produced there were exported to the mainland.

Caribe’s foothold on the island led to further Puerto Rican expansion in new areas. A second subsidiary, Molinos de Puerto Rico, took over Caribe’s animal feed business on the island while also developing Puerto Rico’s virtually nonexistent beef industry as a market for its products. In Molinos’ first five years of operation, consumption of animal feeds in Puerto Rico increased from 136,516 tons, of which 100,314 were imported, to 249,267 tons, of which only 46,723 were imported. The company also profited from an increased demand for meat and milk on the island.

Elsewhere, however, flour millers faced shrinking profits as demand leveled off in both domestic and foreign markets. European grain production had recovered from the disruption of World War II, and prosperity at home in the 1950s and 1960s allowed consumers to buy more expensive food items, leading to lower flour consumption.

Large millers turned to diversification to offset declining profitability. Industry leaders General Mills and Pillsbury developed their consumer foods lines and introduced new types of convenience foods, while the third of the “Big Three” in flour milling, International Milling Company, Inc., diversified primarily into animal feeds. Nebraska Consolidated Mills, perhaps unwilling to compete again in packaged foods after its experience with Duncan Hines, also developed the animal feed end of its business. Throughout the 1960s and into the 1970s, the company established mills and distribution centers for feed and flour in the Southeast and Northwest.

NCM also turned to another basic commodity: chicken. It developed poultry growing and processing complexes in Georgia, Louisiana, and Alabama during the 1960s. In 1965 the company also began to expand into the European market by going into partnership with Bioter-Biona, S.A., a Spanish producer of animal feed and animal health products and breeder of pigs, chickens, and trout.

Emerging As ConAgra in the 1970s

By 1971 Nebraska Consolidated Mills had outgrown its early base in Nebraska as well as its name. It chose a new name to reflect its new concerns: ConAgra, meaning “in partnership with the land.” ConAgra, Inc. was listed on the New York Stock Exchange in 1973.

The new name, however, did not necessarily mean continuing success. The early 1970s, in fact, brought the company to a low point. Many of its acquisitions during the expansion of the 1960s and early 1970s were only marginally profitable at best. In 1974 the company posted net losses and suspended dividends. Heavy losses in commodity speculations brought ConAgra to the brink of bankruptcy in 1975.

ConAgra’s first high-profile leader, former Pillsbury executive Charles “Mike” Harper, was named president and CEO in 1976 with a mandate to turn the ailing company around. Essential to Harper’s turnaround plan were strict financial goals combined with a series of acquisitions that served to broaden ConAgra’s sales base. To reduce debt, Harper first sold nonessential operations. He then began to buy agricultural businesses at the low end of their profit cycles and turn them around. Harper originally intended to stick with ConAgra’s emphasis on basic commodities rather than compete with the packaged-food giants. When he purchased Banquet Foods Company in 1980, he said that the acquisition was a way to increase ConAgra’s chicken capacity. ConAgra’s chicken production did increase by a third, bringing the company from eighth to fifth place among chicken producers. ConAgra expanded into fish as well as poultry in the 1970s with investments in catfish aquaculture.

Creating a Diversified Food Company in the 1980s

Another of Harper’s acquisitions put ConAgra back in the forefront of the flour market. In 1982 ConAgra bought the Peavey Company, a Minneapolis-based flour miller and grain trader, giving it 16.3 percent of the nation’s wheat-milling capacity and a system of grain exporting terminals. Political barriers to U.S. grain exports had depressed Peavey’s profits, and the acquisition was not the early success story that Banquet was for ConAgra. By 1986, however, Peavey was posting a $16.4 million profit on sales of $1.2 billion, a promising upward trend.

Company Perspectives:

ConAgra is one of the world’s largest and most successful food companies. As North America’s largest foodservice manufacturer and second largest retail food supplier, ConAgra is a leader in multiple segments of the food business and focuses on adding value for customers in retail food, foodservice, and agricultural product channels .

Harper also kept to a commodity-oriented approach by diversifying into agricultural chemicals. ConAgra expanded into fertilizers, and in 1978 acquired United Agri Products, a distributor of herbicides and pesticides. Higher grain prices, Harper reasoned, would mean increased demand for such chemicals.

But, in an attempt to counter the cyclical profit pattern of basic agricultural commodities, Harper also entered areas that did not mesh well with the company’s traditional orientation: pet accessories, a Mexican restaurant chain, and a fabrics and crafts chain, among others.

In a dramatic change of direction during the 1980s, ConAgra decided on prepared foods as a better way to balance cyclical profits in the food industry. The company’s stringent financial goals were being met: return on equity averaged 20 percent, annual growth in trend-line earnings were over 14 percent, and long-term debt was held to below 35 percent of total capitalization. With the company on firmer financial ground, ConAgra began a series of acquisitions that would ultimately make it the nation’s second largest food company.

ConAgra moved into the prepared seafood market in 1981 with the purchase of Singleton Seafood, the largest shrimp processor in the country, and Sea-Alaska Products. In 1987 ConAgra bought Trident Seafoods and O’Donnell-Usen Fisheries, the producer of Taste O’ Sea frozen seafood products, thus positioning the company to compete against the leading frozen seafood brands, Mrs. Paul’s Kitchens, Gorton’s, and Van de Kamp’s.

In 1982, during a low in the poultry cycle, ConAgra moved to take first place in the chicken industry by forming Country Poultry, Inc. By the next year, Country Poultry was delivering more than a billion pounds of brand-name broilers to markets, making it the biggest poultry producer in the country. In 1986, the company formed ConAgra Turkey Company and in 1987 it acquired another poultry company, Longmont Foods, further strengthening its position in the field. But ConAgra’s poultry concerns no longer focused on the basic bird Harper purchased Banquet for: Country Poultry introduced a number of higher-profit convenience poultry products, such as marinated chicken breasts, chicken hot dogs, and processed chicken for fast-food restaurants.

ConAgra moved into another area of processed foods in 1983 when the company purchased Armour Food Company, a processor of red meats such as hot dogs, sausage, bacon, ham, and luncheon meats. The acquisition also included Armour’s line of frozen gourmet entrees, Dinner Classics, which complemented Banquet’s line of frozen foods. As with many of his other acquisitions, Harper bought Armour in a down cycle for book value ($182 million). By waiting to complete the deal until Armour closed several plants, Harper painlessly eliminated about 40 percent of Armour’s major union’s members. Some Armour plants still have unions, but without a master contract labor costs were slashed. Harper then reorganized the company, emphasizing new marketing strategies (reintroducing the familiar Armour jingle to take advantage of consumer recognition) and refocusing product lines. The Dinner Classics line was hurt by price competition and the introduction of new brands of premium frozen dinners. Armour as a whole was still unprofitable through the early 1990s, but profits for the Classics line increased.

In 1986, Harper increased ConAgra’s presence in frozen foods by purchasing the Morton, Patio, and Chun King brands. The following year, the company expanded in red meats with its purchase of E.A. Miller, Inc., a western producer of beef products, and Monfort of Colorado, Inc. Almost a decade earlier, ConAgra had tried to purchase MBPXL Corp., the number two beef packer in the country, only to be blocked at the last minute by the privately owned Cargill Inc. The Monfort deal, for $365 million in stock, made ConAgra the third largest U.S. beef producer. Health-conscious consumers began eating less beef in the late 1980s and ConAgra responded by working to create new, leaner beef products as it developed new poultry products. Another 1987 acquisition, 50 percent of Swift Independent Packing Company, a processor of beef, pork, and lamb, made ConAgra a leading meat processor as well. Harper rounded out his changes at ConAgra by developing the company’s international trading position and by forming its own financial services subsidiary.

Key Dates:

1919:: Four grain milling companies are merged as Nebraska Consolidated Mills Company.
1950s:: Company embarks on short-lived foray into prepared foods via Duncan Hines cake mixes.
1960s:: Company enters the poultry processing market.
1965:: Expansion into Europe begins through joint venture with Bioter-Biona, S.A. of Spain.
1971:: Company changes its name to ConAgra, Inc.
1976:: Charles “Mike” Harper is named president and CEO.
1978:: United Agri Products, agricultural chemicals distributor, is acquired.
1980:: Banquet Foods Company is acquired.
1981:: Company enters prepared seafood market through purchases of Singleton Seafood and Sea-Alaska Products.
1982:: Country Poultry, Inc. is formed and soon becomes the top poultry producer in the country.
1983:: Red meats processor Armour Food Company is acquired.
1987:: Three more red meat acquisitions are completed: E.A. Miller, Inc.; Monfort of Colorado, Inc.; and Swift Independent Packing Company.
1990:: ConAgra acquires Beatrice Company.
1992:: Phil Fletcher becomes president and CEO.
1996:: Major restructuring cuts 6,300 jobs and shutters more than 50 plants; Bruce C. Rohde is named president, having been the company’s chief outside counsel since 1984 (he later assumes the titles of CEO and chairman) .
1998:: Margarine and egg substitute business of Nabisco, Inc. is acquired.
1999:: Company announces major restructuring that involves 8,450 job cuts, the closure of 137 facilities, and the divestment of 18 noncore businesses.
2000:: International Home Foods, Inc. is acquired; company changes its name to ConAgra Foods, Inc.

By the late 1980s, ConAgra had grown into a well diversified food company, better able to absorb the ups and downs of the industry. The year 1987 was a banner one for ConAgra’s poultry division, which posted $130 million in operating profits due to a tremendous (and ultimately unsustainable) upswing in the poultry market. The poultry division’s operating profits plummeted the following year to $20 million, but by then ConAgra’s other divisions were strong enough to make up the difference. The company posted net earnings of $155 million, about 5 percent higher than the previous year. The late 1980s also saw ConAgra lose a prolonged takeover battle to poultry rival Tyson Foods, Inc. over Holly Farms Corporation; had ConAgra acquired Holly Farms it would have gained the top position in the U.S. chicken market.

Restructurings and More Acquisitions in the 1990s and Beyond

In 1988 Harper boasted that ConAgra was probably the only food products company to “participate across the entire food chain.” In the grocery store, however, the majority of its packaged food products were found in the frozen foods section, where it held the top market share in the country. In 1990, sensing that even greater diversification was necessary to ensure steady earnings growth, Harper led the purchase of Beatrice Company, which produced top brands such as Hunt’s Tomato Paste and Butterball Turkey and had annual sales of more than $4 billion. The Beatrice purchase gave ConAgra a broader portfolio of products and provided a strong sales and distribution system in the “dry goods” segment. ConAgra paid $2.35 billion for the company and assumed a debt of about $1 billion in the process.

In the early 1990s ConAgra expanded at a rate of about 35 acquisitions and joint ventures a year. The company’s international presence grew as it formed joint ventures in Japan, Thailand, France, Canada, Chile, and Australia. Key acquisitions included the malt and wool businesses of Elders IXL Ltd. and 50 percent of its beef business, known as Australia Meat Holdings. On the home front, ConAgra made its first foray into the kosher foods business with the purchase of National Foods and also entered the private label consumer products market with the acquisition of Arrow Industries, a clothing manufacturer.

Around this same time the company enlarged its frozen foods market share further with the introduction of Healthy Choice, a low fat, low sodium, and low cholesterol line of frozen dinner entrees. By 1993, the Healthy Choice line numbered 300-plus products. By 1993 Healthy Choice posted sales of over $1 billion and was lauded as the “most successful new food brand introduction in two decades” by Advertising Age .

