Conagra Synergy
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Chapter 2
CASE STUDY: CONAGRA SEARCHES FOR SYNERGY
What do Hunt’s ketchup, Orville Redenbacher’s popcorn, Healthy Choice frozen meals, and Slim Jim jerky have in common? All are part of ConAgra’s empire of food brands. With $25 billion in annual sales, ConAgra is the number-two U.S. food products company behind Kraft Foods. Aggressive acquisitions during the 1980s brought ninety different operating companies into the ConAgra family. Now CEO Bruce Rohde is working to lower system wide costs and boost overall profits by improving coordination and cooperation among these diverse operations. The corporate buying spree took place under Charles M. Harper, ConAgra’s CEO before Rohde. Harper snapped up well-known food brands such as Butterball (turkeys). Swift Premium (cold cuts), and Hunt-Wesson (salad oils and tomato-based foods). Once under the ConAgra banner, these different companies were encouraged to continue operating as independent divisions. ConAgra had no corporate computer system; instead, the divisions used their own systems for accounting. In addition, each division continued to sell through its own sales force, forcing supermarket chains to arrange separate purchases with each division. Harper also started the Healthy Choice line of low-fat foods after suffering a heart attack and changing his diet to emphasize healthier fare. ConAgra’s highly decentralized structure worked well as long as sales and profits were growing at a strong pace. By the time Rohde was named to the top slot in 1996, however, consumers were spending more on restaurant meals, which meant they weren’t spending as much on groceries for home-cooked meals. At the same time, the supermarket chains were consolidating through mergers and acquisitions, which gave the stores even more bargaining power when dealing with ConAgra’s and other supplies. Meanwhile, competitors Kraft and Quaker Oats stepped up their trade promotions, offering special displays and
Chapter 2
CASE STUDY: CONAGRA SEARCHES FOR SYNERGY
What do Hunt’s ketchup, Orville Redenbacher’s popcorn, Healthy Choice frozen meals, and Slim Jim jerky have in common? All are part of ConAgra’s empire of food brands. With $25 billion in annual sales, ConAgra is the number-two U.S. food products company behind Kraft Foods. Aggressive acquisitions during the 1980s brought ninety different operating companies into the ConAgra family. Now CEO Bruce Rohde is working to lower system wide costs and boost overall profits by improving coordination and cooperation among these diverse operations. The corporate buying spree took place under Charles M. Harper, ConAgra’s CEO before Rohde. Harper snapped up well-known food brands such as Butterball (turkeys). Swift Premium (cold cuts), and Hunt-Wesson (salad oils and tomato-based foods). Once under the ConAgra banner, these different companies were encouraged to continue operating as independent divisions. ConAgra had no corporate computer system; instead, the divisions used their own systems for accounting. In addition, each division continued to sell through its own sales force, forcing supermarket chains to arrange separate purchases with each division. Harper also started the Healthy Choice line of low-fat foods after suffering a heart attack and changing his diet to emphasize healthier fare. ConAgra’s highly decentralized structure worked well as long as sales and profits were growing at a strong pace. By the time Rohde was named to the top slot in 1996, however, consumers were spending more on restaurant meals, which meant they weren’t spending as much on groceries for home-cooked meals. At the same time, the supermarket chains were consolidating through mergers and acquisitions, which gave the stores even more bargaining power when dealing with ConAgra’s and other supplies. Meanwhile, competitors Kraft and Quaker Oats stepped up their trade promotions, offering special displays and