Move in line with its growth strategy
Conagra Brands (CAG) announced that it has agreed to acquire Angie’s Artisan Treats, maker of Angie’s Boomchickapop popcorn, for an undisclosed amount. The move is in line with the company’s strategy to acquire fast-growing brands to revamp its portfolio.
Founded in 2001 by Dan and Angie Bastian, Angie’s Boomchickapop popcorn brand has reported strong growth since inception. Conagra’s president and CEO, Sean Connolly, stated that Angie’s Boomchickapop brand is a market leader in the fast-growing “better-for-you snacking segment” and the addition of it to its portfolio would help drive the company’s sales going forward. Conagra expects to close the deal by the end of this year.
Conagra Brands is focusing on reinventing its portfolio by shedding underperforming non-core brands and adding fast-growing popular brands through acquisitions. Earlier, the company acquired Thanasi Brands, parent of Duke’s Meat and BIGS seeds, which are growing at a healthy rate and are supplementing its sales. Meanwhile, Conagra is concentrating on portfolio premiumization by adding high-margin products driven by innovation.
Notably, the company’s efforts to accelerate sales growth is showing signs of improvement, as the company’s top line excluding divestitures and currency headwinds saw an improvement on a YoY (year-over-year) basis as the above graph shows.
The company’s management expects its sales to remain flat or witness a fall of 2% in fiscal 2018. Weak volumes on account of lower demand, promotion cutbacks, an unfavorable mix, and currency headwinds are likely to dent its top-line growth. Besides, the company’s planned divestitures will further lower sales.
However, the company’s efforts to optimize its portfolio, healthy performances from recently acquired brands, and a strong product pipeline of innovation-led products are projected to drive its sales in coming quarters.
In comparison, other packaged food manufacturers in the US (SPY) including General Mills (GIS), J.M. Smucker (SJM), Kellogg (K), Campbell Soup (CPB), and Kraft Heinz (KHC) are also seeing lower demand for their products and are expected to report lower sales in coming quarters.