NEW YORK — Product development at Conagra Brands, Inc. begins with a demand science group, “an advanced analytics organization that has access to tons of data pools,” said Sean M. Connolly, president and chief executive officer of the Chicago-based company.
“The demand science group starts out by actually going out and just casting a wide net and gathering the data on all the stuff in food and beyond food in CPG more broadly that is growing, and then they study the attributes that drive that growth,” Mr. Connolly said during a June 1 presentation at the Bernstein Annual Strategic Decisions Conference in New York. “Is it keto? Is it grain-free? Is it organic? Is it something that is carbon neutral? There could be many attributes driving that growth.
“Then we bring in our culinary team and our brand folks and say, well, all these attributes that we see driving growth in CPG more broadly, which of them would make sense to design into our product categories and into our products? And then we elect where to do that.”
He described the approach as “very quantitative,” adding, “it’s a scalable, repeatable model” that the company has used to overhaul its frozen and snack businesses in recent years.
“You can never get complacent,” Mr. Connolly said. “And we live in this society where people are kind of overstimulated by all this provocative stuff, and they want provocative stuff. They don’t want products that look out of date. So we are constantly studying trends, constantly working on the next wave and constantly trying to stay two steps ahead of our competition in this world where people want exciting provocative stuff, and it works. We got a well-oiled machine, and it keeps getting stronger every year.”
The key to winning in the marketplace, he said, is “to take modern attributes and design them into well-known iconic brands.” Recent examples include Birds Eye Fusions, combining “elevated vegetables and sauces,” Banquet Mega Crustless Pizza and Healthy Choice Power Bowls featuring trending seafood options.
To a lesser extent, Conagra Brands adds new products through bolt-on acquisitions and licensing deals, but “far and away, the largest part of our innovation is organic innovations that we build ourselves,” Mr. Connolly said.
“Our bet on where to play has really been on frozen and snacks, and that has really paid off quite nicely,” he said. “But the part you can't see is where not to play.”
He offered an example of plant-based burgers. Several years ago, when “the plant-based meat alternative world exploded” in quick-service restaurants, as Impossible Foods and Beyond Meat emerged on menus across the country, Conagra Brands remained focused on the freezer aisle.
“We had the Gardein brand at the time, which was growing nicely, but as you can imagine, we're not infinite in the capacity we have for the business, so we had to elect where to utilize the capacity for our Gardein business, and where not to do it,” he said. “And all the buzz was foodservice, but that didn’t make sense to us. And the reason it didn’t make sense to us as being our top priority is all of our experience would say foodservice operators, particularly quick-serve operators, build their own brand. They don't build other people's brands.”
He added, “Interestingly, the buzz was also around burgers or burger alternatives at the time. And we elected not to put our focus there. We elected to put our focus on chicken alternatives because the No. 1 animal-based protein consumed by Americans is chicken. And so today, we are chicken-focused in the grocery store in the frozen section. That’s what we decided to do. We decided not to chase the dream in the world of quick-serve restaurants as our top priority. And sure enough, as fate would have it, that is how the business has evolved.
“The foodservice quick-serve restaurant arena served to drive a lot of trial, particularly in burgers, and no one should have ever expected all of that trial would convert to repeat purchase. But that business has begun to soften, and it’s begun to become more of a private label store brand type of operation. Same thing with the meat counter, by the way, in the grocery store, the butcher arena.
“Frozen, to the contrary, that has remained branded, and it’s remained a growth engine and our growth on our Gardein business has been fantastic. And our launch of the Gardein Ultimate Chick'n line, which is our reboot of our chicken to a much higher quality product of chicken alternative, has been a smashing success.”
Conagra Brands also opted out of the home meal delivery market during its rapid rise, he said.“Remember when Blue Apron was hot, this notion of home delivery, direct-to-consumer that was on fire four years ago, and we just couldn't see a path to a sustainable profit pool there,” Mr. Connolly said. “So we elected not to put our resources there, and I'm glad we made that choice.”