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ConAgra Foods, Inc.

ConAgra Foods, Inc.


One ConAgra Drive
Omaha, Nebraska 68102-5001
U.S.A.
Telephone: (402) 595-4000
Fax: (402) 595-4707
Web site: http://www.conagrafoods.com

Public Company
Incorporated: 1919 as Nebraska Consolidated Mills Company
Employees: 27,000
Sales: $11.58 billion (2006)
Stock Exchanges: New York
Ticker Symbol: CAG
NAIC: 311211 Flour Milling; 311223 Other Oilseed Processing; 311225 Fats and Oils Refining and Blending; 311330 Confectionery Manufacturing from Purchased Chocolate; 311411 Frozen Fruit, Juice, and Vegetable Processing; 311412 Frozen Specialty Food Manufacturing; 311421 Fruit and Vegetable Canning; 311422 Specialty Canning; 311423 Dried and Dehydrated Food Manufacturing; 311511 Fluid Milk Manufacturing; 311612 Meat Processed from Carcasses; 311615 Poultry Processing; 311911 Roasted Nuts and Peanut Butter Manufacturing; 311919 Other Snack Food Manufacturing; 311941 Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing; 311999 All Other Miscellaneous Food Manufacturing

In 1919 Alva Kinney brought four grain milling companies in south central Nebraska together to take advantage of increasing grain production in the Midwest, and the Nebraska Consolidated Mills Company was born. More than 85 years and two name changes later, ConAgra Foods, Inc., stands as one of the largest U.S.-based food companies, with nearly 60 percent of revenues derived from the sale of packaged and frozen foods through U.S. retail channels. The company's numerous consumer brands include ACT II, Banquet, Blue Bonnet, Brown 'N Serve, Chef Boyardee, DAVID, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, La Choy, Marie Callender's, Orville Redenbacher's, PAM Cooking Spray, Parkay, Pemmican, Peter Pan, Reddi-wip, Rosarita, Slim Jim, Swiss Miss, Van Camp's, and Wesson. Responsible for approximately 30 percent of revenues is ConAgra's food and ingredients segment, which sells commercially branded foods and ingredients to foodservice, food manufacturing, and industrial customers. ConAgra also generates about 10 percent of its revenues from its trading and merchandising business, which is involved in the sourcing, manufacturing, distribution, and trading of agricultural commodities, fertilizer, and energy. Internationally, the company markets more than 40 consumer food brands in more than 100 countries, generating about 5 percent of overall sales.

EARLY HISTORY: FROM MILLING TO ANIMAL FEED TO POULTRY PROCESSING

Officially formed on September 29, 1919, the Nebraska Consolidated Mills Company (NCM) was headquartered in Grand Island, Nebraska. At first Kinney concentrated on milling the bumper postwar wheat crops at his four Nebraska locations. Soon, to accommodate his growing business, Kinney added a mill in Omaha, in 1922, and moved the headquarters of the company there. He continued to run a profitable and relatively quiet company solely in Nebraska until he retired as president in 1936.

Kinney was succeeded by R. S. Dickinson. Initially, Dickinson followed his predecessor's simple but successful policy of milling grain in Nebraska. World War II and the postwar boom kept the demand for grain high and the milling business profitable.

During the early 1940s Dickinson began to use the company's profits to expand. Other successful milling operations, such as General Mills, Inc., and Pillsbury Mills, Inc. (later the Pillsbury Company), were expanding both the number of plants and the number of products they offered, and NCM followed the same trend. In 1942 Dickinson opened a flour mill and animal feed mill in Alabama. He also promoted research into new types of prepared foods that used flour, which led to the development of Duncan Hines cake mixes, introduced in the early 1950s.

The Alabama expansion was profitable, but Dickinson found that it was more difficult to gain a foothold in the prepared-foods market. Cake mixes, though only a small proportion of the total flour market, accounted for as much as $140 million a year in retail sales by 1947. However, the market was dominated by General Mills's Betty Crocker brand and by Pillsbury, each with one-third of the market share, while Duncan Hines controlled only 10 to 12 percent. Unable to increase its share of the highly competitive cake mix market, NCM eventually decided to get out of prepared foods and use the money it raised to expand in basic commodities: grains and feeds. So, in 1956 the company sold its Duncan Hines brand to the Procter & Gamble Company.

The new president of Nebraska Consolidated Mills, J. Allan Mactier, used the proceeds from the sale to expand aggressively. In 1957 NCM built the first major grain processing plant in Puerto Rico through its subsidiary Caribe Company. The $3 million plant processed flour, corn meal, and animal feeds at Catano in San Juan harbor. Production at the plant did not compete with the parent company's already existing concerns; none of the flours and feeds produced there were exported to the mainland.

Caribe's foothold on the island led to further Puerto Rican expansion in new areas. A second subsidiary, Molinos de Puerto Rico, took over Caribe's animal feed business on the island while also developing Puerto Rico's virtually nonexistent beef industry as a market for its products. In Molinos' first five years of operation, consumption of animal feeds in Puerto Rico increased from 136,516 tons, of which 100,314 were imported, to 249,267 tons, of which only 46,723 were imported. The company also profited from an increased demand for meat and milk on the island.

Elsewhere, however, flour millers faced shrinking profits as demand leveled off in both domestic and foreign markets. European grain production had recovered from the disruption of World War II, and prosperity at home in the 1950s and 1960s allowed consumers to buy more expensive food items, leading to lower flour consumption.

Large millers turned to diversification to offset declining profitability. Industry leaders General Mills and Pillsbury developed their consumer foods lines and introduced new types of convenience foods, while the third of the "Big Three" in flour milling, International Milling Company, Inc., diversified primarily into animal feeds. Nebraska Consolidated Mills, perhaps unwilling to compete again in packaged foods after its experience with Duncan Hines, also developed the animal feed end of its business. Throughout the 1960s and into the 1970s, the company established mills and distribution centers for feed and flour in the Southeast and Northwest.

COMPANY PERSPECTIVES


ConAgra Foods nourishes the lives of its consumers, customers and employees by providing trusted, brand-name food and quality ingredients, while fostering a workplace that grows talented people and values inclusion. We work every day to find a better wayto make meal time convenient, to help schools provide nutritious meals for students, to improve the communities in which we operate and more.

NCM also turned to another basic commodity: chicken. It developed poultry growing and processing complexes in Georgia, Louisiana, and Alabama during the 1960s. In 1965 the company also began to expand into the European market by going into partnership with Bioter-Biona, S.A., a Spanish producer of animal feed and animal health products and breeder of pigs, chickens, and trout.

EMERGING AS CONAGRA

By 1971 Nebraska Consolidated Mills had outgrown its early base in Nebraska as well as its name. It chose a new name to reflect its new concerns: ConAgra, meaning "in partnership with the land" in Latin. ConAgra, Inc., was listed on the New York Stock Exchange in 1973.

The new name, however, did not necessarily mean continuing success. The early 1970s, in fact, brought the company to a low point. Many of its acquisitions during the expansion of the 1960s and early 1970s were only marginally profitable at best. In 1974 the company posted net losses and suspended dividends. Heavy losses in commodity speculations brought ConAgra to the brink of bankruptcy in 1975.

KEY DATES


1919:
Four grain milling companies are merged as Nebraska Consolidated Mills Company, based in Grand Island, Nebraska.
1922:
Headquarters are shifted to Omaha, Nebraska.
1950s:
Company embarks on short-lived foray into prepared foods via Duncan Hines cake mixes.
1960s:
Company enters the poultry processing market.
1965:
Expansion into Europe begins through joint venture with Bioter-Biona, S.A. of Spain.
1971:
Company changes its name to ConAgra, Inc.
1973:
ConAgra stock is listed on the New York Stock Exchange.
1976:
Charles "Mike" Harper is named president and CEO.
1978:
United Agri Products, agricultural chemicals distributor, is acquired.
1980:
Banquet Foods Company is acquired.
1981:
Company enters prepared seafood market through purchases of Singleton Seafood and Sea-Alaska Products.
1982:
Country Poultry, Inc., is formed and soon becomes the top poultry producer in the country.
1983:
Red meats processor Armour Food Company is acquired.
1987:
Three more red meat acquisitions are completed: E.A. Miller, Inc.; Monfort of Colorado, Inc.; and Swift Independent Packing Company.
1988:
The Healthy Choice frozen dinner brand debuts.
1990:
ConAgra acquires Beatrice Company.
1996:
Major restructuring cuts 6,300 jobs and shutters more than 50 plants.
1998:
Margarine and egg substitute business of Nabisco, Inc., is acquired.
1999:
Company launches major restructuring that involves 8,450 job cuts, the closure of 137 facilities, and the divestment of 18 noncore businesses.
2000:
International Home Foods, Inc., is acquired; company changes its name to ConAgra Foods, Inc.
2002:
ConAgra shifts its fresh beef and pork businesses into a joint venture, Swift & Company, in which it continues to hold a 45 percent stake, a move that begins the firm's shift away from commodity businesses.
2003:
Company's chicken business is sold to Pilgrim's Pride Corporation and the U.S. and Canadian operations of United Agri Products are also divested.
2004:
ConAgra sells its minority stake in Swift.
2006:
Another string of divestments includes its remaining seafood and cheese businesses and the bulk of the company's refrigerated meat businesses.