The company also reorganized some of its divisions in the early 1990s, creating ConAgra Grocery Products Companies to unite its Hunt-Wesson companies with its frozen food businesses and ConAgra Meat Products Companies to bring together its branded package meat business and its fresh red meat businesses. Sales for 1992 surpassed $20 billion for the first time, as the company posted its 12th consecutive year of record earnings.

In 1993 Harper resigned his post at ConAgra to become chairman and CEO at RJR Nabisco Holdings Corp. Phil Fletcher, ConAgra’s longtime president and chief operating officer, assumed Harper’s post. In his first two years at the helm, Fletcher cut operating costs by enforcing stricter cost-control measures and fostering greater communication and cooperation between the company’s six dozen individual units. Continuing Harper’s acquisition strategy, ConAgra began expanding globally, with new ventures in China, Australia, Denmark, and Mexico. Earnings for 1994 reached $437 million on sales of $23.5 billion. That year also marked ConAgra’s 75th anniversary, and, as part of the company’s celebration, $200,000 was donated to a museum in Grand Island, Nebraska, for the erection of a replica of the original Glade Mill, one of the four mills merged to create the company in 1919.

During the mid-1990s, ConAgra was involved in two separate lawsuits. In 1995 the company agreed to pay $13.6 million to settle a class-action suit brought by fish distributors and processors who claimed that ConAgra’s Country Skillet Catfish Co. and six other catfish wholesalers conspired to fix prices for nearly a decade. While some of the smaller defendants had admitted guilt in the case, neither ConAgra nor the other major defendants—Hormel Foods Corporation and Delta Pride Catfish Inc.—admitted responsibility. Two years later ConAgra agreed to plea guilty to a felony charge of wire fraud as well as misdemeanor charges of misgrading crops and adding water to grain in a federal case involving ConAgra’s Peavey grain elevators in Indiana. ConAgra employees at the elevators had been accused of cheating farmers who sold crops to ConAgra and of spraying water on grain before selling it in order to increase its value (since it was sold by weight). Four former ConAgra employees pled guilty to criminal charges, and ConAgra agreed to pay $8.3 million in criminal penalties. ConAgra said that top executives at the company were unaware of the alleged activities of the elevator employees.

Meanwhile, moving to improve profitability, ConAgra launched a major restructuring in mid-1996, Approximately 6,300 employees were cut from the workforce, representing a 7 percent reduction, and more than 50 production facilities were closed or sold. A pretax restructuring charge of $507.8 million was taken, leading to a reduced net income figure for fiscal 1996 of $211.8 million (on sales of $24.32 billion). The company hoped to eventually realize more than $100 million in annual cost savings from the job cuts and plant closings.

In August 1996 Bruce C. Rohde was named president and vice-chairman of ConAgra, having been the company’s chief outside counsel since 1984. In September 1997 Rohde was named CEO, and he then added the chairmanship the following year. Acquisitions continued during this period of management transition, with Gilroy Foods, a California-based processor of dehydrated garlic and onion products and other spices, purchased in 1996, and GoodMark Foods Inc., maker of the Slim Jim brand of meat snacks, bought in 1998. Also acquired in 1998, for $400 million, was the margarine and egg substitute business of Nabisco, Inc. Among the brands gained through this deal were Parkay, Blue Bonnet, Fleischmann’s, and Chiffon margarines and the Egg Beaters egg substitute product.

ConAgra announced another major restructuring in May 1999, which resulted in 8,450 employees losing their jobs. By the end of the 2000 fiscal year, 31 production plants and 106 nonproduction facilities had been shut down and 18 noncore businesses had been divested. The restructuring resulted in pretax charges of $440.8 million and $621.4 million in 1999 and 2000, respectively. This latest restructuring was part of a larger program called “Operation Overdrive,” which aimed at generating $600 million in annual cost savings. In addition to the cost cutting, Operation Overdrive also involved a reorganization of the company by customer channel—an abandonment of the decentralized structure installed by Harper in 1980s in favor of a more centralized approach—and an increase in marketing expenditures, including a new emphasis on cross-selling among the various company brands.

Acquisitions continued in 2000. In January 2000 ConAgra acquired Seaboard Farms, the poultry division of Seaboard Corporation, for about $360 million. Seaboard Farms, which had annual sales of $480 million, was a producer and marketer of value-added poultry products primarily to foodservice customers. ConAgra in July 2000 acquired Lightlife Foods, Inc., a leading producer of premium vegetarian and soy products. Lightlife’s product line was a good fit with ConAgra’s blockbuster Healthy Choice brand. Then one month later, ConAgra completed one of its largest acquisitions in history, a $2 billion deal for International Home Foods, Inc. ConAgra gained a number of well-known consumer brands, including Chef Boyardee pasta products, PAM cooking spray, Gulden’s mustard, Bumble Bee seafood, and Jiffy Pop popcorn. International Home Foods had posted 1999 revenues of $2.1 billion. With the company continuing its transformation from its agricultural origins to its position as primarily a producer of packaged foods, the decision was made to add “Foods” to the company name, resulting in the introduction of the ConAgra Foods, Inc. name in September 2000. Plans were also laid to elevate the company’s profile with the public as most consumers recognized the company’s brands but not the company itself. The new name was slated to be placed on more than 100 brand name products produced by ConAgra.

In its 75-plus-year history, ConAgra had evolved from a low-profile flour miller into an international food company with sales of more than $27 billion. It gained its stature through a remarkable mix of conservative fiscal management and aggressive expansion through acquisitions and joint ventures. Building on the work of his predecessors, Rohde was transforming ConAgra into a leaner, more efficient company, and was likely to seek additional acquisitions in a food industry that was rapidly consolidating at the turn of the millennium.

Principal Operating Units

ConAgra Foodservice Company; ConAgra Grocery Products Companies; ConAgra Frozen Prepared Foods; ConAgra Dairy Case Companies; ConAgra Refrigerated Prepared Foods; ConAgra Meat Companies; ConAgra Poultry Company; ConAgra Food Ingredients; United Agri Products Companies; ConAgra Trade Group.

Principal Competitors

Archer Daniels Midland Company; Campbell Soup Company; Cargill, Incorporated; Cenex Harvest States Cooperative; Groupe Danone; Dean Foods Company; Del Monte Foods Company; Farmland Industries, Inc.; Frito-Lay, Inc.; General Mills, Inc.; Gold Kist Inc.; H.J. Heinz Company; Hormel Foods Corporation; IBP, Inc.; Kraft Foods, Inc.; Land O’Lakes, Inc.; McCain Foods Limited; Nestlé S.A.; Perdue Farms Incorporated; The Pillsbury Company; The Quaker Oats Company; Sara Lee Corporation; Schwan’s Sales Enterprises, Inc.; Smithfield Foods, Inc.; Suiza Foods Corporation; Tyson Foods, Inc.; Unilever.

ConAgra Foods, Inc.

views updated May 29 2018

ConAgra Foods, Inc.

One ConAgra Drive
Omaha, Nebraska 68102-5001
U.S.A.
Telephone: (402) 595-4000
Fax: (402) 595-4707
Web site: http://www.conagrafoods.com

Public Company
Incorporated: 1919 as Nebraska Consolidated Mills Company
Employees: 27,000
Sales: $11.58 billion (2006)
Stock Exchanges: New York
Ticker Symbol: CAG
NAIC: 311211 Flour Milling; 311223 Other Oilseed Processing; 311225 Fats and Oils Refining and Blending; 311330 Confectionery Manufacturing from Purchased Chocolate; 311411 Frozen Fruit, Juice, and Vegetable Processing; 311412 Frozen Specialty Food Manufacturing; 311421 Fruit and Vegetable Canning; 311422 Specialty Canning; 311423 Dried and Dehydrated Food Manufacturing; 311511 Fluid Milk Manufacturing; 311612 Meat Processed from Carcasses; 311615 Poultry Processing; 311911 Roasted Nuts and Peanut Butter Manufacturing; 311919 Other Snack Food Manufacturing; 311941 Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing; 311999 All Other Miscellaneous Food Manufacturing

In 1919 Alva Kinney brought four grain milling companies in south central Nebraska together to take advantage of increasing grain production in the Midwest, and the Nebraska Consolidated Mills Company was born. More than 85 years and two name changes later, ConAgra Foods, Inc., stands as one of the largest U.S.-based food companies, with nearly 60 percent of revenues derived from the sale of packaged and frozen foods through U.S. retail channels. The company's numerous consumer brands include ACT II, Banquet, Blue Bonnet, Brown 'N Serve, Chef Boyardee, DAVID, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, La Choy, Marie Callender's, Orville Redenbacher's, PAM Cooking Spray, Parkay, Pemmican, Peter Pan, Reddi-wip, Rosarita, Slim Jim, Swiss Miss, Van Camp's, and Wesson. Responsible for approximately 30 percent of revenues is ConAgra's food and ingredients segment, which sells commercially branded foods and ingredients to foodservice, food manufacturing, and industrial customers. ConAgra also generates about 10 percent of its revenues from its trading and merchandising business, which is involved in the sourcing, manufacturing, distribution, and trading of agricultural commodities, fertilizer, and energy. Internationally, the company markets more than 40 consumer food brands in more than 100 countries, generating about 5 percent of overall sales.

EARLY HISTORY: FROM MILLING TO ANIMAL FEED TO POULTRY PROCESSING

Officially formed on September 29, 1919, the Nebraska Consolidated Mills Company (NCM) was headquartered in Grand Island, Nebraska. At first Kinney concentrated on milling the bumper postwar wheat crops at his four Nebraska locations. Soon, to accommodate his growing business, Kinney added a mill in Omaha, in 1922, and moved the headquarters of the company there. He continued to run a profitable and relatively quiet company solely in Nebraska until he retired as president in 1936.

Kinney was succeeded by R. S. Dickinson. Initially, Dickinson followed his predecessor's simple but successful policy of milling grain in Nebraska. World War II and the postwar boom kept the demand for grain high and the milling business profitable.

During the early 1940s Dickinson began to use the company's profits to expand. Other successful milling operations, such as General Mills, Inc., and Pillsbury Mills, Inc. (later the Pillsbury Company), were expanding both the number of plants and the number of products they offered, and NCM followed the same trend. In 1942 Dickinson opened a flour mill and animal feed mill in Alabama. He also promoted research into new types of prepared foods that used flour, which led to the development of Duncan Hines cake mixes, introduced in the early 1950s.

The Alabama expansion was profitable, but Dickinson found that it was more difficult to gain a foothold in the prepared-foods market. Cake mixes, though only a small proportion of the total flour market, accounted for as much as $140 million a year in retail sales by 1947. However, the market was dominated by General Mills's Betty Crocker brand and by Pillsbury, each with one-third of the market share, while Duncan Hines controlled only 10 to 12 percent. Unable to increase its share of the highly competitive cake mix market, NCM eventually decided to get out of prepared foods and use the money it raised to expand in basic commodities: grains and feeds. So, in 1956 the company sold its Duncan Hines brand to the Procter & Gamble Company.

The new president of Nebraska Consolidated Mills, J. Allan Mactier, used the proceeds from the sale to expand aggressively. In 1957 NCM built the first major grain processing plant in Puerto Rico through its subsidiary Caribe Company. The $3 million plant processed flour, corn meal, and animal feeds at Catano in San Juan harbor. Production at the plant did not compete with the parent company's already existing concerns; none of the flours and feeds produced there were exported to the mainland.

