The coronavirus crisis has brought large food companies back into millions of more homes, allowing Conagra and its peers to win over customers who have dropped their brands for newer or trendier ones. Conagra Brands Inc. is investing in adding the production capacity and marketing, aiming to sustain the pandemic-driven sales momentum. Companies such as Campbell Soup Co. and General Mills Inc. have also said that by expanding marketing and development, they want to capitalize on the growth. Sean Connolly, Chief Executive of Conagra was quoted as saying that he expects the current excitement for cooking and packaged food to continue “well into the future.” The food giant is now adding popcorn and some frozen meals to production capacity.
Mr. Connolly was further quoted as saying that even after vaccines, people would eat more at home. Many of their customers have made investments in their homes. They have learned they like cooking, and some people will emerge financially strapped. Conagra spends money on promoting and modernizing some of its recipes and packaging. In the latest quarter, the firm gained market share. In particular, younger customers purchase their products repeatedly, the executive said. He stated that he expects them to continue to do so even after the pandemic as they extend their families and operate remotely more frequently. The boost to the supermarket business of Conagra comes at the cost of its food-service outlet profits. In its most recent period,
Conagra’s revenue rose 8 percent on a comparable basis. The company said the frozen meals of its Marie Callender, Orville Redenbacher popcorn, and Duncan Hines cake mixes have benefited individuals’ consumption more at home. Conagra, expects comparatively the sales to grow from 6 percent to 8 percent for the current quarter. Conagra’s stock dropped 2 percent on Thursday to $35. Over the past year through Wednesday, its shares were up 6.6 percent, compared with 2.2 percent for the packaged-foods and meats index, and 15 percent for the S&P 500. Since the beginning of last spring’s pandemic, demand for processed goods at grocery stores has moderated.
Credit Suisse food analyst Henry M. Robert Moskow in a message to investors said Conagra is also too optimistic concerning the potential for brands that were not popular before the pandemic, resembling cook Boyardee and Isadora Duncan Hines, to keep up the sales momentum when it ends. However, sales growth in many companies is at least four times the levels they reported before the public health crisis. The estimated operating margin of Conagra for its remaining quarter was lower than anticipated by analysts. Some, like Mr. Moskow, challenged the decision of the food manufacturer to invest more in non-traditional ads including social media
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