Time and again,ConAgra Foods Inc. (CAG) has demonstrated significant expansion of its business portfolio, focusing on branded, value-added opportunities. Acquisitions of a number of private labels, launch of new product line as well as promotional campaigns have supported such expansion while stabilizing the company’s business portfolio for a better future ahead. We presume that the company’s continued diversification trend—evident in its latest launch—will continue to drive growth, adding depth and dynamism to its existing product lines.
ConAgra Mills®, a brand of ConAgra has recently introduced revolutionary new line of all-natural white whole wheat flours —Ultragrain® All Purpose Flour and Ultragrain White Whole Wheat Flour. The retail flour aisle with its better-for-you line will deliver the fiber and nutrition of whole grain, with the taste, texture and appearance of refined flour.
It is seen that the traditional whole wheat flours or other white whole wheat flours taste gritty and bitter, at times. However, the new smooth whole wheat Ultragrain flour is made from specially selected white wheat and milled with ConAgra Mills’ proprietary all-natural process. Naturally mild and sweet flavored Ultragrain is of a softer, smoother texture with speck-free appearance. As per the company, Ultragrain has the goodness of whole grain, which is widespread consumer preference today.
With a new flour brand package, Ultragrain are available in two varieties, both providing whole grain nutrition and more dietary fiber than refined white flour—in convenient two, five and ten pound bags.
Ultragrain All Purpose Flour variety tastes and bakes like refined white flour. It is the only all-purpose flour– blended with 30% Ultragrain whole wheat flour. It offers 9 grams of whole grain per serving and twice the fiber compared with other all-purpose flours. Ultragrain All Purpose Flour does not require recipe adjustments and is devoid of changing the look or taste of mainstream favorites. On the other hand, Ultragrain White Whole Wheat Flour variety has 100% whole grain nutrition alongside the taste, texture and appearance of refined flour. It gives 30 grams of whole grain per serving and its fiber is almost four and a half times that of refined flour, adding whole grain goodness to the flour-based recipes.
ConAgra’s Ultragrain brand, however, is already introduced to consumers through successful products, such as Azteca® Ultragrain Tortillas and Ultragrain PastaTM. Moreover, quite a few ConAgra Foods products, including Healthy Choice® frozen entrées and meals, Marie Callender’s® frozen entrées and meals, Kid Cuisine® entrées, Chef Boyardee® whole grain varieties, are also made with Ultragrain.
To further launch the new flour line of Ultragrain brand to consumers, the company has planned to bank on major advertising campaign associating themselves with USA Today, Google, alongside online coupon system, national free standing inserts, and sampling at high-visibility regional events. Its efforts of social media promotions through food and baking bloggers, Facebook and recipe videos on YouTube look strategic. The Ultragrain brand flours are made available at select locations of Costco, Wal-mart, Publix, H-E-B, SuperValu and more.
We have witnessed that relatively lower prices charged by the private labels have gained an advantage among household consumers, who are willing to try cheaper alternatives during the economic downturn. This has affected the profitability of the foodmakers, including ConAgra. However, with constant effort and innovations, supported by strong sales force, dedicated customer-serving teams, innovative marketing approach, we believe that the company will strongly uphold its category leadership in the branded food market.
Based in Omaha, Nebraska, ConAgra Foods Inc. is one of North America’s leading food companies, serving grocery retailers, restaurants and other foodservice establishments, with brands in 97% of America’s households. The company, over time, has given tough competition to its peers, such as HJ Heinz Co. (HNZ) and Kraft Foods Inc. (KFT).
We currently hold a Neutral recommendation on the stock. ConAgra has a Zacks #3 Rank, implying a short-term Hold rating (1-3 months)
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