Caribe's foothold on the island led to further Puerto Rican expansion in new areas. A second subsidiary, Molinos de Puerto Rico, took over Caribe's animal feed business on the island while also developing Puerto Rico's virtually nonexistent beef industry as a market for its products. In Molinos' first five years of operation, consumption of animal feeds in Puerto Rico increased from 136,516 tons, of which 100,314 were imported, to 249,267 tons, of which only 46,723 were imported. The company also profited from an increased demand for meat and milk on the island.

Elsewhere, however, flour millers faced shrinking profits as demand leveled off in both domestic and foreign markets. European grain production had recovered from the disruption of World War II, and prosperity at home in the 1950s and 1960s allowed consumers to buy more expensive food items, leading to lower flour consumption.

Large millers turned to diversification to offset declining profitability. Industry leaders General Mills and Pillsbury developed their consumer foods lines and introduced new types of convenience foods, while the third of the "Big Three" in flour milling, International Milling Company, Inc., diversified primarily into animal feeds. Nebraska Consolidated Mills, perhaps unwilling to compete again in packaged foods after its experience with Duncan Hines, also developed the animal feed end of its business. Throughout the 1960s and into the 1970s, the company established mills and distribution centers for feed and flour in the Southeast and Northwest.

COMPANY PERSPECTIVES

ConAgra Foods nourishes the lives of its consumers, customers and employees by providing trusted, brand-name food and quality ingredients, while fostering a workplace that grows talented people and values inclusion. We work every day to find a better way—to make meal time convenient, to help schools provide nutritious meals for students, to improve the communities in which we operate and more.

NCM also turned to another basic commodity: chicken. It developed poultry growing and processing complexes in Georgia, Louisiana, and Alabama during the 1960s. In 1965 the company also began to expand into the European market by going into partnership with Bioter-Biona, S.A., a Spanish producer of animal feed and animal health products and breeder of pigs, chickens, and trout.

EMERGING AS CONAGRA

By 1971 Nebraska Consolidated Mills had outgrown its early base in Nebraska as well as its name. It chose a new name to reflect its new concerns: ConAgra, meaning "in partnership with the land" in Latin. ConAgra, Inc., was listed on the New York Stock Exchange in 1973.

The new name, however, did not necessarily mean continuing success. The early 1970s, in fact, brought the company to a low point. Many of its acquisitions during the expansion of the 1960s and early 1970s were only marginally profitable at best. In 1974 the company posted net losses and suspended dividends. Heavy losses in commodity speculations brought ConAgra to the brink of bankruptcy in 1975.

KEY DATES

1919:: Four grain milling companies are merged as Nebraska Consolidated Mills Company, based in Grand Island, Nebraska.
1922:: Headquarters are shifted to Omaha, Nebraska.
1950s:: Company embarks on short-lived foray into prepared foods via Duncan Hines cake mixes.
1960s:: Company enters the poultry processing market.
1965:: Expansion into Europe begins through joint venture with Bioter-Biona, S.A. of Spain.
1971:: Company changes its name to ConAgra, Inc.
1973:: ConAgra stock is listed on the New York Stock Exchange.
1976:: Charles "Mike" Harper is named president and CEO.
1978:: United Agri Products, agricultural chemicals distributor, is acquired.
1980:: Banquet Foods Company is acquired.
1981:: Company enters prepared seafood market through purchases of Singleton Seafood and Sea-Alaska Products.
1982:: Country Poultry, Inc., is formed and soon becomes the top poultry producer in the country.
1983:: Red meats processor Armour Food Company is acquired.
1987:: Three more red meat acquisitions are completed: E.A. Miller, Inc.; Monfort of Colorado, Inc.; and Swift Independent Packing Company.
1988:: The Healthy Choice frozen dinner brand debuts.
1990:: ConAgra acquires Beatrice Company.
1996:: Major restructuring cuts 6,300 jobs and shutters more than 50 plants.
1998:: Margarine and egg substitute business of Nabisco, Inc., is acquired.
1999:: Company launches major restructuring that involves 8,450 job cuts, the closure of 137 facilities, and the divestment of 18 noncore businesses.
2000:: International Home Foods, Inc., is acquired; company changes its name to ConAgra Foods, Inc.
2002:: ConAgra shifts its fresh beef and pork businesses into a joint venture, Swift & Company, in which it continues to hold a 45 percent stake, a move that begins the firm's shift away from commodity businesses.
2003:: Company's chicken business is sold to Pilgrim's Pride Corporation and the U.S. and Canadian operations of United Agri Products are also divested.
2004:: ConAgra sells its minority stake in Swift.
2006:: Another string of divestments includes its remaining seafood and cheese businesses and the bulk of the company's refrigerated meat businesses.

ConAgra's first high-profile leader, former Pillsbury executive Charles "Mike" Harper, was named president and CEO in 1976 with a mandate to turn the ailing company around. Essential to Harper's turnaround plan were strict financial goals combined with a series of acquisitions that served to broaden ConAgra's sales base. To reduce debt, Harper first sold nonessential operations. He then began to buy agricultural businesses at the low end of their profit cycles and turn them around. Harper originally intended to stick with ConAgra's emphasis on basic commodities rather than compete with the packaged-food giants. When he purchased Banquet Foods Company in 1980, he said that the acquisition was a way to increase ConAgra's chicken capacity. ConAgra's chicken production did increase by a third, bringing the company from eighth to fifth place among chicken producers. ConAgra expanded into fish as well as poultry in the 1970s with investments in catfish aquaculture.

CREATING A DIVERSIFIED FOOD COMPANY

Another of Harper's acquisitions put ConAgra back in the forefront of the flour market. In 1982 ConAgra bought the Peavey Company, a Minneapolis-based flour miller and grain trader, giving it 16.3 percent of the nation's wheat-milling capacity and a system of grain exporting terminals. Political barriers to U.S. grain exports had depressed Peavey's profits, and the acquisition was not the early success story that Banquet was for ConAgra. By 1986, however, Peavey was posting a $16.4 million profit on sales of $1.2 billion, a promising upward trend.

Harper also kept to a commodity-oriented approach by diversifying into agricultural chemicals. ConAgra expanded into fertilizers, and in 1978 acquired United Agri Products, a distributor of herbicides and pesticides. Higher grain prices, Harper reasoned, would mean increased demand for such chemicals.

In an attempt to counter the cyclical profit pattern of basic agricultural commodities, Harper also entered areas that did not mesh well with the company's traditional orientation: pet accessories, a Mexican restaurant chain, and a fabrics and crafts chain, among others.

In a dramatic change of direction during the 1980s, ConAgra decided on prepared foods as a better way to balance cyclical profits in the food industry. The company's stringent financial goals were being met: return on equity averaged 20 percent, annual growth in trend-line earnings were over 14 percent, and long-term debt was held to below 35 percent of total capitalization. With the company on firmer financial ground, ConAgra began a series of acquisitions that would eventually make it the nation's second largest food company.

ConAgra moved into the prepared seafood market in 1981 with the purchase of Singleton Seafood, the largest shrimp processor in the country, and Sea-Alaska Products. In 1987 ConAgra bought Trident Seafoods and O'Donnell-Usen Fisheries, the producer of Taste O' Sea frozen seafood products, thus positioning the company to compete against the leading frozen seafood brands, Mrs. Paul's Kitchens, Gorton's, and Van de Kamp's.

In 1982, during a low in the poultry cycle, ConAgra moved to take first place in the chicken industry by forming Country Poultry, Inc. By the next year, Country Poultry was delivering more than a billion pounds of brand-name broilers to markets, making it the biggest poultry producer in the country. In 1986 the company formed ConAgra Turkey Company, and in 1987 it acquired another poultry company, Longmont Foods, further strengthening its position in the field. However, ConAgra's poultry concerns no longer focused on the basic bird Harper purchased Banquet for: Country Poultry introduced a number of higher-profit convenience poultry products, such as marinated chicken breasts, chicken hot dogs, and processed chicken for fast-food restaurants.

ConAgra moved into another area of processed foods in 1983 when the company purchased Armour Food Company, a processor of red meats such as hot dogs, sausage, bacon, ham, and luncheon meats. The acquisition also included Armour's line of frozen gourmet entrees, Dinner Classics, which complemented Banquet's line of frozen foods. As with many of his other acquisitions, Harper bought Armour in a down cycle for book value ($182 million). By waiting to complete the deal until Armour closed several plants, Harper painlessly eliminated about 40 percent of Armour's major union's members. Some Armour plants still had unions, but without a master contract labor costs were slashed. Harper then reorganized the company, emphasizing new marketing strategies (reintroducing the familiar Armour jingle to take advantage of consumer recognition) and refocusing product lines. The Dinner Classics line was hurt by price competition and the introduction of new brands of premium frozen dinners. Armour as a whole was still unprofitable through the early 1990s, but profits for the Classics line increased.

In 1986 Harper increased ConAgra's presence in frozen foods by purchasing the Morton, Patio, and Chun King brands. The following year, the company expanded in red meats with its purchase of E.A. Miller, Inc., a western producer of beef products, and Monfort of Colorado, Inc. Almost a decade earlier, ConAgra had tried to purchase MBPXL Corp., the number two beef packer in the country, only to be blocked at the last minute by the privately owned Cargill Inc. The Monfort deal, for $365 million in stock, made ConAgra the third largest U.S. beef producer. Health-conscious consumers began eating less beef in the late 1980s and ConAgra responded by working to create new, leaner beef products as it developed new poultry products. Another 1987 acquisition, 50 percent of Swift Independent Packing Company, a processor of beef, pork, and lamb, made ConAgra a leading meat processor as well. (The other 50 percent of Swift was acquired in 1989.) Harper rounded out his changes at ConAgra by developing the company's international trading position and by forming its own financial services subsidiary.

By the late 1980s, ConAgra had grown into a well diversified food company, better able to absorb the ups and downs of the industry. The year 1987 was a banner one for ConAgra's poultry division, which posted $130 million in operating profits because of a tremendous (and ultimately unsustainable) upswing in the poultry market. The poultry division's operating profits plummeted the following year to $20 million, but by then ConAgra's other divisions were strong enough to make up the difference. The company posted net earnings of $155 million, about 5 percent higher than the previous year. The late 1980s also saw ConAgra lose a prolonged takeover battle to poultry rival Tyson Foods, Inc., over Holly Farms Corporation; had ConAgra acquired Holly Farms it would have gained the top position in the U.S. chicken market.

RESTRUCTURINGS AND MORE ACQUISITIONS

In 1988 Harper boasted that ConAgra was probably the only food products company to "participate across the entire food chain." In the grocery store, however, the majority of its packaged food products were found in the frozen foods section, where it held the top market share in the country. In 1990, sensing that even greater diversification was necessary to ensure steady earnings growth, Harper led the purchase of Beatrice Company, which produced top brands such as Hunt's Tomato Paste and Butterball Turkey and had annual sales of more than $4 billion. The Beatrice purchase gave ConAgra a broader portfolio of products and provided a strong sales and distribution system in the "dry goods" segment. ConAgra paid $2.35 billion for the company and assumed a debt of about $1 billion in the process.

In the early 1990s ConAgra expanded at a rate of about 35 acquisitions and joint ventures a year. The company's international presence grew as it formed joint ventures in Japan, Thailand, France, Canada, Chile, and Australia. Key acquisitions included the malt and wool businesses of Elders IXL Ltd. and 50 percent of its beef business, known as Australia Meat Holdings. On the home front, ConAgra made its first foray into the kosher foods business with the purchase of National Foods and also entered the private label consumer products market with the acquisition of Arrow Industries, a clothing manufacturer.