ConAgra's first high-profile leader, former Pillsbury executive Charles "Mike" Harper, was named president and CEO in 1976 with a mandate to turn the ailing company around. Essential to Harper's turnaround plan were strict financial goals combined with a series of acquisitions that served to broaden ConAgra's sales base. To reduce debt, Harper first sold nonessential operations. He then began to buy agricultural businesses at the low end of their profit cycles and turn them around. Harper originally intended to stick with ConAgra's emphasis on basic commodities rather than compete with the packaged-food giants. When he purchased Banquet Foods Company in 1980, he said that the acquisition was a way to increase ConAgra's chicken capacity. ConAgra's chicken production did increase by a third, bringing the company from eighth to fifth place among chicken producers. ConAgra expanded into fish as well as poultry in the 1970s with investments in catfish aquaculture.

CREATING A DIVERSIFIED FOOD COMPANY

Another of Harper's acquisitions put ConAgra back in the forefront of the flour market. In 1982 ConAgra bought the Peavey Company, a Minneapolis-based flour miller and grain trader, giving it 16.3 percent of the nation's wheat-milling capacity and a system of grain exporting terminals. Political barriers to U.S. grain exports had depressed Peavey's profits, and the acquisition was not the early success story that Banquet was for ConAgra. By 1986, however, Peavey was posting a $16.4 million profit on sales of $1.2 billion, a promising upward trend.

Harper also kept to a commodity-oriented approach by diversifying into agricultural chemicals. ConAgra expanded into fertilizers, and in 1978 acquired United Agri Products, a distributor of herbicides and pesticides. Higher grain prices, Harper reasoned, would mean increased demand for such chemicals.

In an attempt to counter the cyclical profit pattern of basic agricultural commodities, Harper also entered areas that did not mesh well with the company's traditional orientation: pet accessories, a Mexican restaurant chain, and a fabrics and crafts chain, among others.

In a dramatic change of direction during the 1980s, ConAgra decided on prepared foods as a better way to balance cyclical profits in the food industry. The company's stringent financial goals were being met: return on equity averaged 20 percent, annual growth in trend-line earnings were over 14 percent, and long-term debt was held to below 35 percent of total capitalization. With the company on firmer financial ground, ConAgra began a series of acquisitions that would eventually make it the nation's second largest food company.

ConAgra moved into the prepared seafood market in 1981 with the purchase of Singleton Seafood, the largest shrimp processor in the country, and Sea-Alaska Products. In 1987 ConAgra bought Trident Seafoods and O'Donnell-Usen Fisheries, the producer of Taste O' Sea frozen seafood products, thus positioning the company to compete against the leading frozen seafood brands, Mrs. Paul's Kitchens, Gorton's, and Van de Kamp's.

In 1982, during a low in the poultry cycle, ConAgra moved to take first place in the chicken industry by forming Country Poultry, Inc. By the next year, Country Poultry was delivering more than a billion pounds of brand-name broilers to markets, making it the biggest poultry producer in the country. In 1986 the company formed ConAgra Turkey Company, and in 1987 it acquired another poultry company, Longmont Foods, further strengthening its position in the field. However, ConAgra's poultry concerns no longer focused on the basic bird Harper purchased Banquet for: Country Poultry introduced a number of higher-profit convenience poultry products, such as marinated chicken breasts, chicken hot dogs, and processed chicken for fast-food restaurants.

ConAgra moved into another area of processed foods in 1983 when the company purchased Armour Food Company, a processor of red meats such as hot dogs, sausage, bacon, ham, and luncheon meats. The acquisition also included Armour's line of frozen gourmet entrees, Dinner Classics, which complemented Banquet's line of frozen foods. As with many of his other acquisitions, Harper bought Armour in a down cycle for book value ($182 million). By waiting to complete the deal until Armour closed several plants, Harper painlessly eliminated about 40 percent of Armour's major union's members. Some Armour plants still had unions, but without a master contract labor costs were slashed. Harper then reorganized the company, emphasizing new marketing strategies (reintroducing the familiar Armour jingle to take advantage of consumer recognition) and refocusing product lines. The Dinner Classics line was hurt by price competition and the introduction of new brands of premium frozen dinners. Armour as a whole was still unprofitable through the early 1990s, but profits for the Classics line increased.

In 1986 Harper increased ConAgra's presence in frozen foods by purchasing the Morton, Patio, and Chun King brands. The following year, the company expanded in red meats with its purchase of E.A. Miller, Inc., a western producer of beef products, and Monfort of Colorado, Inc. Almost a decade earlier, ConAgra had tried to purchase MBPXL Corp., the number two beef packer in the country, only to be blocked at the last minute by the privately owned Cargill Inc. The Monfort deal, for $365 million in stock, made ConAgra the third largest U.S. beef producer. Health-conscious consumers began eating less beef in the late 1980s and ConAgra responded by working to create new, leaner beef products as it developed new poultry products. Another 1987 acquisition, 50 percent of Swift Independent Packing Company, a processor of beef, pork, and lamb, made ConAgra a leading meat processor as well. (The other 50 percent of Swift was acquired in 1989.) Harper rounded out his changes at ConAgra by developing the company's international trading position and by forming its own financial services subsidiary.

By the late 1980s, ConAgra had grown into a well diversified food company, better able to absorb the ups and downs of the industry. The year 1987 was a banner one for ConAgra's poultry division, which posted $130 million in operating profits because of a tremendous (and ultimately unsustainable) upswing in the poultry market. The poultry division's operating profits plummeted the following year to $20 million, but by then ConAgra's other divisions were strong enough to make up the difference. The company posted net earnings of $155 million, about 5 percent higher than the previous year. The late 1980s also saw ConAgra lose a prolonged takeover battle to poultry rival Tyson Foods, Inc., over Holly Farms Corporation; had ConAgra acquired Holly Farms it would have gained the top position in the U.S. chicken market.

RESTRUCTURINGS AND MORE ACQUISITIONS

In 1988 Harper boasted that ConAgra was probably the only food products company to "participate across the entire food chain." In the grocery store, however, the majority of its packaged food products were found in the frozen foods section, where it held the top market share in the country. In 1990, sensing that even greater diversification was necessary to ensure steady earnings growth, Harper led the purchase of Beatrice Company, which produced top brands such as Hunt's Tomato Paste and Butterball Turkey and had annual sales of more than $4 billion. The Beatrice purchase gave ConAgra a broader portfolio of products and provided a strong sales and distribution system in the "dry goods" segment. ConAgra paid $2.35 billion for the company and assumed a debt of about $1 billion in the process.

In the early 1990s ConAgra expanded at a rate of about 35 acquisitions and joint ventures a year. The company's international presence grew as it formed joint ventures in Japan, Thailand, France, Canada, Chile, and Australia. Key acquisitions included the malt and wool businesses of Elders IXL Ltd. and 50 percent of its beef business, known as Australia Meat Holdings. On the home front, ConAgra made its first foray into the kosher foods business with the purchase of National Foods and also entered the private label consumer products market with the acquisition of Arrow Industries, a clothing manufacturer.

The company enlarged its frozen foods market share further with the 1988 introduction of Healthy Choice, a low-fat, low-sodium, and low-cholesterol line of frozen dinner entrees. By 1993, the Healthy Choice line numbered 300-plus products. By 1993 Healthy Choice posted sales of over $1 billion and was lauded as the "most successful new food brand introduction in two decades" by Advertising Age.

The company also reorganized some of its divisions in the early 1990s, creating ConAgra Grocery Products Companies to unite its Hunt-Wesson companies with its frozen food businesses and ConAgra Meat Products Companies to bring together its branded packaged meat business and its fresh red meat businesses. Sales for 1992 surpassed $20 billion for the first time, as the company posted its 12th consecutive year of record earnings.

In 1993 Harper resigned his post at ConAgra to become chairman and CEO at RJR Nabisco Holdings Corp. Phil Fletcher, ConAgra's longtime president and chief operating officer, assumed Harper's post. In his first two years at the helm, Fletcher cut operating costs by enforcing stricter cost-control measures and fostering greater communication and cooperation between the company's six dozen individual units. Continuing Harper's acquisition strategy, ConAgra began expanding globally, with new ventures in China, Australia, Denmark, and Mexico. The company also expanded into kosher products by acquiring Hebrew National Foods, maker of premium hot dogs and deli meats, in 1993, and the following year ConAgra purchased the Marie Callender's brand for frozen food. Earnings for 1994 reached $437 million on sales of $23.5 billion. That year also marked ConAgra's 75th anniversary, and, as part of the company's celebration, $200,000 was donated to a museum in Grand Island, Nebraska, for the erection of a replica of the original Glade Mill, one of the four mills merged to create the company in 1919. In 1995 ConAgra acquired the Van Camp's canned beans brand and Knott's Berry Farm Foods, maker of jams, jellies, salad dressings, and syrups.

