ConAgra Investing More In Snacks, Frozen Foods

ConAgra Foods Inc. (CAG) is trying to grow its snacking and frozen foods businesses as it tries to capitalize on food shoppers' greater willingness to spend on wants rather than basic needs, Chief Executive Gary Rodkin said in an interview Tuesday.

The shift is evident in the latest products that ConAgra has ready to hit supermarket shelves. ConAgra is bolstering its snacking portfolio with line extensions to its Slim Jim meat products and also debuting ready-to-eat Orville Reddenbacher's popcorn next month, moving the brand beyond its microwave popcorn. ConAgra will also introduce a frozen Greek yogurt product under its Healthy Choice brand in June which will be marketed as a portion-controlled snack.

"We're not trying to spread our resources like peanut butter," Rodkin said on the sidelines at the Consumer Analyst Group of New York conference in Boca Raton, Florida. Instead, more investments are being made in areas like snacks and frozen meals.

ConAgra's strategy underscores how food manufacturers are trying to expand into growing categories to overcome little growth in the packaged food space. ConAgra is looking for acquisitions for growth as well, looking for deals in private-label food space, adjacent branded categories and in international markets.

Rodkin said that while shoppers are "trying to squeeze every nickel they can" on pantry staples, they're willing to indulge on products like desserts. That's one reason behind the introduction of Marie Callender's single-serve pies.

"That's not a necessity but they want it," Rodkin said.

ConAgra and other food maker do still face a difficult environment. While Rodkin declined to comment on trends in their current fiscal third-quarter, he said that weak results reported by other food makers like J.M. Smucker Co. (SJM) and General Mills Inc. (GIS) are "across companies, categories, retailers."

Rodkin said the weak trends are due to consumers reluctant to spend after food manufacturers put most of the price increases into the market.

"It's the cumulative effect of the pricing that's taken effect over the last six to nine months," Rodkin said.

ConAgra on Tuesday did back its guidance for the fiscal year. Rodkin said that most of the earnings growth will occur in the fiscal fourth quarter when cost comparisons from a year ago were easier.

ConAgra shares were up slightly, at $26.65, in Tuesday trading.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; paul.ziobro@dowjones.com

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