The company enlarged its frozen foods market share further with the 1988 introduction of Healthy Choice, a low-fat, low-sodium, and low-cholesterol line of frozen dinner entrees. By 1993, the Healthy Choice line numbered 300-plus products. By 1993 Healthy Choice posted sales of over $1 billion and was lauded as the "most successful new food brand introduction in two decades" by Advertising Age.

The company also reorganized some of its divisions in the early 1990s, creating ConAgra Grocery Products Companies to unite its Hunt-Wesson companies with its frozen food businesses and ConAgra Meat Products Companies to bring together its branded packaged meat business and its fresh red meat businesses. Sales for 1992 surpassed $20 billion for the first time, as the company posted its 12th consecutive year of record earnings.

In 1993 Harper resigned his post at ConAgra to become chairman and CEO at RJR Nabisco Holdings Corp. Phil Fletcher, ConAgra's longtime president and chief operating officer, assumed Harper's post. In his first two years at the helm, Fletcher cut operating costs by enforcing stricter cost-control measures and fostering greater communication and cooperation between the company's six dozen individual units. Continuing Harper's acquisition strategy, ConAgra began expanding globally, with new ventures in China, Australia, Denmark, and Mexico. The company also expanded into kosher products by acquiring Hebrew National Foods, maker of premium hot dogs and deli meats, in 1993, and the following year ConAgra purchased the Marie Callender's brand for frozen food. Earnings for 1994 reached $437 million on sales of $23.5 billion. That year also marked ConAgra's 75th anniversary, and, as part of the company's celebration, $200,000 was donated to a museum in Grand Island, Nebraska, for the erection of a replica of the original Glade Mill, one of the four mills merged to create the company in 1919. In 1995 ConAgra acquired the Van Camp's canned beans brand and Knott's Berry Farm Foods, maker of jams, jellies, salad dressings, and syrups.

During the mid-1990s, ConAgra was involved in two separate lawsuits. In 1995 the company agreed to pay $13.6 million to settle a class-action suit brought by fish distributors and processors who claimed that ConAgra's Country Skillet Catfish Co. and six other catfish wholesalers conspired to fix prices for nearly a decade. While some of the smaller defendants had admitted guilt in the case, neither ConAgra nor the other major defendants, Hormel Foods Corporation and Delta Pride Catfish Inc., admitted responsibility. Two years later ConAgra agreed to plead guilty to a felony charge of wire fraud as well as misdemeanor charges of misgrading crops and adding water to grain in a federal case involving ConAgra's Peavey grain elevators in Indiana. ConAgra employees at the elevators had been accused of cheating farmers who sold crops to ConAgra and of spraying water on grain before selling it in order to increase its value (since it was sold by weight). Four former ConAgra employees pleaded guilty to criminal charges, and ConAgra agreed to pay $8.3 million in criminal penalties. ConAgra said that top executives at the company were unaware of the alleged activities of the elevator employees.

Meanwhile, moving to improve profitability, ConAgra launched a major restructuring in mid-1996. Approximately 6,300 employees were cut from the workforce, representing a 7 percent reduction, and more than 50 production facilities were closed or sold. A pretax restructuring charge of $507.8 million was taken, leading to a reduced net income figure for 1996 of $211.8 million (on sales of $24.32 billion). The company hoped to eventually realize more than $100 million in annual cost savings from the job cuts and plant closings.

In August 1996 Bruce C. Rohde was named president and vice-chairman of ConAgra, having been the company's chief outside counsel since 1984. In September 1997 Rohde was named CEO, and he then added the chairmanship the following year. Acquisitions continued during this period of management transition, with Gilroy Foods, a California-based processor of dehydrated garlic and onion products and other spices, purchased in 1996, and GoodMark Foods Inc., maker of the Slim Jim brand of meat snacks, bought in 1998. Also acquired in 1998, for $400 million, was the margarine and egg substitute business of Nabisco, Inc. Among the brands gained through this deal were Parkay, Blue Bonnet, Fleischmann's, and Chiffon margarines and the Egg Beaters egg substitute product.

ConAgra announced another major restructuring in May 1999, which resulted in 8,450 employees losing their jobs. By the end of the 2000 fiscal year, 31 production plants and 106 nonproduction facilities had been shut down and 18 noncore businesses had been divested. The restructuring resulted in pretax charges of $440.8 million and $621.4 million in 1999 and 2000, respectively. This latest restructuring was part of a larger program called "Operation Overdrive," which aimed at generating $600 million in annual cost savings. In addition to the cost cutting, Operation Overdrive also involved a reorganization of the company by customer channel, an abandonment of the decentralized structure installed by Harper in the 1980s in favor of a more centralized approach, and an increase in marketing expenditures, including a new emphasis on cross-selling among the various company brands.

SHIFTING OUT OF COMMODITY-ORIENTED BUSINESSES

Acquisitions continued in 2000. In January 2000 ConAgra acquired Seaboard Farms, the poultry division of Seaboard Corporation, for about $360 million. Seaboard Farms, which had annual sales of $480 million, was a producer and marketer of value-added poultry products primarily to foodservice customers. ConAgra in July 2000 acquired Lightlife Foods, Inc., a leading producer of premium vegetarian and soy products. Lightlife's product line was a good fit with ConAgra's blockbuster Healthy Choice brand. Then one month later, ConAgra completed one of its largest acquisitions in history, a $2 billion deal for International Home Foods, Inc. ConAgra gained a number of well-known consumer brands, including Chef Boyardee pasta products, PAM cooking spray, Gulden's mustard, Bumble Bee seafood, and Jiffy Pop popcorn. International Home Foods had posted 1999 revenues of $2.1 billion. With the company continuing its transformation from its agricultural origins to its position as primarily a producer of packaged foods, the decision was made to add "Foods" to the company name, resulting in the introduction of the ConAgra Foods, Inc., name in September 2000. Plans were also laid to elevate the company's profile with the public as most consumers recognized the company's brands but not the company itself. The new name was slated to be placed on more than 100 brand name products produced by ConAgra.

By fiscal 2001 revenues at ConAgra had reached $27.19 billion. That year the company was forced to restate its financial results for the 1998 through 2000 fiscal years because its United Agri Products subsidiary had recorded fictitious sales and improperly recorded revenue on sales that had been deferred. Earnings for the years were lowered by a total of $120 million. In 2005 ConAgra agreed to pay $14 million to settle a shareholder lawsuit that had been filed in response to the accounting irregularities. In the meantime, the company suffered another black eye in mid-2002 when the U.S. Department of Agriculture forced its ConAgra Beef unit to recall 19 million pounds of ground beef produced at a plant in Greeley, Colorado, because of E. coli contamination that was ultimately linked to 38 illnesses and one death. This was the second largest meat recall in U.S. history.

In 2002 ConAgra began a multiyear process of divesting low-margin commodities-related businesses in order to heighten the focus on higher-margin, branded packaged foods. The first operations to be jettisoned were the company's fresh beef and pork businesses, including ConAgra Beef, which were transferred into a joint venture led by Hicks, Muse, Tate & Furst Incorporated. This transaction, completed in September 2002 and valued at $1.4 billion, left ConAgra with a 45 percent stake in the venture, which was named Swift & Company after one of the brands included in the deal.

Several more divestitures followed in 2003. In May the Bumble Bee and other brands of canned seafood were sold to an investment group that included Bumble Bee managers, and ConAgra also sold its processed-cheese operations, which included the Nauvoo and Treasure Cave brands, to Saputo Inc. of Canada. In November 2003 ConAgra sold its chicken business to Pilgrim's Pride Corporation for about $550 million in cash and stock and the U.S. and Canadian crop inputs businesses of United Agri Products to Apollo Management, L.P. in a $560 million cash-and-stock deal. Results for fiscal 2004 highlighted the shift in focus that the divestiture spree was engendering: More than 80 percent of revenues was derived from branded packaged foods that year, compared to the more than 50 percent of sales that had come from fresh meat and other commodities in 1998.

Continuing to unload its commodity holdings, ConAgra sold its minority interest in Swift to Hicks, Muse in September 2004 for $194 million. One month later the company sold its cattle feedlots to Smithfield Foods, Inc. In April 2005, ConAgra divested the international operations of United Agri Products. ConAgra also began to reinvigorate what had been a fairly moribund new product development pipeline. In 2004, for example, the company introduced Banquet Crock-Pot Classics, frozen meat and vegetable meals designed for slow-cooking in Crock-Pots. In its first 12 months on the market, this new product line brought in sales of more than $100 million. Overall revenues for fiscal 2005 totaled $14.57 billion, substantially below the record level of $27.63 billion of 2002 because of the ongoing slimdown. The profits of $641.5 million were trimmed because of difficulties in ConAgra's packaged-meat operations, which were struggling to contend with rising meat costs. In August 2005 the company sold its minority stake in Pilgrim's Pride for $482 million.

In October 2005 Gary Rodkin was brought on-board as the new president and CEO of ConAgra Foods, succeeding the retiring Rohde. Rodkin had served as chairman and CEO of PepsiCo, Inc.'s Beverages and Foods North America unit. One of the new leader's first moves, initiated in December 2005, was to streamline the corporation's structure into two main businesses: consumer foods and commercial products, the latter representing a merger of the firm's foodservice and food ingredients businesses, as well as encompassing what remained of its agricultural and energy commodities business. Early in 2006 he then announced the company's intention to divest several more commodity-oriented businesses—Cook's ham, seafood, and packaged meats and cheese—that generated annual revenues of $2.8 billion but low profits. In March, ConAgra sold the Cook's ham business to Smithfield Foods for $260 million. Its Louis Kemp mock crab business was offloaded to Trident Seafoods Corporation, while the remaining seafood brands went to Singleton Fisheries, Inc. In August 2006 ConAgra sold the last of its cheese businesses to a Dallas-based investment company, Fair-mount Food Group, LLC. Two months later, most of ConAgra's refrigerated meat businesses, including Butterball turkeys, Armour hot dogs, and Eckrich meats, were sold to Smithfield Foods for $571 million in cash. ConAgra held onto several meat brands, including Healthy Choice meats, Hebrew National, Brown 'N Serve, Slim Jim, and Pemmican.

Much smaller and more focused on retail packaged food brands by late 2006, ConAgra was working to bolster its marketing efforts for its top brands to push sales and increase profits. The company had also launched a multiyear efficiency drive involving the closure of about a dozen plants toward a goal of cutting annual operating costs by $100 million. Having evolved from a low profile flour miller into an international food company with sales of more than $11 billion, ConAgra Foods was clearly entering a new, and potentially more profitable, era in its 85-plus-year history.

Maura Troester

Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

ConAgra Foods Canada, Inc./Aliments ConAgra Canada Inc.; ConAgra Foods Export Company, Inc.; ConAgra Foods Food Ingredients Company, Inc.; ConAgra Foods Packaged Foods Company, Inc.; ConAgra Grocery Products Company, LLC; ConAgra International Fertilizer Company; ConAgra International, Inc.; ConAgra Limited/ConAgra Limitée (Canada); ConAgra Trade Group, Inc.

PRINCIPAL OPERATING UNITS

Consumer Foods; International Foods; Commercial Products.

PRINCIPAL COMPETITORS

Kraft Foods Inc.; General Mills, Inc.; Nestlé S.A.; Unilever; H.J. Heinz Company; Sara Lee Food & Beverage; Campbell Soup Company; Kellogg Company.