During the mid-1990s, ConAgra was involved in two separate lawsuits. In 1995 the company agreed to pay $13.6 million to settle a class-action suit brought by fish distributors and processors who claimed that ConAgra's Country Skillet Catfish Co. and six other catfish wholesalers conspired to fix prices for nearly a decade. While some of the smaller defendants had admitted guilt in the case, neither ConAgra nor the other major defendants, Hormel Foods Corporation and Delta Pride Catfish Inc., admitted responsibility. Two years later ConAgra agreed to plead guilty to a felony charge of wire fraud as well as misdemeanor charges of misgrading crops and adding water to grain in a federal case involving ConAgra's Peavey grain elevators in Indiana. ConAgra employees at the elevators had been accused of cheating farmers who sold crops to ConAgra and of spraying water on grain before selling it in order to increase its value (since it was sold by weight). Four former ConAgra employees pleaded guilty to criminal charges, and ConAgra agreed to pay $8.3 million in criminal penalties. ConAgra said that top executives at the company were unaware of the alleged activities of the elevator employees.

Meanwhile, moving to improve profitability, ConAgra launched a major restructuring in mid-1996. Approximately 6,300 employees were cut from the workforce, representing a 7 percent reduction, and more than 50 production facilities were closed or sold. A pretax restructuring charge of $507.8 million was taken, leading to a reduced net income figure for 1996 of $211.8 million (on sales of $24.32 billion). The company hoped to eventually realize more than $100 million in annual cost savings from the job cuts and plant closings.

In August 1996 Bruce C. Rohde was named president and vice-chairman of ConAgra, having been the company's chief outside counsel since 1984. In September 1997 Rohde was named CEO, and he then added the chairmanship the following year. Acquisitions continued during this period of management transition, with Gilroy Foods, a California-based processor of dehydrated garlic and onion products and other spices, purchased in 1996, and GoodMark Foods Inc., maker of the Slim Jim brand of meat snacks, bought in 1998. Also acquired in 1998, for $400 million, was the margarine and egg substitute business of Nabisco, Inc. Among the brands gained through this deal were Parkay, Blue Bonnet, Fleischmann's, and Chiffon margarines and the Egg Beaters egg substitute product.

ConAgra announced another major restructuring in May 1999, which resulted in 8,450 employees losing their jobs. By the end of the 2000 fiscal year, 31 production plants and 106 nonproduction facilities had been shut down and 18 noncore businesses had been divested. The restructuring resulted in pretax charges of $440.8 million and $621.4 million in 1999 and 2000, respectively. This latest restructuring was part of a larger program called "Operation Overdrive," which aimed at generating $600 million in annual cost savings. In addition to the cost cutting, Operation Overdrive also involved a reorganization of the company by customer channel, an abandonment of the decentralized structure installed by Harper in the 1980s in favor of a more centralized approach, and an increase in marketing expenditures, including a new emphasis on cross-selling among the various company brands.

SHIFTING OUT OF COMMODITY-ORIENTED BUSINESSES

Acquisitions continued in 2000. In January 2000 ConAgra acquired Seaboard Farms, the poultry division of Seaboard Corporation, for about $360 million. Seaboard Farms, which had annual sales of $480 million, was a producer and marketer of value-added poultry products primarily to foodservice customers. ConAgra in July 2000 acquired Lightlife Foods, Inc., a leading producer of premium vegetarian and soy products. Lightlife's product line was a good fit with ConAgra's blockbuster Healthy Choice brand. Then one month later, ConAgra completed one of its largest acquisitions in history, a $2 billion deal for International Home Foods, Inc. ConAgra gained a number of well-known consumer brands, including Chef Boyardee pasta products, PAM cooking spray, Gulden's mustard, Bumble Bee seafood, and Jiffy Pop popcorn. International Home Foods had posted 1999 revenues of $2.1 billion. With the company continuing its transformation from its agricultural origins to its position as primarily a producer of packaged foods, the decision was made to add "Foods" to the company name, resulting in the introduction of the ConAgra Foods, Inc., name in September 2000. Plans were also laid to elevate the company's profile with the public as most consumers recognized the company's brands but not the company itself. The new name was slated to be placed on more than 100 brand name products produced by ConAgra.

By fiscal 2001 revenues at ConAgra had reached $27.19 billion. That year the company was forced to restate its financial results for the 1998 through 2000 fiscal years because its United Agri Products subsidiary had recorded fictitious sales and improperly recorded revenue on sales that had been deferred. Earnings for the years were lowered by a total of $120 million. In 2005 ConAgra agreed to pay $14 million to settle a shareholder lawsuit that had been filed in response to the accounting irregularities. In the meantime, the company suffered another black eye in mid-2002 when the U.S. Department of Agriculture forced its ConAgra Beef unit to recall 19 million pounds of ground beef produced at a plant in Greeley, Colorado, because of E. coli contamination that was ultimately linked to 38 illnesses and one death. This was the second largest meat recall in U.S. history.

In 2002 ConAgra began a multiyear process of divesting low-margin commodities-related businesses in order to heighten the focus on higher-margin, branded packaged foods. The first operations to be jettisoned were the company's fresh beef and pork businesses, including ConAgra Beef, which were transferred into a joint venture led by Hicks, Muse, Tate & Furst Incorporated. This transaction, completed in September 2002 and valued at $1.4 billion, left ConAgra with a 45 percent stake in the venture, which was named Swift & Company after one of the brands included in the deal.

Several more divestitures followed in 2003. In May the Bumble Bee and other brands of canned seafood were sold to an investment group that included Bumble Bee managers, and ConAgra also sold its processed-cheese operations, which included the Nauvoo and Treasure Cave brands, to Saputo Inc. of Canada. In November 2003 ConAgra sold its chicken business to Pilgrim's Pride Corporation for about $550 million in cash and stock and the U.S. and Canadian crop inputs businesses of United Agri Products to Apollo Management, L.P. in a $560 million cash-and-stock deal. Results for fiscal 2004 highlighted the shift in focus that the divestiture spree was engendering: More than 80 percent of revenues was derived from branded packaged foods that year, compared to the more than 50 percent of sales that had come from fresh meat and other commodities in 1998.

Continuing to unload its commodity holdings, ConAgra sold its minority interest in Swift to Hicks, Muse in September 2004 for $194 million. One month later the company sold its cattle feedlots to Smithfield Foods, Inc. In April 2005, ConAgra divested the international operations of United Agri Products. ConAgra also began to reinvigorate what had been a fairly moribund new product development pipeline. In 2004, for example, the company introduced Banquet Crock-Pot Classics, frozen meat and vegetable meals designed for slow-cooking in Crock-Pots. In its first 12 months on the market, this new product line brought in sales of more than $100 million. Overall revenues for fiscal 2005 totaled $14.57 billion, substantially below the record level of $27.63 billion of 2002 because of the ongoing slimdown. The profits of $641.5 million were trimmed because of difficulties in ConAgra's packaged-meat operations, which were struggling to contend with rising meat costs. In August 2005 the company sold its minority stake in Pilgrim's Pride for $482 million.

In October 2005 Gary Rodkin was brought on-board as the new president and CEO of ConAgra Foods, succeeding the retiring Rohde. Rodkin had served as chairman and CEO of PepsiCo, Inc.'s Beverages and Foods North America unit. One of the new leader's first moves, initiated in December 2005, was to streamline the corporation's structure into two main businesses: consumer foods and commercial products, the latter representing a merger of the firm's foodservice and food ingredients businesses, as well as encompassing what remained of its agricultural and energy commodities business. Early in 2006 he then announced the company's intention to divest several more commodity-oriented businessesCook's ham, seafood, and packaged meats and cheesethat generated annual revenues of $2.8 billion but low profits. In March, ConAgra sold the Cook's ham business to Smithfield Foods for $260 million. Its Louis Kemp mock crab business was offloaded to Trident Seafoods Corporation, while the remaining seafood brands went to Singleton Fisheries, Inc. In August 2006 ConAgra sold the last of its cheese businesses to a Dallas-based investment company, Fair-mount Food Group, LLC. Two months later, most of ConAgra's refrigerated meat businesses, including Butterball turkeys, Armour hot dogs, and Eckrich meats, were sold to Smithfield Foods for $571 million in cash. ConAgra held onto several meat brands, including Healthy Choice meats, Hebrew National, Brown 'N Serve, Slim Jim, and Pemmican.

Much smaller and more focused on retail packaged food brands by late 2006, ConAgra was working to bolster its marketing efforts for its top brands to push sales and increase profits. The company had also launched a multiyear efficiency drive involving the closure of about a dozen plants toward a goal of cutting annual operating costs by $100 million. Having evolved from a low profile flour miller into an international food company with sales of more than $11 billion, ConAgra Foods was clearly entering a new, and potentially more profitable, era in its 85-plus-year history.

Maura Troester

Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

ConAgra Foods Canada, Inc./Aliments ConAgra Canada Inc.; ConAgra Foods Export Company, Inc.; ConAgra Foods Food Ingredients Company, Inc.; ConAgra Foods Packaged Foods Company, Inc.; ConAgra Grocery Products Company, LLC; ConAgra International Fertilizer Company; ConAgra International, Inc.; ConAgra Limited/ConAgra Limitée (Canada); ConAgra Trade Group, Inc.

