Processed Food Brands Look for Fresh Makeover
December 17 2016 - 6:29AM
Dow Jones News
By Annie Gasparro
Hamburger Helper and Chef Boyardee have something in common:
both are fighting to win back customers who have dropped processed
packaged food for fresher, more natural alternatives.
General Mills Inc. and ConAgra Brands Inc. each own a stable of
brands hit hard by big shifts in eating habits. This week,
investors will get a glimpse of how they are faring as they make
changes like removing artificial ingredients from Trix cereal and
create new brands with so-called clean labels, like Wicked
Kitchen.
Along with Cheerios and Trix cereals, General Mills also sells
Betty Crocker cake mix, Totino's pizza rolls, Progresso soup,
Yoplait yogurt and many other brands. The challenge of staying on
top of food trends sweeping each of the aisles where those products
are stocked has created one problem after another.
A yearslong effort by General Mills to remove synthetic food
dyes from cereal seems to have turned around that business, with
retail sales of its reformulated cereals up 3% in the U.S. in the
last reported quarter. But now a persistent decline in yogurt sales
has General Mills scrambling.
General Mills is adding more organic yogurt and introducing new
products like yogurt drinks and snacks that don't come in the
traditional yogurt cup. Investors will be anxious to see if these
efforts have paid off. Executives have warned it will take
time.
General Mills is expected on Tuesday to report flat earnings of
87 cents per share on $4.23 billion in revenue, according to
analysts polled by Thomson Reuters, down from $4.42 billion a year
ago.
ConAgra in the past year has sold its private label business and
spun off its commercial foods operation, which will make it
difficult to compare the upcoming results with last year's
comparable quarter.
Chief Executive Sean Connolly, who joined ConAgra less than two
years ago, has argued that whittling down the business will allow
the company to concentrate on reviving older brands that had lost
their relevance. ConAgra's stable of products including Marie
Callender's frozen pot pies, Slim Jim jerky and Hunt's canned
tomatoes generate some $7 billion in annual sales.
Reddi-Wip is advertising its use of "real cream" rather than
hydrogenated oils, and "no artificial growth hormone." Hunt's is
promoting how it peels its tomatoes with steam, rather than
chemicals. ConAgra's website for Hebrew National hot dogs brags
that they have no artificial flavors, no fillers and no byproducts
because "the shorter the ingredients list, the better."
ConAgra hopes reshaping its brands will lead to higher sales
volume and profit margins. For now the company has pulled back on
discounts, so total revenue has declined.
On Thursday, ConAgra is slated to report earnings of 45 cents
per share on $2.11 billion in revenue for its latest quarter, based
on the Thomson Reuters poll.
Write to Annie Gasparro at annie.gasparro@wsj.com
(END) Dow Jones Newswires
December 17, 2016 07:14 ET (12:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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