ConAgra Foods Takes Steps to Improve Integration of Ralcorp
By Lynne Cooke
ConAgra Foods is taking steps to improve the challenging integration of Ralcorp Holdings, a leading maker of private label products that it acquired a year ago. The brand marketer has put in place an integrated sales team, improved forecasting and increased service levels. Meanwhile, retailer partnerships have been strengthened.
“When we acquired Ralcorp, it was a collection of business units, going through the early months of a restructuring, and that resulted in some tougher issues to work through than we had anticipated,” said Gary Rodkin, CEO of ConAgra, speaking at Consumer Analyst Group of New York Conference recently.
The acquisition of Ralcorp a year ago increased ConAgra’s annualized sales of private label goods from $1 billion to $4.5 billion, making the Omaha-based company the largest private brand maker in North America.
Ralcorp’s diversified product mix includes ready-to-eat and hot cereals; nutritional and cereal bars; crackers and cookies; chocolate candy; mayonnaise; frozen griddle products including pancakes, waffles, and French toast; frozen biscuits and other frozen pre-baked products such as breads and muffins; frozen pasta meals; and other products. ConAgra’s product portfolio includes Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt’s, Orville Redenbacher’s, Peter Pan, and other iconic brands.
But blending the portfolios has not gone smoothly, admitted Rodkin, who outlined several steps to improve the situation.
“Within private brands, we’re making progress in key focus areas,” he said. “We have the right organization and leadership now in place, and that speeds decision making and ensures better connectivity. We have an integrated sales team in place with one voice to the customer. [It is] a customer-by-customer, category-by-category approach; it’s not one size fits all.”
He said some manufacturing network adjustments within the new private label supply chain – notably several plant consolidations that were underway prior to the acquisition – were not executed well.
“We let down some retailers on fulfilling certain orders. In some cases that meant lost business,” Rodkin said.
ConAgra has made progress in remedying the situation, he added, by integrating processes and systems, improving forecasting and getting order fulfillment back on track. In the last six months, service levels have improved from 97% to almost 99% in private brands in aggregate.
Rodkin pointed out that retailer partnerships have been big focal point for ConAgra, which has been building relationships with customers that create win-win opportunities.
“We’ve spent a considerable amount of time with retailers, as part of our work to get our private brands business up and running,” he said. “They are interested, they are listening, they are fully engaged during these conversations because they see the growth opportunity that ConAgra Foods private brands’ portfolio and capabilities can offer, and that we are unlike any other private brand supplier.”
Rodkin underscored the opportunity that retailers have to combine national brands with private brands. Such ready-for-the-floor shippers can be solution-selling displays. For example, he said combining private brand pasta and Hunt’s tomato sauce delivers a 37% increase versus comparable merchandising of similar products displayed separately.
“The key to being a successful supplier in the private brand space is becoming more than just a supplier,” Rodkin said. “We will bring the consumer packaged goods capabilities to retailers for their own brands, something that no one has done in a big way.”
Editor’s Note: This story as based partially on a transcript provided by Seeking Alpha (www.seekingalpha.com).