PRINCIPAL OPERATING UNITS

Consumer Foods; International Foods; Commercial Products.

PRINCIPAL COMPETITORS

Kraft Foods Inc.; General Mills, Inc.; Nestlé S.A.; Unilever; H.J. Heinz Company; Sara Lee Food & Beverage; Campbell Soup Company; Kellogg Company.

FURTHER READING

Andreas, Carol, Meatpackers and Beef Barons, Niwot, Colo.: University Press of Colorado, 1994, 225 p.

Bailey, Jeff, and Richard Gibson, "ConAgra to Cut 6,500 Jobs, Close Plants," Wall Street Journal, May 15, 1996, p. A3.

Berk, Christina Cheddar, "ConAgra Shifts Focus to Food Brands," Wall Street Journal, October 24, 2006, p. B3A.

Blyskal, Jeff, "The Best Damn Food Company in the United States," Forbes, October 24, 1983, pp. 48+.

Brandon, Copple, "Synergy in Ketchup?" Forbes, February 7, 2000, pp. 6869.

Burns, Greg, "How a New Boss Got ConAgra Cooking Again," Business Week, July 25, 1994, p. 72.

Byrne, Harlan S., "A Growing Presence: From Farm to Table, ConAgra Is on the Move," Barron's, June 20, 1988, pp. 13+.

Cahill, William R., "Cultivating Profits: ConAgra Is on a Seven-Year Winning Streak," Barron's, March 2, 1987, pp. 49+.

Campanella, Frank W., "Fish and Fowl and Flour, Too, Prove Profitable Mix for ConAgra Inc.," Barron's, May 4, 1981, pp. 52+.

"ConAgra: Buying a Frozen-Food Maker to Get at Its Chickens," Business Week, December 1, 1980, p. 124.

"ConAgra's Quantum Leap in Buying Beatrice Co.," Mergers and Acquisitions, September/October 1990, p. 54.

"ConAgra: The Payoff Could Be Huge from Its Risky Bet on Armour," Business Week, December 19, 1983, pp. 85+.

Eig, Jonathan, "ConAgra Will Restate Three Years of Results," Wall Street Journal, May 25, 2001, p. A3.

Epstein, Victor, "A Game of Chicken: ConAgra Beating the Drumstick for Poultry Sales," Omaha (Nebr.) World-Herald, September 3, 2000, p. 1M.

Gibson, Richard, "ConAgra, Hormel Pay a Pretty Penny in an Ugly Catfish Price-Fixing Case," Wall Street Journal, December 29, 1995, p. A3.

Henkoff, Ronald, "A Giant That Keeps Innovating," Fortune, December 16, 1991, p. 101.

Ivey, Mike, "How ConAgra Grew Bigand Now, Beefy," Business Week, May 18, 1987, pp. 8788.

Kawar, Mark, "ConAgra Chicken Unit Sold," Omaha (Nebr.) World-Herald, June 10, 2003, p. 1D.

, "ConAgra Sells Bumble Bee Brand," Omaha (Nebr.) World-Herald, May 20, 2003, p. 1D.

, "ConAgra Sheds Ag Side of Food," Omaha (Nebr.) World-Herald, October 31, 2003, p. 1D.

, "ConAgra Targets 'Bad Fats' in Its Food Lines," Omaha (Nebr.) World-Herald, September 25, 2004, p. 1D.

, "Smithfield Buys ConAgra Feedlots," Omaha (Nebr.) World-Herald, October 20, 2004, p. 1D.

Kilman, Scott, "ConAgra, International Home Foods Join Food Sector's Consolidation Bandwagon," Wall Street Journal, June 26, 2000, p. B14.

, "ConAgra to Pay $8.3 Million to Settle Fraud Charges in Grain-Handling Case," Wall Street Journal, March 20, 1997, p. B12.

Limprecht, Jane E., ConAgra Who?: $15 Billion and Growing, Omaha, Nebr.: ConAgra, Inc., 1989, 301 p.

Lublin, Joann S., and Janet Adamy, "ConAgra Names Pepsi Executive As CEO to Help Guide Recovery," Wall Street Journal, September 1, 2005, p. A2.

Miller, James P., "ConAgra to Cut 7,000 from Work Force," Wall Street Journal, May 13, 1999, p. A3.

Neff, Jack, "The Biggest Food Company Nobody Really Knows," Food Processing, February 2001, pp. 1920, 2425.

Neiman, Janet, "ConAgra Fertilizes Plans for Branded Foods Growth," Advertising Age, September 6, 1982, pp. 4+.

Rasmussen, Jim, "Rohde Ready to Lead ConAgra," Omaha (Nebr.) World-Herald, July 12, 1997.

Ruff, Joe, "ConAgra Is Selling Seafood Subsidiary," Omaha (Nebr.) World-Herald, March 15, 2006, p. 1D.

, "ConAgra to Shed Armour, Butterball, Eckrich Meats," Omaha (Nebr.) World-Herald, February 3, 2006, p. 1D.

, "ConAgra Will Sell 14 Plants: Smithfield Foods Will Acquire Most of the Omaha Company's Refrigerated Meats," Omaha (Nebr.) World-Herald, August 1, 2006, p. 1D.

, "Cuts Ahead As ConAgra Streamlines," Omaha (Nebr.) World-Herald, September 15, 2006, p. 1D.

, "The Road Back: Shareholders Hope ConAgra's New CEO, Gary Rodkin, Can Get the Omaha Company Back on Track," Omaha (Nebr.) World Herald, September 11, 2005, p. 1D.

Sachar, Laura, "An Eye on Your Stomach," Financial World, April 21, 1987, pp. 26+.

Saporito, Bill, and Cynthia Hutton, "ConAgra's Profits Aren't Chicken Feed," Fortune, October 27, 1986, pp. 70+.

Smith, Rod, "ConAgra Moves 'Closer to Table' in Decision to Sell Beef, Pork Groups," Feedstuffs, May 27, 2002, pp. 1, 23.

Taylor, John, "ConAgra Adds Big Brands to Larder," Omaha (Nebr.) World-Herald, June 24, 2000.

, "ConAgra Aims to Widen 'Sea of Green,'" Omaha (Nebr.) World-Herald, December 8, 1996, p. 1M.

, "Foreign Flavor: ConAgra Adapts Products for International Tastes," Omaha (Nebr.) World-Herald, March 30, 1998.

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ConAgra Foods, Inc.

ConAgra Foods, Inc.

One ConAgra Drive
Omaha, Nebraska 68102-5001
U.S.A.
Telephone: (402) 595-4000
Fax: (402) 595-4665
Web site: http://www.conagrafoods.com

Public Company
Incorporated:
1919 as Nebraska Consolidated Mills Company
Employees: 80,000
Sales: $27.19 billion (2001)
Stock Exchanges: New York
Ticker Symbol: CAG
NAIC: 112112 Cattle Feedlots; 112511 Finfish Farming and Fish Hatcheries; 311111 Dog and Cat Food Manufacturing; 311211 Flour Milling; 311223 Other Oilseed Processing; 311340 Nonchocolate Confectionery Manufacturing; 311411 Frozen Fruit, Juice, and Vegetable Processing; 311412 Frozen Specialty Food Manufacturing; 311421 Fruit and Vegetable Canning; 311423 Dried and Dehydrated Food Manufacturing; 311513 Cheese Manufacturing; 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing; 311611 Animal (Except Poultry) Slaughtering; 311612 Meat Processed from Carcasses; 311615 Poultry Processing; 311711 Seafood Canning; 311712 Fresh and Frozen Seafood Processing; 311830 Tortilla Manufacturing; 311911 Roasted Nuts and Peanut Butter Manufacturing; 311941 Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing; 311999 All Other Miscellaneous Food Manufacturing; 422510 Grain and Field Bean Wholesalers

In 1919 Alva Kinney brought four grain milling companies in south central Nebraska together to take advantage of increasing grain production in the Midwest, and the Nebraska Consolidated Mills Company was born. More than 80 years and two name changes later, ConAgra Foods, Inc. stands as one of the worlds largest food companies, holding the number one position in North America in foodservice manufacturing and the number two spot (behind Kraft Foods, Inc.) in retail food sales. The companys numerous consumer brands include Hunts tomato products, Healthy Choice, Banquet, Armour, Bumble Bee, Louis Kemp, La Choy, Wesson, Country Pride, Blue Bonnet, Parkay, Marie Calenders, Cooks, Swift Premium, Butterball, Slim Jim, Chef Boyardee, Orville Redenbachers, PAM Cooking Spray, Van Camps, Peter Pan, and Swiss Miss. Approximately 80 percent of ConAgras revenues are derived from its retail and foodservice businesses. Responsible for the remaining 20 percent of sales are the companys agricultural products businesses, which are involved in the manufacturing and distribution of food ingredients, seeds, crop protection chemicals, and fertilizers, as well as in worldwide trading of bulk agricultural commodities.

