New Products Boost ConAgra’s Sales

ConAgra Foods today reported a 6.1 percent rise in third quarter fiscal 2009 sales, which the company attributed to new product introductions and improvements on key brands, such as Banquet and Marie Callender.

While sales increased to $3.1 billion, net income dropped 37.5 percent to $193.2 million from $309.1 million for the same year-ago period. But the company said it would continue investing marketing dollars in its brands and it expects “healthy” growth in 2010.

ConAgra’s U.S. measured media spending was down from $226 million in 2007 to $189 million last year, excluding online, per Nielsen Monitor-Plus. In the third quarter, however, the company had increased marketing spend by more than 10 percent, CEO Gary Rodkin said in an earnings call this morning. Brands like Banquet, Chef Boyardee and Wesson cooking oils experienced strong quarterly growth. Other brands, including ACT II and Peter Pan, didn’t do so well due to discontinued SKUs and a recent peanut butter recall, Rodkin said.

ConAgra is also seeing improvements in its frozen foods business, which has been going through a transformation. The company will promote its new Healthy Choice All Naturals Entree line with an ad campaign launching next month that features a spokesperson who “epitomizes the target for the brand,” Rodkin said. (The spokesperson was not revealed.) The six-item line, which includes varieties like Portabella Spinach Parmesan and Pumpkin Squash Ravioli, is high in fiber, has antioxidants and is low in saturated fat, per the company.

Brands like Chef Boyardee and Healthy Choice Fresh Mixers, too, have gotten new advertising, Rodkin said. Ads for Healthy Choice Fresh Mixers launched last fall with businesswoman Ivanka Trump as its spokesperson. The products use the same patented steam cooking technology as sister brand Healthy Choice Café Steamers. Healthy Choice Café Steamers was also one of the top new product launches of 2008, according to market research firm IRI’s annual New Product Pacesetters report.

“We believe we’re in the right place now in terms of how we have responded competitively,” said ConAgra’s Consumer Foods president André Hawaux, when commenting on the frozen food business during the earnings call. “We are not looking to compete in that category primarily through price, that’s why you’ve seen us step up” on marketing and packaging.

New nonfrozen products reaching full distribution this summer include Alexia Premium Crunchy Snacks, which use natural seasonings and have 25 percent less fat than potato chips. But “they are the real thing,” Rodkin said of the products, which began shipping in March.