ConAgra, Inc.

views updated May 21 2018

ConAgra, Inc.

ConAgra Center
One Central Park Plaza
Omaha, Nebraska 68102
U.S.A.
(402) 595-4000
Fax: (402) 595-4595

Public Company
Incorporated: 1919 as Nebraska Consolidated Mills
Company
Employees: 42,993
Sales: $21.5 billion
Stock Exchanges: New York
SICs: 2048 Prepared Feeds, Not Elsewhere Classified; 2879
Agricultural Chemicals, Not Elsewhere Classified; 2041
Flour & Other Grain Mill Products; 6211 Security Brokers
& Dealers

In 1919 Alva Kinney brought four grain milling companies in south central Nebraska together to take advantage of increasing grain production in the Midwest, and the Nebraska Consolidated Mills Company was born. Seventy years and a name change later, ConAgra, Inc. is a diversified international company whose products range from agricultural supplies such as fertilizers, pesticides, and feeds to prepared gourmet dinners for a new age of consumers.

Officially formed on September 29, 1919, the Nebraska Consolidated Mills Company (NCM) was headquartered in Grand Island, Nebraska. At first Kinney concentrated on milling the bumper postwar wheat crops at his four Nebraska locations. But soon, to accommodate his growing business, Kinney added a mill in Omaha, in 1922, and moved the headquarters of the company there. He continued to run a profitable and relatively quiet company solely in Nebraska until he retired as president in 1936.

Kinney was succeeded by R. S. Dickinson. Initially, Dickinson followed his predecessor’s simple but successful policy of milling grain in Nebraska. World War II and the postwar boom kept the demand for grain high and the milling business profitable.

During the early 1940s Dickinson began to use the company’s profits to expand. Other successful milling operations, such as General Mills and Pillsbury, were expanding both the number of plants and the number of products they offered, and NCM followed the same trend. In 1942 Dickinson opened a flour mill and animal feed mill in Alabama. He also promoted research into new types of prepared foods that used flour, which led to the development of Duncan Hines cake mixes, introduced in the early 1950s.

The Alabama expansion was profitable, but Dickinson found that it was more difficult to gain a foothold in the prepared-foods market. Cake mixes, though only a small proportion of the total flour market, accounted for as much as $140 million a year in retail sales by 1947. But the market was dominated by General Mills’s Betty Crocker brand and by Pillsbury, each with one third of the market share, while Duncan Hines controlled only ten to 12 percent. Unable to increase its share of the highly-competitive cake mix market, NCM eventually decided to get out of prepared foods and use the money it raised to expand in basic commodities: grains and feeds. So, in 1956 the company sold its Duncan Hines brand to Proctor & Gamble.

The new president of Nebraska Consolidated Mills, J. Allan Mactier, used the proceeds from the sale to expand aggressively. In 1958, NCM built the first major grain processing plant in Puerto Rico through its subsidiary, Caribe Company. The $3 million plant processed flour, corn meal, and animal feeds at Catano in San Juan harbor. Production at the plant did not compete with the parent company’s already-existing concerns; none of the flours and feeds produced there were exported to the mainland.

Caribe’s foothold on the island led to further Puerto Rican expansion in new areas. A second subsidiary, Molinos de Puerto Rico, took over Caribe’s animal feed business on the island while also developing Puerto Rico’s virtually nonexistent beef industry as a market for its products. In Molino’s first five years of operation, consumption of animal feeds in Puerto Rico increased from 136,516 tons, of which 100,314 were imported, to 249,267 tons, of which only 46,723 were imported. The company also profited from an increased demand for meat and milk on the island.

Elsewhere, however, flour millers faced shrinking profits as demand leveled off in both domestic and foreign markets. European grain production had recovered from the disruption of World War II, and prosperity at home in the 1950s and 1960s allowed consumers to buy more expensive food items, leading to lower flour consumption.

Large millers turned to diversification to offset declining profitability. Industry leaders General Mills and Pillsbury developed their consumer foods lines and introduced new types of convenience foods, while the third of the “Big Three” in flour milling, International Milling Company, Inc., diversified primarily into animal feeds. Nebraska Consolidated Mills, perhaps unwilling to compete again in packaged foods after its experience with Duncan Hines, also developed the animal feed end of its business. Throughout the 1960s and into the 1970s, the company developed mills and distribution centers for feed and flour in the Southeast and Northwest.

NCM also turned to another basic commodity: chicken. It developed poultry growing and processing complexes in Georgia, Louisiana, and Alabama during the 1960s. In 1965 the company also began to expand into the European market by going into partnership with Bioter-Biona, S.A., a Spanish producer of animal feed and animal health products and breeder of pigs, chickens, and trout.

By 1971 Nebraska Consolidated Mills had outgrown its early base in Nebraska as well as its name. It chose a new name to reflect its new concerns: ConAgra, meaning “in partnership with the land.” ConAgra was listed on the New York Stock Exchange in 1973.

The new name, however, did not necessarily mean continuing success. The early 1970s, in fact, brought the company to a low point. Many of its acquisitions during the expansion of the 1960s and early 1970s were only marginally profitable at best. In 1974 the company posted net losses and suspended dividends. Heavy losses in commodity speculations brought ConAgra to the brink of bankruptcy in 1975.

ConAgra’s first high-profile chief executive, former Pillsbury executive Charles Harper, was named president in 1975 with a mandate to turn the ailing company around. Essential to Harper’s turn-around plan were strict financial goals combined with a series of acquisitions that served to broaden’s ConAgra’s sales base. To reduce debt, Harper first sold nonessential operations. He then began to buy agricultural businesses at the low end of their profit cycles and turn them around. Harper originally intended to stick with ConAgra’s emphasis on basic commodities rather than compete with the packaged-food giants. When he purchased Banquet Foods Corporation in 1980, he claimed that the acquisition was not an entry into prepared foods but a way to increase ConAgra’s chicken capacity. ConAgra’s chicken production did increase by a third, bringing the company from eighth to fifth place among chicken producers. Harper expanded into fish as well as poultry in the 1970s with investments in catfish aquaculture.

Another of Harper’s acquisitions put ConAgra back in the forefront of the flour market. In 1982 ConAgra bought the Peavey Company, a Minneapolis-based flour miller and grain trader, giving it 16.3 percent of the nation’s wheat-milling capacity and a system of grain exporting terminals. Political barriers to U.S. grain exports had depressed Peavey’s profits, and the acquisition was not the early success story that Banquet was for ConAgra. By 1986, however, Peavey was posting a $16.4 million profit on sales of $1.2 billion, a promising upward trend.

Harper also kept to a commodity-oriented approach by diversifying into agricultural chemicals. ConAgra expanded into fertilizers, and in 1978 acquired United Agri Products, a distributor of herbicides and pesticides. Higher grain prices, Harper reasoned, would mean increased demand for such chemicals.

But, in an attempt to counter the cyclical profit pattern of basic agricultural commodities, Harper also entered areas that didn’t mesh well with the company’s traditional orientation: pet accessories, a Mexican restaurant chain, and a fabrics and crafts chain, among others.

In a dramatic change of direction during the 1980s, ConAgra decided on prepared foods as a better way to balance cyclical profits in the food industry. The company’s stringent financial goals were being met: return on equity averaged 20 percent; annual growth in trend-line earnings were over 14 percent and long-term debt was held to below 35 percent of total capitalization. With the company on firmer financial ground, ConAgra began a series of acquisitions which would ultimately make it the nation’s second largest food company.

ConAgra’s moved into the prepared seafood market in 1981 with the purchase of Singleton Seafood, the largest shrimp processor in the country, and Sea-Alaska Products. In 1987 ConAgra bought Trident Seafoods and O’Donnell-Usen Fisheries, the producer of Taste O’ Sea frozen seafood products, thus positioning the company to compete against the leading frozen seafood brands, Mrs. Paul’s Kitchens, Gorton’s, and Van de Kamp’s.

In 1982, during a low in the poultry cycle, ConAgra moved to take first place in the chicken industry by forming Country Poultry, Inc. By the next year, Country Poultry was delivering more than a billion pounds of brand-name broilers to markets, making it the biggest poultry producer in the country. In 1986, the company formed ConAgra Turkey Company and in 1987 it acquired another poultry company, Longmont Foods, further strengthening its position in the field. But ConAgra’s poultry concerns no longer focused on the basic bird Harper purchased Banquet for: Country Poultry introduced a number of higher-profit convenience poultry products, such as marinated chicken breasts, chicken hot dogs, and processed chicken for fast food restaurants.

ConAgra moved into another area of processed foods in 1983 when the company purchased Armour Food Company, a processor of red meats such as hot dogs, sausage, bacon, ham, and lunch meats. The acquisition also included Armour’s line of frozen gourmet entrees, Dinner Classics, which complemented Banquet’s line of frozen foods. As with many of his other acquisitions, Harper bought Armour in a down cycle for book value ($182 million). By waiting to complete the deal until Armour closed several plants, Harper painlessly eliminated about 40 percent of Armour’s major union’s members. Some Armour plants still have unions, but without a master contract labor costs were slashed. Harper then reorganized the company, emphasizing new marketing strategies (reintroducing the familiar Armour jingle to take advantage of consumer recognition) and refocusing product lines. The Dinner Classics line was hurt by price competition and the introduction of new brands of premium frozen dinners. Armour as a whole was still unprofitable through the early 1990s, but the Classics line has increased profits since the purchase.

In 1986, Harper increased ConAgra’s presence in frozen foods by purchasing the Morton, Patio, and Chun King brands. And in 1987, the company expanded in red meats with its purchase of E.A. Miller, Inc., a western producer of beef products, and Monfort of Colorado, Inc. Almost a decade earlier, ConAgra had tried to purchase MBPXL Corp., the number-two beef packer in the country, only to be blocked at the last minute by the privately owned Cargill Inc. The Monfort deal, for $365 million in stock, made ConAgra the third-largest U.S. beef producer. Health-conscious consumers began eating less beef in the late 1980s and ConAgra responded by working to develop new, leaner beef products as it developed new poultry products. Another 1987 acquisition, 50 percent of Swift Independent Packing Company, a processor of beef, pork, and lamb, made ConAgra a leading meat processor as well. Harper rounded out his changes at ConAgra by developing the company’s international trading position and by forming its own financial services subsidiary.

By the late 1980s, ConAgra had grown into a well diversified food company, better able to absorb the ups and downs of the industry. 1987 was a banner year for ConAgra’s poultry division, which posted $130 million in operating profits due to a tremendous (and ultimately unsustainable) upswing in the poultry market. The poultry division’s operating profits plummeted the following year to $20 million, but by then ConAgra’s other divisions were strong enough to make up the difference. The company posted net earnings of $155 million, about 5 percent higher than the previous year.

In 1988 Harper boasted that ConAgra was probably the only food products company to “participate across the entire food chain.” However, in the grocery store, the majority of its packaged food products were found in the frozen foods section, where it held the top market share in the country. In 1990, sensing that even greater diversification was necessary to ensure steady earnings growth, Harper led the purchase of Beatrice Co., which produced top brands such as Hunt’s Tomato Paste and Butterball Turkey and had annual sales over $4 billion. The Beatrice purchase gave ConAgra a broader portfolio of products and provided a strong sales and distribution system in the “dry goods” segment. ConAgra paid $2.35 billion for the company and assumed a debt of about $1 billion in the process.