Early History: From Milling to Animal Feed to Poultry Processing

Officially formed on September 29, 1919, the Nebraska Consolidated Mills Company (NCM) was headquartered in Grand Island, Nebraska. At first Kinney concentrated on milling the bumper postwar wheat crops at his four Nebraska locations. But soon, to accommodate his growing business, Kinney added a mill in Omaha, in 1922, and moved the headquarters of the company there. He continued to run a profitable and relatively quiet company solely in Nebraska until he retired as president in 1936.

Kinney was succeeded by R.S. Dickinson. Initially, Dickinson followed his predecessors simple but successful policy of milling grain in Nebraska. World War II and the postwar boom kept the demand for grain high and the milling business profitable.

During the early 1940s Dickinson began to use the companys profits to expand. Other successful milling operations, such as General Mills and Pillsbury, were expanding both the number of plants and the number of products they offered, and NCM followed the same trend. In 1942 Dickinson opened a flour mill and animal feed mill in Alabama. He also promoted research into new types of prepared foods that used flour, which led to the development of Duncan Hines cake mixes, introduced in the early 1950s.

The Alabama expansion was profitable, but Dickinson found that it was more difficult to gain a foothold in the prepared-foods market. Cake mixes, though only a small proportion of the total flour market, accounted for as much as $140 million a year in retail sales by 1947. But the market was dominated by General Millss Betty Crocker brand and by Pillsbury, each with one-third of the market share, while Duncan Hines controlled only 10 to 12 percent. Unable to increase its share of the highly competitive cake mix market, NCM eventually decided to get out of prepared foods and use the money it raised to expand in basic commodities: grains and feeds. So, in 1956 the company sold its Duncan Hines brand to Procter & Gamble.

The new president of Nebraska Consolidated Mills, J. Allan Mactier, used the proceeds from the sale to expand aggressively. In 1957, NCM built the first major grain processing plant in Puerto Rico through its subsidiary Caribe Company. The $3 million plant processed flour, corn meal, and animal feeds at Catano in San Juan harbor. Production at the plant did not compete with the parent companys already existing concerns; none of the flours and feeds produced there were exported to the mainland.

Caribes foothold on the island led to further Puerto Rican expansion in new areas. A second subsidiary, Molinos de Puerto Rico, took over Caribes animal feed business on the island while also developing Puerto Ricos virtually nonexistent beef industry as a market for its products. In Molinos first five years of operation, consumption of animal feeds in Puerto Rico increased from 136,516 tons, of which 100,314 were imported, to 249,267 tons, of which only 46,723 were imported. The company also profited from an increased demand for meat and milk on the island.

Elsewhere, however, flour millers faced shrinking profits as demand leveled off in both domestic and foreign markets. European grain production had recovered from the disruption of World War II, and prosperity at home in the 1950s and 1960s allowed consumers to buy more expensive food items, leading to lower flour consumption.

Large millers turned to diversification to offset declining profitability. Industry leaders General Mills and Pillsbury developed their consumer foods lines and introduced new types of convenience foods, while the third of the Big Three in flour milling, International Milling Company, Inc., diversified primarily into animal feeds. Nebraska Consolidated Mills, perhaps unwilling to compete again in packaged foods after its experience with Duncan Hines, also developed the animal feed end of its business. Throughout the 1960s and into the 1970s, the company established mills and distribution centers for feed and flour in the Southeast and Northwest.

NCM also turned to another basic commodity: chicken. It developed poultry growing and processing complexes in Georgia, Louisiana, and Alabama during the 1960s. In 1965 the company also began to expand into the European market by going into partnership with Bioter-Biona, S.A., a Spanish producer of animal feed and animal health products and breeder of pigs, chickens, and trout.

Emerging As ConAgra in the 1970s

By 1971 Nebraska Consolidated Mills had outgrown its early base in Nebraska as well as its name. It chose a new name to reflect its new concerns: ConAgra, meaning in partnership with the land. ConAgra, Inc. was listed on the New York Stock Exchange in 1973.

The new name, however, did not necessarily mean continuing success. The early 1970s, in fact, brought the company to a low point. Many of its acquisitions during the expansion of the 1960s and early 1970s were only marginally profitable at best. In 1974 the company posted net losses and suspended dividends. Heavy losses in commodity speculations brought ConAgra to the brink of bankruptcy in 1975.

ConAgras first high-profile leader, former Pillsbury executive Charles Mike Harper, was named president and CEO in 1976 with a mandate to turn the ailing company around. Essential to Harpers turnaround plan were strict financial goals combined with a series of acquisitions that served to broaden ConAgras sales base. To reduce debt, Harper first sold nonessential operations. He then began to buy agricultural businesses at the low end of their profit cycles and turn them around. Harper originally intended to stick with ConAgras emphasis on basic commodities rather than compete with the packaged-food giants. When he purchased Banquet Foods Company in 1980, he said that the acquisition was a way to increase ConAgras chicken capacity. ConAgras chicken production did increase by a third, bringing the company from eighth to fifth place among chicken producers. ConAgra expanded into fish as well as poultry in the 1970s with investments in catfish aquaculture.

Creating a Diversified Food Company in the 1980s

Another of Harpers acquisitions put ConAgra back in the forefront of the flour market. In 1982 ConAgra bought the Peavey Company, a Minneapolis-based flour miller and grain trader, giving it 16.3 percent of the nations wheat-milling capacity and a system of grain exporting terminals. Political barriers to U.S. grain exports had depressed Peaveys profits, and the acquisition was not the early success story that Banquet was for ConAgra. By 1986, however, Peavey was posting a $16.4 million profit on sales of $1.2 billion, a promising upward trend.

Company Perspectives:

ConAgra is one of the worlds largest and most successful food companies. As North Americas largest foodservice manufacturer and second largest retail food supplier, ConAgra is a leader in multiple segments of the food business and focuses on adding value for customers in retail food, foodservice, and agricultural product channels .

Harper also kept to a commodity-oriented approach by diversifying into agricultural chemicals. ConAgra expanded into fertilizers, and in 1978 acquired United Agri Products, a distributor of herbicides and pesticides. Higher grain prices, Harper reasoned, would mean increased demand for such chemicals.

But, in an attempt to counter the cyclical profit pattern of basic agricultural commodities, Harper also entered areas that did not mesh well with the companys traditional orientation: pet accessories, a Mexican restaurant chain, and a fabrics and crafts chain, among others.

In a dramatic change of direction during the 1980s, ConAgra decided on prepared foods as a better way to balance cyclical profits in the food industry. The companys stringent financial goals were being met: return on equity averaged 20 percent, annual growth in trend-line earnings were over 14 percent, and long-term debt was held to below 35 percent of total capitalization. With the company on firmer financial ground, ConAgra began a series of acquisitions that would ultimately make it the nations second largest food company.

ConAgra moved into the prepared seafood market in 1981 with the purchase of Singleton Seafood, the largest shrimp processor in the country, and Sea-Alaska Products. In 1987 ConAgra bought Trident Seafoods and ODonnell-Usen Fisheries, the producer of Taste O Sea frozen seafood products, thus positioning the company to compete against the leading frozen seafood brands, Mrs. Pauls Kitchens, Gortons, and Van de Kamps.

In 1982, during a low in the poultry cycle, ConAgra moved to take first place in the chicken industry by forming Country Poultry, Inc. By the next year, Country Poultry was delivering more than a billion pounds of brand-name broilers to markets, making it the biggest poultry producer in the country. In 1986, the company formed ConAgra Turkey Company and in 1987 it acquired another poultry company, Longmont Foods, further strengthening its position in the field. But ConAgras poultry concerns no longer focused on the basic bird Harper purchased Banquet for: Country Poultry introduced a number of higher-profit convenience poultry products, such as marinated chicken breasts, chicken hot dogs, and processed chicken for fast-food restaurants.

ConAgra moved into another area of processed foods in 1983 when the company purchased Armour Food Company, a processor of red meats such as hot dogs, sausage, bacon, ham, and luncheon meats. The acquisition also included Armours line of frozen gourmet entrees, Dinner Classics, which complemented Banquets line of frozen foods. As with many of his other acquisitions, Harper bought Armour in a down cycle for book value ($182 million). By waiting to complete the deal until Armour closed several plants, Harper painlessly eliminated about 40 percent of Armours major unions members. Some Armour plants still have unions, but without a master contract labor costs were slashed. Harper then reorganized the company, emphasizing new marketing strategies (reintroducing the familiar Armour jingle to take advantage of consumer recognition) and refocusing product lines. The Dinner Classics line was hurt by price competition and the introduction of new brands of premium frozen dinners. Armour as a whole was still unprofitable through the early 1990s, but profits for the Classics line increased.

In 1986, Harper increased ConAgras presence in frozen foods by purchasing the Morton, Patio, and Chun King brands. The following year, the company expanded in red meats with its purchase of E.A. Miller, Inc., a western producer of beef products, and Monfort of Colorado, Inc. Almost a decade earlier, ConAgra had tried to purchase MBPXL Corp., the number two beef packer in the country, only to be blocked at the last minute by the privately owned Cargill Inc. The Monfort deal, for $365 million in stock, made ConAgra the third largest U.S. beef producer. Health-conscious consumers began eating less beef in the late 1980s and ConAgra responded by working to create new, leaner beef products as it developed new poultry products. Another 1987 acquisition, 50 percent of Swift Independent Packing Company, a processor of beef, pork, and lamb, made ConAgra a leading meat processor as well. Harper rounded out his changes at ConAgra by developing the companys international trading position and by forming its own financial services subsidiary.

