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2012 Power 50: No. 37 Gary Rodkin

Most consumers of ConAgra’s many brands remain “extremely value-conscious” in applying budget lessons learned during the recession, observes Gary Rodkin, the company’s president and chief executive officer.

“And by value, I don’t just mean price,” he said. “They are demanding better quality, convenience and overall value for the reduced amount of dollars they are spending on food.”

The many competing needs have set ConAgra on a vigorous acquisition spree over the past year as Rodkin continues to reshape the home of Orville Redenbacher, Chef Boyardee and Peter Pan from a holding company into an operating company.

“All of the acquisitions are positioned to help us achieve our strategic plan, either by growing our core through adjacent categories, through international growth or via private-label expansion,” he said.

The Omaha, Neb.-based firm has made four acquisitions over the past year: Odom’s Tennessee Pride (frozen breakfast sandwiches), Kangaroo Brands (pita chips), National Pretzel Co. (salty snacks) and Del Monte Canada (packaged fruit snacks). Three of the deals were completed during the company’s recently closed fourth quarter.

Expanding the company’s portfolio is seen by analysts as a gutsy move. Consumers remain skittish about the economy, but the move is already paying dividends. ConAgra’s Q4 report stated that, despite a 5% drop in sales volume, revenue in the consumer food segment was up 6% over the prior year, with a majority of the growth attributed to the acquisitions.

Meanwhile, fourth-quarter sales and profits for the company’s commercial business grew 7%, with most of the credit going to its Lamb Weston potato division. International commercial sales also performed well, and Rodkin sees overseas business as a significant growth vehicle going into the next year.

“We’ve had about 10% of our net sales come from international markets in the past, and that has grown of late as our international frozen potato joint ventures are growing, and we recently became majority owner of Agro Tech Foods Limited India,” he noted. “We do fully expect our international growth to accelerate, and we have plans in place to make that happen.”

Innovation is a feature of all ConAgra products, no matter where they are sold. Rodkin points to preparation methods developed for some of ConAgra’s flagship brands as a prime example of this approach. Healthy Choice continues to find success with proprietary steaming technology, while multiple brands — Marie Callender’s and Healthy Choice among them — feature a process that combines baked-in-the-oven taste with made-in-the-microwave convenience.

“That kind of innovation helps create more positive perceptions of the quality of food in the frozen category,” he said. “It drives new products that stick in the marketplace, providing sustainable, profitable growth for us and retailers.”

Similar to many other major manufacturers, higher-trending input costs have also placed demands on the company. The past year has been a challenge, with inflation at the wholesale level averaging 11% for most of fiscal 2012. ConAgra implemented retail price increases that put a dent in sales volumes, even in budget brands like Banquet frozen meals.

It’s a strategy Rodkin doesn’t expect will need repeating this year.
“We established a much more robust pricing architecture with better analytics, so that our net pricing actions would help address the rising input costs and yet drive as much category growth as possible,” he said.

Rodkin, a executive veteran of PepsiCo and General Mills who’s worked through just about every financial scenario there is, says ConAgra is well-positioned for the coming year, buoyed by an earnings-per-share growth guidance in the 6%-8% range, and a viable operating cash flow outlook of more than $1 billion.

“We are proud of how we’ve transformed the company over the past 6 or 7 years from a holding company to an operating company,” he said.

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