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Conagra's New Chicago Facility is Likely to Boost Snacks Unit

Zacks Equity Research

Conagra Brands, Inc. CAG has remained keen toward bolstering its snacking business. This is evident from the company’s latest plans to develop an innovation center in Chicago — The Conagra Brands Center for Food Design. The facility will be an extension of the company’s research and development capabilities. Let’s take a closer look.

Efforts to Bolster Snacking Business

Conagra’s snacking business is worth nearly $2 billion. The unit is witnessing fast growth, courtesy of consumers’ rising demand for unique, flavorful and high-quality snacks options. These trends have propelled the company to keep exploring opportunities for growth in the snacking arena. The plan for developing a new research facility in Chicago is intended to meet such objectives. The innovation center will be equipped with advanced systems and focus on combining culinary with improved packaging designs. The center is expected to open in the first quarter of 2020.

Speaking of other prudent efforts to bolster presence in the snacking unit, Conagra’s acquisition of Pinnacle Foods deserves special mention. The consolidation of these food companies has created a robust portfolio of leading, iconic and on-trend brands. Conagra is on track with the integration process of the buyout as well as realizing synergies from the same. Further, the buyout is aiding the company to accelerate innovation and exploit long-term opportunities in the culinary space. In previous instances, Conagra’s acquisition of Angie's Artisan Treats, LLC, has strengthened offerings in the snacking unit.

Growth Endeavors

In addition to strengthening the snacks portfolio, the company is striving to expand in frozen food products. In fact, through The Center for Food Design and Technology in Omaha, Conagra concentrates on expanding offering across categories like frozen, refrigerated, shelf-stable meals as well as condiments and enhancers. Apart from these, the company is undertaking efforts to grow in the plant-based meat-alternatives food space, evident from endeavors to augment the Gardein brand banner.

In summation, such efforts bear testimony to the fact that bolstering product portfolio through innovation and other strategic moves are key to Conagra’s business growth. In fact, the company’s value-over-volume strategy ensures that volume performance is not driven by price discounts but by strong innovations as well as new merchandising, distribution and consumer trail-related investments. The strategy also includes exiting low margin SKUs and redesigning investments to achieve improved ROI.

We expect that such effective plans will continue aiding this Zacks Rank #3 (Hold) company to strengthen its footing in the food space and boosting investors’ optimism. In the past six months, the stock has rallied nearly 26% compared with the industry’s rise of 10.8%.

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