Key Dates:

1919:
Four grain milling companies are merged as Nebraska Consolidated Mills Company.
1950s:
Company embarks on short-lived foray into prepared foods via Duncan Hines cake mixes.
1960s:
Company enters the poultry processing market.
1965:
Expansion into Europe begins through joint venture with Bioter-Biona, S.A. of Spain.
1971:
Company changes its name to ConAgra, Inc.
1976:
Charles Mike Harper is named president and CEO.
1978:
United Agri Products, agricultural chemicals distributor, is acquired.
1980:
Banquet Foods Company is acquired.
1981:
Company enters prepared seafood market through purchases of Singleton Seafood and Sea-Alaska Products.
1982:
Country Poultry, Inc. is formed and soon becomes the top poultry producer in the country.
1983:
Red meats processor Armour Food Company is acquired.
1987:
Three more red meat acquisitions are completed: E.A. Miller, Inc.; Monfort of Colorado, Inc.; and Swift Independent Packing Company.
1990:
ConAgra acquires Beatrice Company.
1992:
Phil Fletcher becomes president and CEO.
1996:
Major restructuring cuts 6,300 jobs and shutters more than 50 plants; Bruce C. Rohde is named president, having been the companys chief outside counsel since 1984 (he later assumes the titles of CEO and chairman) .
1998:
Margarine and egg substitute business of Nabisco, Inc. is acquired.
1999:
Company announces major restructuring that involves 8,450 job cuts, the closure of 137 facilities, and the divestment of 18 noncore businesses.
2000:
International Home Foods, Inc. is acquired; company changes its name to ConAgra Foods, Inc.

By the late 1980s, ConAgra had grown into a well diversified food company, better able to absorb the ups and downs of the industry. The year 1987 was a banner one for ConAgras poultry division, which posted $130 million in operating profits due to a tremendous (and ultimately unsustainable) upswing in the poultry market. The poultry divisions operating profits plummeted the following year to $20 million, but by then ConAgras other divisions were strong enough to make up the difference. The company posted net earnings of $155 million, about 5 percent higher than the previous year. The late 1980s also saw ConAgra lose a prolonged takeover battle to poultry rival Tyson Foods, Inc. over Holly Farms Corporation; had ConAgra acquired Holly Farms it would have gained the top position in the U.S. chicken market.

Restructurings and More Acquisitions in the 1990s and Beyond

In 1988 Harper boasted that ConAgra was probably the only food products company to participate across the entire food chain. In the grocery store, however, the majority of its packaged food products were found in the frozen foods section, where it held the top market share in the country. In 1990, sensing that even greater diversification was necessary to ensure steady earnings growth, Harper led the purchase of Beatrice Company, which produced top brands such as Hunts Tomato Paste and Butterball Turkey and had annual sales of more than $4 billion. The Beatrice purchase gave ConAgra a broader portfolio of products and provided a strong sales and distribution system in the dry goods segment. ConAgra paid $2.35 billion for the company and assumed a debt of about $1 billion in the process.

In the early 1990s ConAgra expanded at a rate of about 35 acquisitions and joint ventures a year. The companys international presence grew as it formed joint ventures in Japan, Thailand, France, Canada, Chile, and Australia. Key acquisitions included the malt and wool businesses of Elders IXL Ltd. and 50 percent of its beef business, known as Australia Meat Holdings. On the home front, ConAgra made its first foray into the kosher foods business with the purchase of National Foods and also entered the private label consumer products market with the acquisition of Arrow Industries, a clothing manufacturer.

Around this same time the company enlarged its frozen foods market share further with the introduction of Healthy Choice, a low fat, low sodium, and low cholesterol line of frozen dinner entrees. By 1993, the Healthy Choice line numbered 300-plus products. By 1993 Healthy Choice posted sales of over $1 billion and was lauded as the most successful new food brand introduction in two decades by Advertising Age .

The company also reorganized some of its divisions in the early 1990s, creating ConAgra Grocery Products Companies to unite its Hunt-Wesson companies with its frozen food businesses and ConAgra Meat Products Companies to bring together its branded package meat business and its fresh red meat businesses. Sales for 1992 surpassed $20 billion for the first time, as the company posted its 12th consecutive year of record earnings.

In 1993 Harper resigned his post at ConAgra to become chairman and CEO at RJR Nabisco Holdings Corp. Phil Fletcher, ConAgras longtime president and chief operating officer, assumed Harpers post. In his first two years at the helm, Fletcher cut operating costs by enforcing stricter cost-control measures and fostering greater communication and cooperation between the companys six dozen individual units. Continuing Harpers acquisition strategy, ConAgra began expanding globally, with new ventures in China, Australia, Denmark, and Mexico. Earnings for 1994 reached $437 million on sales of $23.5 billion. That year also marked ConAgras 75th anniversary, and, as part of the companys celebration, $200,000 was donated to a museum in Grand Island, Nebraska, for the erection of a replica of the original Glade Mill, one of the four mills merged to create the company in 1919.

During the mid-1990s, ConAgra was involved in two separate lawsuits. In 1995 the company agreed to pay $13.6 million to settle a class-action suit brought by fish distributors and processors who claimed that ConAgras Country Skillet Catfish Co. and six other catfish wholesalers conspired to fix prices for nearly a decade. While some of the smaller defendants had admitted guilt in the case, neither ConAgra nor the other major defendantsHormel Foods Corporation and Delta Pride Catfish Inc.admitted responsibility. Two years later ConAgra agreed to plea guilty to a felony charge of wire fraud as well as misdemeanor charges of misgrading crops and adding water to grain in a federal case involving ConAgras Peavey grain elevators in Indiana. ConAgra employees at the elevators had been accused of cheating farmers who sold crops to ConAgra and of spraying water on grain before selling it in order to increase its value (since it was sold by weight). Four former ConAgra employees pled guilty to criminal charges, and ConAgra agreed to pay $8.3 million in criminal penalties. ConAgra said that top executives at the company were unaware of the alleged activities of the elevator employees.

Meanwhile, moving to improve profitability, ConAgra launched a major restructuring in mid-1996, Approximately 6,300 employees were cut from the workforce, representing a 7 percent reduction, and more than 50 production facilities were closed or sold. A pretax restructuring charge of $507.8 million was taken, leading to a reduced net income figure for fiscal 1996 of $211.8 million (on sales of $24.32 billion). The company hoped to eventually realize more than $100 million in annual cost savings from the job cuts and plant closings.

In August 1996 Bruce C. Rohde was named president and vice-chairman of ConAgra, having been the companys chief outside counsel since 1984. In September 1997 Rohde was named CEO, and he then added the chairmanship the following year. Acquisitions continued during this period of management transition, with Gilroy Foods, a California-based processor of dehydrated garlic and onion products and other spices, purchased in 1996, and GoodMark Foods Inc., maker of the Slim Jim brand of meat snacks, bought in 1998. Also acquired in 1998, for $400 million, was the margarine and egg substitute business of Nabisco, Inc. Among the brands gained through this deal were Parkay, Blue Bonnet, Fleischmanns, and Chiffon margarines and the Egg Beaters egg substitute product.

ConAgra announced another major restructuring in May 1999, which resulted in 8,450 employees losing their jobs. By the end of the 2000 fiscal year, 31 production plants and 106 nonproduction facilities had been shut down and 18 noncore businesses had been divested. The restructuring resulted in pretax charges of $440.8 million and $621.4 million in 1999 and 2000, respectively. This latest restructuring was part of a larger program called Operation Overdrive, which aimed at generating $600 million in annual cost savings. In addition to the cost cutting, Operation Overdrive also involved a reorganization of the company by customer channelan abandonment of the decentralized structure installed by Harper in 1980s in favor of a more centralized approachand an increase in marketing expenditures, including a new emphasis on cross-selling among the various company brands.

Acquisitions continued in 2000. In January 2000 ConAgra acquired Seaboard Farms, the poultry division of Seaboard Corporation, for about $360 million. Seaboard Farms, which had annual sales of $480 million, was a producer and marketer of value-added poultry products primarily to foodservice customers. ConAgra in July 2000 acquired Lightlife Foods, Inc., a leading producer of premium vegetarian and soy products. Lightlifes product line was a good fit with ConAgras blockbuster Healthy Choice brand. Then one month later, ConAgra completed one of its largest acquisitions in history, a $2 billion deal for International Home Foods, Inc. ConAgra gained a number of well-known consumer brands, including Chef Boyardee pasta products, PAM cooking spray, Guldens mustard, Bumble Bee seafood, and Jiffy Pop popcorn. International Home Foods had posted 1999 revenues of $2.1 billion. With the company continuing its transformation from its agricultural origins to its position as primarily a producer of packaged foods, the decision was made to add Foods to the company name, resulting in the introduction of the ConAgra Foods, Inc. name in September 2000. Plans were also laid to elevate the companys profile with the public as most consumers recognized the companys brands but not the company itself. The new name was slated to be placed on more than 100 brand name products produced by ConAgra.

