Conagra: Snacks, Frozen Categories Drive Q3 Net Sales; Inflationary Pressures Linger

Conagra reported a 6% increase in organic net sales during Q3 fiscal year 2022, largely driven by consistent consumer demand for its frozen and snack products. However, the company said it experienced “higher-than-anticipated” market inflation throughout the quarter, which it expects will continue to impact pricing across its frozen, refrigerated and snack businesses.

“In response, we have taken steps to implement additional inflation-driven pricing actions,” said Sean Connolly, president and CEO of Conagra Brands, in a press release. “We will begin to see the benefits of these actions in the first quarter of fiscal 2023. Consumer demand has remained strong in the face of our pricing actions to-date, but there will continue to be a lag between the timing of the incremental inflation and the benefits of our mitigating actions.”

Connolly said that due to the nature of the ingredient supply for meat and dairy-based products, and the difficulties of cold shipping among transportation shortages, offsetting prices in both of these areas continues to create additional challenges. However, he did note during a call with investors, that Conagra’s continued share gains have benefitted from the lack of private label competition within its core categories. This factor enables the company to offset some inflationary pressures, especially within meat snacks, without a high risk of deterring consumer’s on-shelf, he said.

“Unit sales have remained consistently positive on a 2-year basis even as the on-shelf prices for our brands have increased,” said Connolly during the call. “This dynamic is a testament to the fact that, despite the broad-based inflationary environment we’re operating in, the targeted nature of our inflation-driven pricing actions and the superior relative value of our products continue to resonate with our customers and consumers. “

The company reported “meaningful acceleration” across its snacks categories, which saw sales increase 11% year-over-year. Meat snack sales lead the charge with 21% growth, followed by Popcorn (+6.7%), Seeds (+4.7%) and Sweets (+2.9%).

Outside of snacking, the company’s frozen portfolio saw a 6% jump with many of its newer, better-for-you SKUs reaching at the top of their respective categories in terms of sales, the company reports. This includes Reddi-wip’s zero sugar offering, frozen stir fry veggies from Bird’s Eye and Gardein’s plant-based ‘chicken’ product line.

While highlighting the success of its recent launches, Conagra unveiled a full slate of new innovations set to hit shelves over the next year. Although plant-based innovations remain in focus among these new SKUs, other trends like convenient comfort foods and co-branded products also emerged.

“We’re not just gaining share, we’re gaining share in some of the most attractive parts of the store,” said Connolly. “These results are holding, notwithstanding, our need to put significant inflation-driven pricing into the market.”