In the early 1990s ConAgra expanded at a rate of about 35 acquisitions and joint ventures a year. The company’s international presence grew as it formed joint ventures in Japan, Thailand, France, Canada, Chile, and Australia. Key acquisitions included Australia Meat Holdings and the malt, wool, and 50 percent of the beef business of Elders Ltd., another Australian concern. On the home front, ConAgra made its first foray into the kosher foods business with the purchase of National Foods and also entered the private label consumer products market with the acquisition of Arrow Industries, a clothing manufacturer.

In 1991 the company enlarged its frozen foods market share further with the introduction of Healthy Choice, a low fat, low sodium, and low cholesterol line of frozen dinner entrees. Within two years, the brand had expanded to offer everything from healthy hot dogs to ice cream. By 1993 Healthy Choice posted sales of over $1 billion and was lauded as the “most successful new food brand introduction in two decades” by Advertising Age.

The company also reorganized some of its divisions in the early 1990s, creating ConAgra Grocery Products Companies to unite its Hunt-Wesson companies with its frozen food businesses and ConAgra Meat Products Companies to bring together its branded package meat business and its fresh red meat businesses. 1992 sales surpassed $20 billion for the first time, as the company posted its 12th consecutive year of record earnings.

In 1992 Harper resigned his post at ConAgra to become chairman and chief executive officer at RJR Nabisco Holdings Corp. Phil Fletcher, ConAgra’s longtime president and chief operating officer, assumed Harper’s post. In his first two years at the helm, Fletcher cut operating costs by enforcing stricter cost-control measures and fostering greater communication and cooperation between the company’s six dozen individual units. Continuing Harper’s acquisition strategy, ConAgra began expanding globally, with new ventures in China, Australia, Denmark, and Mexico. 1994 earnings reached $437 million on sales of $23.5 billion.

1994 marked ConAgra’s 75th anniversary, and, as part of the company’s celebration, $200,000 was donated to a museum in Grand Island, Nebraska, for the erection of a replica of the original Glade Mill, one of the four mills merged to create the company in 1919. In its 75 year history, ConAgra had transformed itself from a low-profile flour miller into an international food company with sales well over $20 billion. It gained its stature through a remarkable mix of conservative fiscal management and aggressive expansion through acquisitions and joint ventures. With its 60-plus operating units—selling everything from livestock feed to microwaveable dinners—ConAgra seemed well positioned to absorb the cyclical trends of the food industry. Building on the strengths of his predecessor, Fletcher was transforming ConAgra into a leaner, more efficient company, and given his track record, the company’s future seemed in good hands.

Principal Subsidiaries

ConAgra Agri-Products Companies; ConAgra Diversified Products Companies; ConAgra Grocery Products Companies; ConAgra Meat Products Companies; ConAgra Red Meat Companies; ConAgra Poultry Company; ConAgra Trading and Processing Companies; ConAgra Broiler Co.; ConAgra Frozen Foods Co.; Beatrice Co.; Camerican International Inc.; Monfort Inc.; Country General Stores Co.; E.A. Miller Inc.; Decker Foods Co.; United Agri Products Cos.; General Spice Inc.; Agrichem Co.; Arrow Industries Inc.; Camerican International Inc.

ConAgra, Inc.

views updated May 21 2018

ConAgra, Inc.

ConAgra Center
One Central Park Plaza
Omaha, Nebraska 68102
U.S.A.
(402) 978-4000

Public Company
Incorporated: 1919 as Nebraska Consolidated Mills Company
Employees: 42,993
Sales: $9.5 billion
Stock Index: New York

In 1919 Alva Kinney brought four grain milling companies in south central Nebraska together to take advantage of increasing grain production in the Midwest, and the Nebraska Consolidated Mills Company was born. Seventy years and a name change later, ConAgra is a diversified international company whose products range from agricultural supplies such as fertilizers, pesticides, and feeds to prepared gourmet dinners for a new age of consumers.

Officially formed on September 29, 1919, the Nebraska Consolidated Mills Company (NCM) was headquartered in Grand Island, Nebraska. At first Kinney concentrated on milling the bumper postwar wheat crops at his four Nebraska locations. But soon, to accommodate his growing business, Kinney added a mill in Omaha, in 1922, and moved the headquarters of the company there. He continued to run a profitable and relatively quiet company solely in Nebraska until he retired as president in 1936.

Kinney was succeeded by R. S. Dickinson. Initially, Dickinson followed his predecessor’s simple but successful policy of milling grain in Nebraska. World War II and the postwar boom kept the demand for grain high and the milling business profitable.

During the early 1940s Dickinson began to use the company’s profits to expand. Other successful milling operations, such as General Mills and Pillsbury, were expanding both the number of plants and the number of products they offered, and NCM followed the same trend. In 1942 Dickinson opened a flour mill and animal feed mill in Alabama. He also promoted research into new types of prepared foods that used flour, which led to the development of Duncan Hines cake mixes, introduced in the early 1950s.

The Alabama expansion was profitable, but Dickinson found that it was more difficult to gain a foothold in the prepared-foods market. Cake mixes, though only a small proportion of the total flour market, accounted for as much as $140 million a year in retail sales by 1947. But the market was dominated by General Mills’s Betty Crocker brand and by Pillsbury, each with one third of the market share, while Duncan Hines controlled only 10-12%. Unable to increase its share of the highly-competitive cake mix market, NCM eventually decided to get out of prepared foods and use the money it raised to expand in basic commodities: grains and feeds. So, in 1956 the company sold its Duncan Hines brand to Proctor & Gamble.

The new president of Nebraska Consolidated Mills, J. Allan Mactier, used the proceeds from the sale to expand aggressively. In 1958, NCM built the first major grain processing plant in Puerto Rico through its subsidiary, Caribe Company. The $3 million plant processed flour, corn meal, and animal feeds at Catano in San Juan harbor. Production at the plant did not compete with the parent company’s already-existing concerns; none of the flours and feeds produced there were exported to the mainland.

Caribe’s foothold on the island led to further Puerto Rican expansion in new areas. A second subsidiary, Molinos de Puerto Rico, took over Caribe’s animal feed business on the island while also developing Puerto Rico’s virtually nonexistent beef industry as a market for its products. In Molino’s first five years of operation, consumption of animal feeds in Puerto Rico increased from 136,516 tons, of which 100,314 were imported, to 249,267 tons, of which only 46,723 were imported. The company also profited from an increased demand for meat and milk on the island.

Elsewhere, however, flour millers faced shrinking profits as demand leveled off in both domestic and foreign markets. European grain production had recovered from the disruption of World War II, and prosperity at home in the 1950s and 1960s allowed consumers to buy more expensive food items, leading to lower flour consumption.

Large millers turned to diversification to offset declining profitability. Industry leaders General Mills and Pillsbury developed their consumer foods lines and introduced new types of convenience foods, while the third of the “Big Three” in flour milling, International Milling company, Inc., diversified primarily into animal feeds. Nebraska Consolidated Mills, perhaps unwilling to compete again in packaged foods after its experience with Duncan Hines, also developed the animal feed end of its business. Throughout the 1960s and into the 1970s, the company developed mills and distribution centers for feed and flour in the Southeast and Northwest.

NCM also turned to another basic commodity: chicken. It developed poultry growing and processing complexes in Georgia, Louisiana, and Alabama during the 1960s.

In 1965 the company also began to expand into the European market by going into partnership with Bioter-Biona, S. A., a Spanish producer of animal feed and animal health products and breeder of pigs, chickens, and trout.

By 1971 Nebraska Consolidated Mills had outgrown its early base in Nebraska as well as its name. It chose a new name to reflect its new concerns: ConAgra, meaning “in partnership with the land.” ConAgra was listed on the New York Stock Exchange in 1973.

The new name, however, did not necessarily mean continuing success. The early 1970s, in fact, brought the company to a low point. Many of its acquisitions during the expansion of the 1960s and early 1970s were only marginally profitable at best. In 1974 the company posted net losses and suspended dividends. Heavy losses in commodity speculations brought ConAgra to the brink of bankruptcy in 1975.

ConAgra’s first high-profile chief executive, former Pillsbury executive Charles Harper, was named president in 1975 with a mandate to turn the ailing company around.

Harper first sold nonessential operations to reduce debt. He then began to buy agricultural businesses at the low end of their profit cycles and turn them around. Harper originally intended to stick with ConAgra’s emphasis on basic commodities rather than compete with the packaged-food giants. When he purchased Banquet Foods Corporation in 1980, he claimed that the acquisition was not an entry into prepared foods but a way to increase ConAgra’s chicken capacity. ConAgra’s chicken production did increase by a third, bringing the company from eighth to fifth place among chicken producers. Harper expanded into fish as well as poultry in the 1970s with investments in catfish aquaculture.

Another of Harper’s acquisitions put ConAgra in the forefront of its original flour market. In 1982 ConAgra bought the Peavey Company, a Minneapolis-based flour miller and grain trader, giving it 16.3% of the nation’s wheat-milling capacity and a system of grain exporting terminals. Political barriers to U.S. grain exports had depressed Peavey’s profits, and so far the acquisition has not been the success story that Banquet was for ConAgra. But by 1986, Peavey had shown a $16.4 million profit on sales of $1.2 billion, a promising upward trend.

Harper also kept to a commodity-oriented approach by diversifying into agricultural chemicals. ConAgra expanded into fertilizers, and in 1978 acquired United Agri Products, a distributor of herbicides and pesticides. Higher grain prices, Harper reasoned, would mean increased demand for such chemicals.

But, in an attempt to counter the cyclical profit pattern of basic agricultural commodities, Harper also entered areas that didn’t mesh well with the company’s traditional orientation: pet accessories, a Mexican restaurant chain, and a fabrics and crafts chain, among others. These acquisitions have yet to be as profitable as anticipated.

In a dramatic change of direction during the 1980s, ConAgra decided on prepared foods as a better way to balance cyclical profits in the food industry. In 1981 the company bought Singleton Seafood, the largest shrimp processor in the country, and Sea-Alaska Products. In 1987 ConAgra bought Trident Seafoods and O’Donnell-Usen Fisheries, the producer of Taste O’ Sea frozen seafood products, thus positioning the company to compete against the leading frozen seafood brands, Mrs. Paul’s Kitchens, Gorton’s, and Van de Kamp’s.

In 1982, during a low in the poultry cycle, ConAgra moved to take first place in the chicken industry by forming Country Poultry, Inc. By the next year, Country Poultry was delivering more than a billion pounds of brand-name broilers to markets, making it the biggest poultry producer in the country. In 1986, the company formed ConAgra Turkey Company and in 1987 it acquired another poultry company, Longmont Foods, further strengthening its position in the field. But ConAgra’s poultry concerns no longer focused on the basic bird Harper purchased Banquet for: Country Poultry introduced a number of higher-profit convenience poultry products, such as marinated chicken breasts, chicken hot dogs, and processed chicken for fast food restaurants.

ConAgra moved into another area of processed foods in 1983 when the company purchased Armour Food Company, a processor of red meats such as hot dogs, sausage, bacon, ham, and lunch meats. The acquisition also included Armour’s line of frozen gourmet entrees, Dinner Classics, which complemented Banquet’s line of frozen foods. As with many of his other acquisitions, Harper bought Armour in a down cycle for book value ($182 million). By waiting to complete the deal until Armour closed several plants, Harper painlessly eliminated about 40% of the Armour’s major union’s members. Some Armour plants still have unions, but without a master contract labor costs were slashed. Harper then reorganized the company, emphasizing new marketing strategies (reintroducing the familiar Armour jingle to take advantage of consumer recognition) and refocusing product lines. The Dinner Classics line has been hurt by price competition and the introduction of new brands of premium frozen dinners. Armour as a whole was still unprofitable in 1988, but the Classics line has increased profits since the purchase.