In its 75-plus-year history, ConAgra had evolved from a low-profile flour miller into an international food company with sales of more than $27 billion. It gained its stature through a remarkable mix of conservative fiscal management and aggressive expansion through acquisitions and joint ventures. Building on the work of his predecessors, Rohde was transforming ConAgra into a leaner, more efficient company, and was likely to seek additional acquisitions in a food industry that was rapidly consolidating at the turn of the millennium.

Principal Operating Units

ConAgra Foodservice Company; ConAgra Grocery Products Companies; ConAgra Frozen Prepared Foods; ConAgra Dairy Case Companies; ConAgra Refrigerated Prepared Foods; ConAgra Meat Companies; ConAgra Poultry Company; ConAgra Food Ingredients; United Agri Products Companies; ConAgra Trade Group.

Principal Competitors

Archer Daniels Midland Company; Campbell Soup Company; Cargill, Incorporated; Cenex Harvest States Cooperative; Groupe Danone; Dean Foods Company; Del Monte Foods Company; Farmland Industries, Inc.; Frito-Lay, Inc.; General Mills, Inc.; Gold Kist Inc.; H.J. Heinz Company; Hormel Foods Corporation; IBP, Inc.; Kraft Foods, Inc.; Land OLakes, Inc.; McCain Foods Limited; Nestlé S.A.; Perdue Farms Incorporated; The Pillsbury Company; The Quaker Oats Company; Sara Lee Corporation; Schwans Sales Enterprises, Inc.; Smithfield Foods, Inc.; Suiza Foods Corporation; Tyson Foods, Inc.; Unilever.

Further Reading

Andreas, Carol, Meatpackers and Beef Barons, Niwot, Colo.: University Press of Colorado, 1994, 225 p.

Bailey, Jeff, and Richard Gibson, ConAgra to Cut 6,500 Jobs, Close Plants, Wall Street Journal, May 15, 1996, p. A3.

Blyskal, Jeff, The Best Damn Food Company in the United States, Forbes, October 24, 1983, pp. 48 +.

Brandon, Copple, Synergy in Ketchup?, Forbes, February 7, 2000, pp. 6869.

Burns, Greg, How a New Boss Got ConAgra Cooking Again, Business Week, July 25, 1994, p. 72.

Byrne, Harlan S., A Growing Presence: From Farm to Table, ConAgra Is on the Move, Barrons, June 20, 1988, pp. 13 +.

Cahill, William R., Cultivating Profits: ConAgra Is on a Seven-Year Winning Streak, Barrons, March 2, 1987, pp. 49 +.

Campanella, Frank W., Fish and Fowl and Flour, Too, Prove Profitable Mix for ConAgra Inc., Barrons, May 4, 1981, pp. 52 +.

ConAgra: Buying a Frozen-Food Maker to Get at Its Chickens, Business Week, December 1, 1980, p. 124.

ConAgras Quantum Leap in Buying Beatrice Co., Mergers and Acquisitions, September/October 1990, p. 54.

ConAgra: The Payoff Could Be Huge from Its Risky Bet on Armour, Business Week, December 19, 1983, pp. 85 +.

Epstein, Victor, A Game of Chicken: ConAgra Beating the Drumstick for Poultry Sales, Omaha World-Herald, September 3, 2000, p. 1M.

Gibson, Richard, ConAgra, Hormel Pay a Pretty Penny in an Ugly Catfish Price-Fixing Case, Wall Street Journal, December 29, 1995, p. A3.

Henkoff, Ronald, A Giant That Keeps Innovating, Fortune, December 16, 1991, p. 101.

Ivey, Mike, How ConAgra Grew Bigand Now, Beefy, Business Week, May 18, 1987, pp. 8788.

Kilman, Scott, ConAgra, International Home Foods Join Food Sectors Consolidation Bandwagon, Wall Street Journal, June 26, 2000, p. B14.

, ConAgra to Pay $8.3 Million to Settle Fraud Charges in Grain-Handling Case, Wall Street Journal, March 20, 1997, p. B12.

Miller, James P., ConAgra to Cut 7,000 from Work Force, Wall Street Journal, May 13, 1999, p. A3.

Neiman, Janet, ConAgra Fertilizes Plans for Branded Foods Growth, Advertising Age, September 6, 1982, pp. 4 +.

Rasmussen, Jim, Rohde Ready to Lead ConAgra, Omaha World-Herald, July 12, 1997.

Sachar, Laura, An Eye on Your Stomach, Financial World, April 21, 1987, pp. 26 +.

Saporito, Bill, and Cynthia Hutton, ConAgras Profits Arent Chicken Feed, Fortune, October 27, 1986, pp. 70 +.

Taylor, John, ConAgra Adds Big Brands to Larder, Omaha World-Herald, June 24, 2000.

, ConAgra Aims to Widen Sea of Green, Omaha World-Herald, December 8, 1996, p. 1M.

, Foreign Flavor: ConAgra Adapts Products for International Tastes, Omaha World-Herald, March 30, 1998.

Maura Troester
update: David E. Salamie

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ConAgra, Inc.

ConAgra, Inc.

ConAgra Center
One Central Park Plaza
Omaha, Nebraska 68102
U.S.A.
(402) 595-4000
Fax: (402) 595-4595

Public Company
Incorporated:
1919 as Nebraska Consolidated Mills
Company
Employees: 42,993
Sales: $21.5 billion
Stock Exchanges: New York
SICs: 2048 Prepared Feeds, Not Elsewhere Classified; 2879
Agricultural Chemicals, Not Elsewhere Classified; 2041
Flour & Other Grain Mill Products; 6211 Security Brokers
& Dealers

In 1919 Alva Kinney brought four grain milling companies in south central Nebraska together to take advantage of increasing grain production in the Midwest, and the Nebraska Consolidated Mills Company was born. Seventy years and a name change later, ConAgra, Inc. is a diversified international company whose products range from agricultural supplies such as fertilizers, pesticides, and feeds to prepared gourmet dinners for a new age of consumers.

Officially formed on September 29, 1919, the Nebraska Consolidated Mills Company (NCM) was headquartered in Grand Island, Nebraska. At first Kinney concentrated on milling the bumper postwar wheat crops at his four Nebraska locations. But soon, to accommodate his growing business, Kinney added a mill in Omaha, in 1922, and moved the headquarters of the company there. He continued to run a profitable and relatively quiet company solely in Nebraska until he retired as president in 1936.

Kinney was succeeded by R. S. Dickinson. Initially, Dickinson followed his predecessors simple but successful policy of milling grain in Nebraska. World War II and the postwar boom kept the demand for grain high and the milling business profitable.

During the early 1940s Dickinson began to use the companys profits to expand. Other successful milling operations, such as General Mills and Pillsbury, were expanding both the number of plants and the number of products they offered, and NCM followed the same trend. In 1942 Dickinson opened a flour mill and animal feed mill in Alabama. He also promoted research into new types of prepared foods that used flour, which led to the development of Duncan Hines cake mixes, introduced in the early 1950s.

The Alabama expansion was profitable, but Dickinson found that it was more difficult to gain a foothold in the prepared-foods market. Cake mixes, though only a small proportion of the total flour market, accounted for as much as $140 million a year in retail sales by 1947. But the market was dominated by General Millss Betty Crocker brand and by Pillsbury, each with one third of the market share, while Duncan Hines controlled only ten to 12 percent. Unable to increase its share of the highly-competitive cake mix market, NCM eventually decided to get out of prepared foods and use the money it raised to expand in basic commodities: grains and feeds. So, in 1956 the company sold its Duncan Hines brand to Proctor & Gamble.

The new president of Nebraska Consolidated Mills, J. Allan Mactier, used the proceeds from the sale to expand aggressively. In 1958, NCM built the first major grain processing plant in Puerto Rico through its subsidiary, Caribe Company. The $3 million plant processed flour, corn meal, and animal feeds at Catano in San Juan harbor. Production at the plant did not compete with the parent companys already-existing concerns; none of the flours and feeds produced there were exported to the mainland.

Caribes foothold on the island led to further Puerto Rican expansion in new areas. A second subsidiary, Molinos de Puerto Rico, took over Caribes animal feed business on the island while also developing Puerto Ricos virtually nonexistent beef industry as a market for its products. In Molinos first five years of operation, consumption of animal feeds in Puerto Rico increased from 136,516 tons, of which 100,314 were imported, to 249,267 tons, of which only 46,723 were imported. The company also profited from an increased demand for meat and milk on the island.

Elsewhere, however, flour millers faced shrinking profits as demand leveled off in both domestic and foreign markets. European grain production had recovered from the disruption of World War II, and prosperity at home in the 1950s and 1960s allowed consumers to buy more expensive food items, leading to lower flour consumption.

Large millers turned to diversification to offset declining profitability. Industry leaders General Mills and Pillsbury developed their consumer foods lines and introduced new types of convenience foods, while the third of the Big Three in flour milling, International Milling Company, Inc., diversified primarily into animal feeds. Nebraska Consolidated Mills, perhaps unwilling to compete again in packaged foods after its experience with Duncan Hines, also developed the animal feed end of its business. Throughout the 1960s and into the 1970s, the company developed mills and distribution centers for feed and flour in the Southeast and Northwest.

