Conagra Brands SWOT & PESTLE Analysis

Strength

1. Strong Brand Portfolio: Conagra has positioned itself as one of the leading packaged food companies in North America by leveraging its strong portfolio of brands. The company offers its products across four segments: Grocery and Snacks, Refrigerated and Frozen, Foodservice, and International. The Grocery and Snacks segment principally includes branded, shelf-stable food products, while the Refrigerated and Frozen segment includes branded, temperature-controlled food products. The International segment principally includes branded, food products, in various temperature states. The Foodservice segment includes branded and customized food products, including meals, entrees, sauces and a variety of custom-manufactured culinary products. Conagra sells these products under several iconic brands, such as Marie Callender's, Reddi-wip, Hunt's, Healthy Choice, Slim Jim and Orville Redenbacher's, as well as emerging brands, including Alexia, Blake's and Frontera. Such strong presence in the market supported by an extensive portfolio of brands has been helping Conagra sustain its leadership position in the North American processed foods market.

2. High Inventory Turnover Ratio: Conagra reported an increase in the inventory turnover ratio during the FY2017. Improving inventory turnover ratio and lower inventory turnover days signify that the company incurs low inventory carrying costs, which help improve its operating performance. In FY2017, the company’s reported inventory turnover ratio of 5.9 as compared to 5.7 in FY2016. Its inventory turnover ratio was higher than one of its competitors, The Hershey Co which reported inventory turnover of 5.4 times in FY2017. In FY2018 also, it maintained an inventory turnover ratio of 5.8. A higher inventory turnover than its close competitors indicates that the company takes fewer number of days to clear its inventory in comparison with its competitors.

3. Industry leading innovation capabilities: Product innovation-based strategy enables the company to stay abreast of the changes in the industry and provide it the ‘first mover’ advantage by launching products ahead of competition and delivering advanced products and services to its customers. Conagra employs processes at their principal manufacturing locations that emphasize applied research and technical services directed at product improvement and quality control. In addition, Conagra conducted research activities related to the development of new products. Research and development expenses were $47.3 million, $44.6 million, and $59.6 million in fiscal 2018, 2017, and 2016, respectively. Refrigerated & Frozen net sales for fiscal 2018 were $2.75 billion, an increase of $100.3 million, or 4%, compared to fiscal 2017. Results for fiscal 2018 reflected a 3% increase in volume compared to fiscal 2017, excluding the impact of acquisitions. The increase in sales volumes was a result of brand renovation and innovation launches.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

1. Pending Law Suits: Conagra Brands is party to an impending law suit from its acquisition of Beatrice Foods in 1991, including litigation proceedings related to businesses divested by Beatrice prior to our acquisition of the company. These proceedings include suits against a number of lead paint and pigment manufacturer, including ConAgra Grocery Products Company, LLC, a wholly owned subsidiary of the Company ("ConAgra Grocery Products") as alleged successor to W. P. Fuller & Co., a lead paint and pigment manufacturer owned and operated by a predecessor to Beatrice from 1962 until 1967. These lawsuits generally seek damages for personal injury, property damage, economic loss, and governmental expenditures allegedly caused by the use of lead-based paint, and/or injunctive relief for inspection and abatement.
In June 2009, an accidental explosion occurred at manufacturing facility in Garner, North Carolina. This facility was the primary production facility for our Slim Jim® branded meat snacks. In June 2009, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives announced its determination that the explosion was the result of an accidental natural gas release and not a deliberate act, the case is awaiting decision by the Nebraska Supreme Court.

2 Intellectual Property Rights: Conagra’s intellectual property rights, including trademarks, licensing agreements, trade secrets, patents, and copyrights, are a significant and valuable aspect of our business. If it fails to adequately protect the intellectual property rights it has now or may acquire in the future, or if there occurs any change in law or otherwise that serves to reduce or remove the current legal protections of its intellectual property, then its financial results could be materially and adversely affected. Some of its intellectual property rights, including the P.F. Chang's®, Bertolli®, Del Monte®, and Libby's® trademarks, are owned by third parties and licensed to it, and others, such as Alexia®, are owned by it and licensed to third parties. While many of these licensing arrangements are perpetual in nature, others must be periodically renegotiated or renewed pursuant to the terms of such licensing arrangement. If in the future it is unable to renew such a licensing arrangement pursuant to its terms and conditions, then its financial results could be materially and adversely affected.

Environmental

1. Environmental Proceedings: Conagra Brands is a party to certain environmental proceedings relating to ITS acquisition of Beatrice in fiscal 1991. Such proceedings include proceedings related to businesses divested by Beatrice prior to our acquisition of Beatrice. The accrual for Beatrice-related environmental matters totaled $52.4 million as of May 27, 2018, a majority of which relates to the Superfund and state-equivalent sites. These sites involve locations previously owned or operated by predecessors of Beatrice that used or produced petroleum, pesticides, fertilizers, dyes, inks, solvents, PCBs, acids, lead, sulfur, tannery wastes, and/or other contaminants. In the past five years, Beatrice has paid or is in the process of paying its liability share at 31 of these sites.

2. Sustainable Development: Conagra brands have strived to develop sustainably by cutting waste, improving packaging line operations. It established Sustainable Development Awards in 2009 in which employees were asked to submit their innovative ideas or projects that will help in reduction of resources such as waste, water, energy and help the company to cut costs across its numerous business channels. So far, the projects developed for the contest have decreased Conagra Brands’ carbon footprint by more than 189,000 metric tons, conserved 3.5 billion gallons of water, diverted more than 207,500 tons of solid waste from landfills, reduced solid waste by nearly 98,000 tons and decreased packaging by 32,000 tons. Award winners receive a $5,000 grant from the Conagra Brands Foundation for use in their community on sustainability-focused public service projects.
The Conagra Brands’ Orville Redenbacher’s facility in Rensselaer, Ind., reduced more than 390 metric tons of greenhouse gas after an AMD sustainment event prompted them to improve a conveyor system. Conagra Brands is also committed to reducing GHG emissions by 20 percent per pound of production by 2020.