In 1986, Harper increased ConAgra’s presence in frozen foods by purchasing the Morton, Patio, and Chun King brands. And in 1987, the company expanded in red meats with its purchase of E.A. Miller, Inc., a western producer of beef products, and Montfort of Colorado, Inc. Almost a decade earlier, ConAgra had tried to purchase MBPXL Corp., the number-two beef packer in the country, only to be blocked at the last minute by the privately owned Cargill Inc. The Montfort deal, for $365 million in stock, made ConAgra the third-largest U.S. beef producer. Although health-conscious consumers are eating less beef, ConAgra hopes to develop new meat products as it developed new poultry products. Another 1987 acquisition, 50% of Swift Independent Packing Company, a processor of beef, pork, and lamb, made ConAgra a leading meat processor as well. Harper has rounded out his changes at ConAgra to date by developing the company’s international trading position and by developing its own financial services subsidiary.

In 70 years, ConAgra changed from a low-profile flour miller into a producer of basic commodities, and then into an acquisition-driven, diversified international food company with interests across the food industry. As such, the company seems well-positioned to balance cyclical trends in foods as well as changing consumer taste. The company’s poultry, seafood, and grain concerns appeal to new consumer interests in low-cholesterol eating, while busy families are ringing up profits for ConAgra in its prepared foods division.

Principal Subsidiaries:

AgriBasics Fertilizer Co.; Agricol Corp., Inc.; Alliance Grain, Inc.; Molinos de Puerto Rico, Inc.; CAG Co.; Cropmate Co.; Trekker Co.; Atwood Commodities, Inc.; United Agri Products, Inc.; Armour Food Express Co.; Kurt A. Becher GmbH & Co. KG; Bergerco USA; Bergerco (VI), Inc.; Taco Plaza, Inc.; To-Ricos, Inc.; Atwood-Larson Co.; U.S. Tire, Inc.; Canadian Harvest Process (1988) Ltd.; C & L Grain & Feed Co.; Woodward & Dickerson (Japan) Ltd.; Saprogal; Sapropor (75%); Geldermann, Inc.; United Agri Products Financial Services, Inc.; Weld Agricultural Credit, Inc.

International Directory of Company Histories

ConAgra Foods, Inc.

views updated May 23 2018

ConAgra Foods, Inc.

founded: 1919 as nebraska consolidated mills

Contact Information:

headquarters: 1 conagra drive
omaha, ne 68102-5001 phone: (402)595-4000 fax: (402)595-4702 url: http://www.conagra.com

OVERVIEW

ConAgra Foods, Inc., headquartered in Omaha, Nebraska, is a foodservice manufacturer and retail food supplier. It ranks as the top food service manufacturer (meat and poultry, French fries, and dough-based products) in the United States. It is ranked second as a food company (behind Kraft Foods), and a frozen foods company (behind Nestle USA) and in meat and poultry sales, behind IBP, Inc. Its annual sales reach approximately $27 billion.

The general public knows ConAgra best through its numerous and well known brand names that include Banquet, Chef Boyardee, Healthy Choice, and Van Camp's. Indeed, consumers are likely to see ConAgra products wherever they turn. In supermarkets, the products are found on the shelves, in the dairy case, the frozen food section, at the deli, and in the fresh and prepared meat case. Products can also be found at restaurants and hotels, convenience stores, and vending and snacking areas.

ConAgra Foods has been called a brand "powerhouse," as it boasts more than 80 brands. These include 25 food brands that record annual retail sales exceeding $100 million. One brand, Healthy Choice, has retail sales of about $1.5 billion dollars.

The company's major business subdivisions include agricultural products, packaged foods, and refrigerated foods. The agricultural business segment processes and distributes ingredients for food and beverage products and meat and poultry production. Also, the segment distributes crop protection chemicals, fertilizers, seeds, and information systems at wholesale and retail levels.

The packaged food segment produces shelf-stable foods, frozen foods, dairy case products, and foodservice products for retail, foodservice, and specialty markets. Shelf-stable products include tomato products, pasta products, cooking oils, popcorn, soup, puddings, meat snacks, canned beans, canned pasta, tuna, canned chili, cocoa mixes, and peanut butter. Frozen food products include dinners, pizzas, entrees, snacks, ice cream, and seafood. Dairy products include tablespreads, cheeses, egg alternatives, and dessert toppings. Foodservice products include potato products, ethnic food products, hand-held dough-based products, specialty meats, and other products primarily for foodservice markets.

The refrigerated foods segment produces and markets fresh and branded processed meats, beef and pork products, chicken and turkey products, and meat alternative products for retail, foodservice, institutional, and specialty markets. The processed meat products include hot dogs, bacon, ham, sausages, cold cuts, turkey products, and kosher products. Fresh meat products include beef, pork, and lamb. The poultry businesses include chicken and turkey products. Meat alternative products include soy-based items like meatless hot dogs and patties.

COMPANY FINANCES

In 2000, ConAgra Foods Inc.'s agricultural products segment reported fiscal year sales of $5.2 billion. The packaged foods segment had sales of $7.7 billion. The refrigerated foods segment had sales of $12.5 billion.

For fiscal 2001, overall sales grew 7 percent to reach $27.2 billion, while operating profit reached $1.9 billion. ConAgra reported that it had a tough first half of the year, but it bounced back in the second. During the fourth quarter, sales for the company's food businesses (packaged and refrigerated) grew 5 percent to $5.5 billion. Total food business operating profit declined to $372.0 million, versus $415.0 million in fiscal 2000. For all of 2001, food business sales grew 7 percent to $21.9 billion, and food business operating profit stayed the same at $1.6 billion.

Fourth quarter sales for the packaged food segment showed a 17 percent increase ($2.3 billion), while operating profit was $276.0 million compared to $294.0 million in the fourth quarter of 2000. For the full fiscal year, the segment's sales grew 14 percent to $8.7 billion and operating profit grew 5 percent to $1.1 billion.

For the same quarter, refrigerated foods sales went down by 2 percent to $3.3 billion, and operating profit decreased to $97.0 million (down from $121 million in the fourth quarter 2000). For the full year, sales rose 3 percent to $13.2 billion, and operating profit declined to $438.0 million from $491.0 million in 2000.

Fourth quarter sales for the agricultural products segment increased 4 percent to $899 million. Operating profit was $33 million, compared to $47 million in the fourth quarter of fiscal 2000. For the full fiscal year, agricultural products sales rose 5 percent to $5.3 billion and operating profit totaled $281 million, down slightly from the 2000 operating profit of $283 million.

In 2002, for the 39 weeks ended February 24, 2002, revenues rose 3 percent to $21.22 billion. Net income rose 6 percent to $592.8 million.

FAST FACTS: About ConAgra Foods, Inc.

Ownership: ConAgra Foods, Inc. is a publicly owned company traded on the New York Stock Exchange.

Ticker Symbol: CAG

Officers: Bruce Rohde, Chmn., Pres., CEO, 52, 2001 Salary $982,000; James O'Donnell, CFO, VP, Sec., 53, 2001 salary $466,000; Owen Johnson, EVP, Human Resources and Administration, 55, 2001 salary $415,000; Dwight Goslee, EVP, Operations Control and Development, 51, 2001 salary $133,000; Kenneth Gerhardt, SVP, CIO, 51, 2001 salary $373,000

Employees: 90,000

Principal Subsidiary Companies: ConAgra Foods Inc. is subdivided into three major business segments, including agricultural products, packaged foods, and refrigerated foods. These segments are further subdivided into various companies. The companies include more than 500 subsidiaries, many with well-known names such as Butterball Turkey, Bumble Bee Seafoods, Hunt Foods, and Swift & Company.

Chief Competitors: ConAgra Foods operates in the consumer/non-cyclical sector of the food processing industry. Its main competitors include Cargill, Kraft Foods, and Nestle USA.

ANALYSTS' OPINIONS

Some analysts have a bit of trouble reading ConAgra Foods, Inc. for several reasons. For one thing, the company has employed a complex trading strategy. In recent years, using cash earnings rather than reported earnings, ConAgra traded 34 percent below the price-cash flow ratios of the food industry group. Also, ConAgra is viewed by some as a complex company that has a "commodity-like image" because two-thirds of its sales are derived from activities such as meatpacking, poultry production, and agriproducts. For ConAgra Foods, low margins typical in those businesses result in an overall margin well below those of other food industry leaders. And because the company has three significant business segments, sometimes it's hard to determine exactly where the profits are really coming from.

However, Shields and Company of New York feels that ConAgra Foods, Inc. is a strong, well-managed food company that is "under-recognized" by the market. In 2000, it rated ConAgra a "strong buy." It based this rating on its increased confidence in ConAgra's ability to maintain its long-established record of double-digit earnings growth. "With annual sales of $27 billion, ConAgra is the nation's second largest food company, deriving 36 percent of sales and 63 percent of profits from Packaged Foods, 45 percent and 22 percent from Refrigerated Foods, and 19 percent and 15 percent from Agricultural Products," Shields reported in October 2000. "The company has an unusually strong position in the growing foodservice market, which accounts for 37 percent of revenues, and where it is the industry's number one supplier."

HISTORY

It all started back 1919. The company that would become ConAgra Foods Inc. began when four flourmills in Grand Island, Nebraska, consolidated and incorporated as Nebraska Consolidated Mills. Three years later, the new company moved to Omaha, the city where ConAgra Foods, Inc. is now based.

For the next 50 years, Nebraska Consolidated Mills operated primarily as a commodity producer and food industry supplier. But that would start to change in the second half of the twentieth century, when it would move into other areas and enterprises. The company's evolving nature was reflected in its name change to ConAgra in 1971.

ConAgra really started becoming the company it is known as today in the 1980s and 1990s when it made a long series of acquisitions in a period when conglomerates were breaking apart. The process began in 1980, when ConAgra bought Banquet Foods from RCA. By 2000 the company would amass 33 brands that would turn an impressive $100 million in sales.

In 1998 ConAgra named Bruce Rohde as its chief executive officer. The appointment would prove crucial, as Rohde strengthened ConAgra's overall performance and enhanced the company's potential. Rohde implemented cost reduction steps, and he placed more emphasis on product development and marketing. He also focused on acquisitions and divestitures. The results of his actions had a significantly positive impact. By the end of the decade, ConAgra's profit margins would be at record highs. As the company moved into the twenty-first century, it appeared that these margins would continue rising.

In 1999 ConAgra integrated its five beef subsidiaries and began operating them under one name, Congra Beef Co. In August 2000, ConAgra made one of its most significant acquisitions when it bought International Home Foods for $2.9 billion. It was the company's largest acquisition in its history, and it would increase the sales of its packaged foods segment by 30 percent. The company scored another major acquisition that same year when it purchased Bumble Bee, a tuna company.

CHRONOLOGY: Key Dates for ConAgra Foods, Inc.

