Pinnacle Foods and Conagra Merger
Combining ConAgra and Pinnacle would really create a new giant up toward the top of the US packaged food industry, edging closer to names like Kraft Heinz and Nestle in share, and particularly a new one in the frozen food aisle, with household name brands like Birds Eye and Healthy Choice, both of which are experiencing strong recent growth and a bit of a resurgence, all housed under one roof.
There has been a ton of attention lately on the renaissance happening in the frozen food aisle, and understandably so. There has been an emphasis on the influence of fresh food and the growth in the outer perimeter of grocery stores, so a return to growth and interest in the center frozen aisles is notable. Most of this has to do with frozen food companies finally coming around to some self-reflection and altering the products they have relied on for so long in order to better meet consumers where they currently are (as opposed to consumer priorities suddenly shifting back toward processed frozen foods).
That said, the trend toward fresh eating is still powerful and growing. While some of these frozen companies have experienced a resurgence in sales recently, I do think there are limits to how much these frozen categories can rebound. Revamping products to better align with consumer tastes and priorities is absolutely a path to growth in the frozen aisle, but it is not a surefire means to it for all frozen companies; I believe opportunities for growth are ultimately limited in this space. Combining the resources of ConAgra and Pinnacle, along with their selections of recognizable and increasingly on-trend health-oriented brands (particularly Pinnacle’s), could help to solidify a portion of this potential growth for both companies and limit the growth potential of competitors, assuring that they can compete well with other large manufacturers, such as Nestle, and that they fully capitalize on the opportunities that exist while they are available and aren’t left out.
Additionally, Pinnacle’s advantage extends beyond just its frozen ready meals. It has a huge presence, primarily through its Birds Eye brand, in frozen vegetables, which has increasingly included innovative and on-trend items such as riced vegetables and cauliflower items with bold flavors – all items that are helping to fuel growth. This has been further helped along by a migration for many consumers away from heavy consumption of fresh vegetables and toward leaning on frozen varieties, due to convenience and concerns about waste of fresh items; Pinnacle’s selections all offer benefits to consumers here. With ConAgra’s recent spin-off of its Lamb Weston frozen potato brand, this could re-engage the company in the frozen vegetable space alongside its frozen meals presence, but with a selection of products more frequently associated with health and wellness and much more aligned with consumer trends than frozen potatoes. Additionally, Pinnacle’s ownership of meat substitute brand Gardein, along with specialty gluten-free baked goods brands like Udi’s and Glutino, are a huge plus in reaching consumers in other fast-growing specialty areas that ConAgra has been absent from.
Ultimately, this merger could create a really powerful duo and a new giant in the food industry with a leading and growing role to play in the health and wellness segment.