1919:: Nebraska Consolidated Mills, which will become ConAgra Foods, Inc., is founded in Grand Island, Nebraska
1922:: Nebraska Consolidated Mills moved to Omaha, Nebraska, the future headquarters of ConAgra Foods, Inc.
1971:: Nebraska Consolidated Mills changes its name to ConAgra
1980:: ConAgra begins a long series of acquisitions when it purchases Banquet Foods from RCA
1998:: Bruce Rohde is appointed CEO of ConAgra
1999:: ConAgra begins "Operation Overdrive," a major organizational restructuring program
1999:: ConAgra integrates its five beef subsidiaries and begins operating them under one name, ConAgra Beef Co.
2000:: ConAgra buys International Home Foods for $2.9 billion; ConAgra changes its name to ConAgra Foods, Inc. to reflect its changing business focus
2001:: ConAgra Foods, Inc. acquires the David & Sons sunflower seeds and snack business from Nestle USA, Inc.

In September 2000, ConAgra renamed itself ConAgra Foods, Inc., to underscore its new emphasis on its increasing role as a foodservice manufacturer. As part of this image makeover, Rohde placed advertisements in the Wall Street Journal, the national financial newspaper. With the ads, he wanted the country to see that ConAgra Foods was a major food company, and not just an agricultural ingredients supplier. Rohde wanted nothing less than for ConAgra Foods, Inc. to become America's favorite food company.

In December 2001, the company acquired the David & Sons sunflower seeds and snack business from Nestle USA, Inc., a subsidiary of Swiss-based Nestle S.A., one of its major competitors.

STRATEGY

Management has implemented a strategic plan designed to result, over a long term, in single-digit sales growth, expanding profit margins, double-digit growth in operating profits, and an increasing return on investment. The plan has five key strategies including channelization, controlling capital, "cleaning house," margin and mix, and targeted acquisitions.

Channelization involves focusing on the specific needs of each class of customers, including general consumers, supermarkets, club stores, and convenience stores in the retail sector, and restaurant chains and broad-line distributors in foodservice. Controlling capital involves establishing tight controls over capital expenditures to provide more funds for acquisitions and other purposes. The "cleaning house" strategy is part of ConAgra Foods Inc.'s intent to strengthen the company and increase its profitability by divesting unproductive assets and businesses that no longer fit in with its long-term plans. The margin and mix strategy involves the company's "Operation Overdrive," a major restructuring program that began in 1999 and has resulted in significant cost reductions and expanded margins. Through its targeted acquisitions strategy, ConAgra Foods intends to continue its active acquisition programs, which has resulted in tremendous gains for the company, including diversity of product, increased sales, and rising cash flow.

INFLUENCES

When ConAgra wanted to become known as a major food company, it found it has some obvious catching up to do with food industry competitors. The company was able to achieve this rather rapidly, thanks to a massive organizational restructuring that includes divestiture of businesses like barges, wool, and pet supplies last year, as well as reorganizing its remaining business into three lines: retail foods, foodservice supply, and agricultural products.

The appointment of Bruce Rohde as CEO had no small impact on the company's successful navigation of its new direction. Possessing a track record of initiating change, Rohde helped ConAgra Foods become the largest U.S. foodservice manufacturer and the second largest retail food supplier. One of the things Rohde did was step up ConAgra Foods' acquisition efforts. Under his watch, the company scored some pivotal business acquisitions, including International Home Foods. It amassed important brand names like Chef Boyardee, Bumble Bee, Pam, and Gulden's, and it reinforced some of its brands through line extensions that included new products such as gravy, stuffing, broth (for the Butterball brand name), and a casserole mix (for the Banquet brand name).

CURRENT TRENDS

Moving into 2001, ConAgra continued making acquisitions, the most high-profile element of its strategic plan. It also started forming strategic alliances. However, the company doesn't absorb other companies and branded names indiscriminately, nor does it choose partners randomly.

For instance, in 2001, ConAgra joined forces with Wolfgank Puck to manufacture, market, and distribute gourmet foods such as frozen entrees, pizzas, and side dishes under the Wolfgang Puck name. According to reports, ConAgra entered into the agreement to capitalize on a growing trend: American consumers are cooking less, eating out more, and relying more and more on gourmet meals that are easy to prepare. Faced with a shrinking market for vegetables, meats, and other farm products that need to be prepared, ConAgra aggressively went after high-margin gourmet products, which Rohde sees as a gold mine, and for good reason. In 2001, consumers were spending about $1 billion a day on food eaten away from home (according to the National Restaurant Association), and prepared foods remain one of the few growth segments in the industry.

PRODUCTS

ConAgra has perhaps the largest number of leading brand names in the food industry. Thirty of its brands have sales in excess of $100 million a year, including Healthy Choice, with sales of more than $1 billion. Its three major business segments include packaged foods, refrigerated foods, and agricultural products.

Its packaged foods segment includes many well-known brand names. Its major shelf-stable brands include Hunt's, Healthy Choice, Chef Boyardee, Wesson, Orville Redenbacher's, Peter Pan, Van Camp's, Gulden's, Swiss Miss, Bumble Bee, and La Choy. Major frozen food brands include Banquet, Marie Callender's, Kid Cuisine, and Wolfgang Puck. Major dairy brands include Parkay, Blue Bonnet, Fleischmann's, Egg Beaters, and County Line. Foodservice major brands include Lamb Weston, Fernando's, Casa de Oro, Holly Ridge, Rosarita, and Zoll. Major brands from its refrigerated foods segment include Armour, Butterball, Cook's, Country Pride, Healthy Choice, Brown 'N Serve, National Deli, and Swift Premium.

ConAgra's agricultural products segment distributes crop protection chemicals, fertilizers, seeds, and information systems at wholesale and retail levels. Major agricultural brands include Clean Crop, ACA, Savage, Shotgun, Saber, Signature, and Loveland Industries.

The company also is a leading supplier of both hamburger patties and frozen French fries to McDonald's, Burger King, Wendy's, and other fast food chains. Other customers include Pizza Hut, Taco Bell, Arby's, Popeyes, Jack in the Box, Applebee's, and Aramark. In addition, it is the top supplier to just about all of the major foodservice distributors including SYSCO, U.S. Food-service, PYA/Monarch, Alliance, and Performance Food Group.

CORPORATE CITIZENSHIP

ConAgra Foods, Inc. commits itself to improving the quality of life in communities across America. It does this through leadership partnerships and financial contributions. Specifically, its activities are focused on two major national initiatives: Feeding Children Better, a multi-million-dollar, multi-year commitment to helping end child hunger in the United States; and a national program aimed at educating consumers about home food safety.

The company has also implemented an environmental program that includes four key initiatives: water and energy conservation, prevention of air pollution, waste reduction and recycling, and land management protection and enhancement. In 2000 the company's program saved 448.3 million gallons of water, reduced landfill waste by nearly 14.0 million pounds, cut electrical use by 35.7 million kilowatts, and cut natural gas use by 86.8 million square cubic feet.

GLOBAL PRESENCE

ConAgra Foods has principal operations in about 25 countries and more than 200 operating groups and plants around the globe. It has foreign offices located in Hong Kong, Korea, Mexico, Taiwan, and Tokyo.

EMPLOYMENT

ConAgra Foods employs more than 90,000 people worldwide, and it provides a strong employee support system that includes a flexible benefits package and a family-friendly working environment. Employees are offered a menu of benefits that best suit their individual or family needs. Plans include 401(k) with company match; PPO, HMO, or POS health coverage; and dental and vision coverage.

GOING TO BAT FOR CONAGRA

In August 2000 baseball superstar Sammy Sosa joined the ConAgra Foods team. The outfielder was turned into a pitcher; that is, his role was designated to be a "pitchman" for ConAgra's popular Hunt's Snack Pack and Orville Redenbacher's Gourmet Popping Corn brands. He was also slated to go to bat for ConAgra's Feeding Children Better program.

In striving to create an environment that encourages creativity and innovation, the company has installed an online internal job posting process, promotional and rotational career opportunities, and recognition and reward programs. It also offers encourages advancement through educational reimbursement programs, memberships in professional and industry associations, conference and seminar attendance, and through programs offered at its Learning Center in Omaha, Nebraska.

SOURCES OF INFORMATION

Bibliography

business 2.0.com. "conagra foods, inc." 1 april 2002. available at http://www.business2.com.

cbs marketwatch. "profile: conagra foods, inc." 2002. available at http://cbs.marketwatch.com.

cohen, debra. "conagra mulls the fate of laggard units—analysts," 26 december 2001. available at http://www.google.com/fdc/ads.

cummins, robert j. "investment highlights: conagra foods, inc." shields & company, 17 october 2000. available at http://www.shieldsandco.com.

hoover's online. "conagra foods, inc.," 1 april 2002. available at http://www.hoovers.com.

independent sector. "conagra foods and america's second harvest." mission and market, 2002. available at http://www.independentsector.org/mission_market/conagra.htm.

yahoo! finance. "conagra foods, inc." yahoo market guide, 28 march 2002. available at http://biz.yahoo.com/p/c/cag.html.

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. conagra foods, inc.'s primary sics are:

2011 meat packing plants

2013 sausages and other prepared meat products

2015 poultry slaughtering and processing

2022 natural, processed, and imitation cheese

2038 frozen specialties, not elsewhere classified

2041 flour and other grain mill products

2048 prepared feeds and feed ingredients for animals andfowls, except dogs and cats

2875 fertilizers, mixing only

2879 pesticides and agricultural chemicals, not elsewhereclassified

6211 security brokers, dealers, and flotation companies

also investigate companies by their north american industry classification system codes, also known as naics codes. conagra foods, inc.'s primary naics codes are:

311119 other animal food manufacturing

311211 flour milling

311412 frozen specialty food manufacturing

311513 cheese manufacturing

311611 animal (except poultry) slaughtering

311612 meat processed from carcasses

311615 poultry processing

325314 fertilizer (mixing only) manufacturing

325320 pesticide and other agricultural chemical manufacturing

523120 securities brokerage

Company Profiles for Students

ConAgra Foods, Inc.

ConAgra Foods, Inc.

Early History: From Milling to Animal Feed to Poultry Processing

Emerging As ConAgra in the 1970s

Creating a Diversified Food Company in the 1980s

Company Perspectives:

Key Dates:

Restructurings and More Acquisitions in the 1990s and Beyond

Principal Operating Units

Principal Competitors

Further Reading

ConAgra Foods, Inc.

ConAgra Foods, Inc.

EARLY HISTORY: FROM MILLING TO ANIMAL FEED TO POULTRY PROCESSING

COMPANY PERSPECTIVES

EMERGING AS CONAGRA

KEY DATES

CREATING A DIVERSIFIED FOOD COMPANY

RESTRUCTURINGS AND MORE ACQUISITIONS

SHIFTING OUT OF COMMODITY-ORIENTED BUSINESSES

PRINCIPAL SUBSIDIARIES

PRINCIPAL OPERATING UNITS

PRINCIPAL COMPETITORS

FURTHER READING

ConAgra, Inc.

ConAgra, Inc.

Principal Subsidiaries

Further Reading

ConAgra, Inc.

ConAgra, Inc.

Principal Subsidiaries:

ConAgra Foods, Inc.

ConAgra Foods, Inc.

Contact Information:

OVERVIEW

COMPANY FINANCES

FAST FACTS: About ConAgra Foods, Inc.

ANALYSTS' OPINIONS

HISTORY

CHRONOLOGY: Key Dates for ConAgra Foods, Inc.

STRATEGY

INFLUENCES

CURRENT TRENDS

PRODUCTS

CORPORATE CITIZENSHIP

GLOBAL PRESENCE

EMPLOYMENT

GOING TO BAT FOR CONAGRA

SOURCES OF INFORMATION

Bibliography

For additional industry research:

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ConAgra Inc

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