NCM also turned to another basic commodity: chicken. It developed poultry growing and processing complexes in Georgia, Louisiana, and Alabama during the 1960s. In 1965 the company also began to expand into the European market by going into partnership with Bioter-Biona, S.A., a Spanish producer of animal feed and animal health products and breeder of pigs, chickens, and trout.

By 1971 Nebraska Consolidated Mills had outgrown its early base in Nebraska as well as its name. It chose a new name to reflect its new concerns: ConAgra, meaning in partnership with the land. ConAgra was listed on the New York Stock Exchange in 1973.

The new name, however, did not necessarily mean continuing success. The early 1970s, in fact, brought the company to a low point. Many of its acquisitions during the expansion of the 1960s and early 1970s were only marginally profitable at best. In 1974 the company posted net losses and suspended dividends. Heavy losses in commodity speculations brought ConAgra to the brink of bankruptcy in 1975.

ConAgras first high-profile chief executive, former Pillsbury executive Charles Harper, was named president in 1975 with a mandate to turn the ailing company around. Essential to Harpers turn-around plan were strict financial goals combined with a series of acquisitions that served to broadens ConAgras sales base. To reduce debt, Harper first sold nonessential operations. He then began to buy agricultural businesses at the low end of their profit cycles and turn them around. Harper originally intended to stick with ConAgras emphasis on basic commodities rather than compete with the packaged-food giants. When he purchased Banquet Foods Corporation in 1980, he claimed that the acquisition was not an entry into prepared foods but a way to increase ConAgras chicken capacity. ConAgras chicken production did increase by a third, bringing the company from eighth to fifth place among chicken producers. Harper expanded into fish as well as poultry in the 1970s with investments in catfish aquaculture.

Another of Harpers acquisitions put ConAgra back in the forefront of the flour market. In 1982 ConAgra bought the Peavey Company, a Minneapolis-based flour miller and grain trader, giving it 16.3 percent of the nations wheat-milling capacity and a system of grain exporting terminals. Political barriers to U.S. grain exports had depressed Peaveys profits, and the acquisition was not the early success story that Banquet was for ConAgra. By 1986, however, Peavey was posting a $16.4 million profit on sales of $1.2 billion, a promising upward trend.

Harper also kept to a commodity-oriented approach by diversifying into agricultural chemicals. ConAgra expanded into fertilizers, and in 1978 acquired United Agri Products, a distributor of herbicides and pesticides. Higher grain prices, Harper reasoned, would mean increased demand for such chemicals.

But, in an attempt to counter the cyclical profit pattern of basic agricultural commodities, Harper also entered areas that didnt mesh well with the companys traditional orientation: pet accessories, a Mexican restaurant chain, and a fabrics and crafts chain, among others.

In a dramatic change of direction during the 1980s, ConAgra decided on prepared foods as a better way to balance cyclical profits in the food industry. The companys stringent financial goals were being met: return on equity averaged 20 percent; annual growth in trend-line earnings were over 14 percent and long-term debt was held to below 35 percent of total capitalization. With the company on firmer financial ground, ConAgra began a series of acquisitions which would ultimately make it the nations second largest food company.

ConAgras moved into the prepared seafood market in 1981 with the purchase of Singleton Seafood, the largest shrimp processor in the country, and Sea-Alaska Products. In 1987 ConAgra bought Trident Seafoods and ODonnell-Usen Fisheries, the producer of Taste O Sea frozen seafood products, thus positioning the company to compete against the leading frozen seafood brands, Mrs. Pauls Kitchens, Gortons, and Van de Kamps.

In 1982, during a low in the poultry cycle, ConAgra moved to take first place in the chicken industry by forming Country Poultry, Inc. By the next year, Country Poultry was delivering more than a billion pounds of brand-name broilers to markets, making it the biggest poultry producer in the country. In 1986, the company formed ConAgra Turkey Company and in 1987 it acquired another poultry company, Longmont Foods, further strengthening its position in the field. But ConAgras poultry concerns no longer focused on the basic bird Harper purchased Banquet for: Country Poultry introduced a number of higher-profit convenience poultry products, such as marinated chicken breasts, chicken hot dogs, and processed chicken for fast food restaurants.

ConAgra moved into another area of processed foods in 1983 when the company purchased Armour Food Company, a processor of red meats such as hot dogs, sausage, bacon, ham, and lunch meats. The acquisition also included Armours line of frozen gourmet entrees, Dinner Classics, which complemented Banquets line of frozen foods. As with many of his other acquisitions, Harper bought Armour in a down cycle for book value ($182 million). By waiting to complete the deal until Armour closed several plants, Harper painlessly eliminated about 40 percent of Armours major unions members. Some Armour plants still have unions, but without a master contract labor costs were slashed. Harper then reorganized the company, emphasizing new marketing strategies (reintroducing the familiar Armour jingle to take advantage of consumer recognition) and refocusing product lines. The Dinner Classics line was hurt by price competition and the introduction of new brands of premium frozen dinners. Armour as a whole was still unprofitable through the early 1990s, but the Classics line has increased profits since the purchase.

In 1986, Harper increased ConAgras presence in frozen foods by purchasing the Morton, Patio, and Chun King brands. And in 1987, the company expanded in red meats with its purchase of E.A. Miller, Inc., a western producer of beef products, and Monfort of Colorado, Inc. Almost a decade earlier, ConAgra had tried to purchase MBPXL Corp., the number-two beef packer in the country, only to be blocked at the last minute by the privately owned Cargill Inc. The Monfort deal, for $365 million in stock, made ConAgra the third-largest U.S. beef producer. Health-conscious consumers began eating less beef in the late 1980s and ConAgra responded by working to develop new, leaner beef products as it developed new poultry products. Another 1987 acquisition, 50 percent of Swift Independent Packing Company, a processor of beef, pork, and lamb, made ConAgra a leading meat processor as well. Harper rounded out his changes at ConAgra by developing the companys international trading position and by forming its own financial services subsidiary.

By the late 1980s, ConAgra had grown into a well diversified food company, better able to absorb the ups and downs of the industry. 1987 was a banner year for ConAgras poultry division, which posted $130 million in operating profits due to a tremendous (and ultimately unsustainable) upswing in the poultry market. The poultry divisions operating profits plummeted the following year to $20 million, but by then ConAgras other divisions were strong enough to make up the difference. The company posted net earnings of $155 million, about 5 percent higher than the previous year.

In 1988 Harper boasted that ConAgra was probably the only food products company to participate across the entire food chain. However, in the grocery store, the majority of its packaged food products were found in the frozen foods section, where it held the top market share in the country. In 1990, sensing that even greater diversification was necessary to ensure steady earnings growth, Harper led the purchase of Beatrice Co., which produced top brands such as Hunts Tomato Paste and Butterball Turkey and had annual sales over $4 billion. The Beatrice purchase gave ConAgra a broader portfolio of products and provided a strong sales and distribution system in the dry goods segment. ConAgra paid $2.35 billion for the company and assumed a debt of about $1 billion in the process.

In the early 1990s ConAgra expanded at a rate of about 35 acquisitions and joint ventures a year. The companys international presence grew as it formed joint ventures in Japan, Thailand, France, Canada, Chile, and Australia. Key acquisitions included Australia Meat Holdings and the malt, wool, and 50 percent of the beef business of Elders Ltd., another Australian concern. On the home front, ConAgra made its first foray into the kosher foods business with the purchase of National Foods and also entered the private label consumer products market with the acquisition of Arrow Industries, a clothing manufacturer.

In 1991 the company enlarged its frozen foods market share further with the introduction of Healthy Choice, a low fat, low sodium, and low cholesterol line of frozen dinner entrees. Within two years, the brand had expanded to offer everything from healthy hot dogs to ice cream. By 1993 Healthy Choice posted sales of over $1 billion and was lauded as the most successful new food brand introduction in two decades by Advertising Age.

The company also reorganized some of its divisions in the early 1990s, creating ConAgra Grocery Products Companies to unite its Hunt-Wesson companies with its frozen food businesses and ConAgra Meat Products Companies to bring together its branded package meat business and its fresh red meat businesses. 1992 sales surpassed $20 billion for the first time, as the company posted its 12th consecutive year of record earnings.

In 1992 Harper resigned his post at ConAgra to become chairman and chief executive officer at RJR Nabisco Holdings Corp. Phil Fletcher, ConAgras longtime president and chief operating officer, assumed Harpers post. In his first two years at the helm, Fletcher cut operating costs by enforcing stricter cost-control measures and fostering greater communication and cooperation between the companys six dozen individual units. Continuing Harpers acquisition strategy, ConAgra began expanding globally, with new ventures in China, Australia, Denmark, and Mexico. 1994 earnings reached $437 million on sales of $23.5 billion.

1994 marked ConAgras 75th anniversary, and, as part of the companys celebration, $200,000 was donated to a museum in Grand Island, Nebraska, for the erection of a replica of the original Glade Mill, one of the four mills merged to create the company in 1919. In its 75 year history, ConAgra had transformed itself from a low-profile flour miller into an international food company with sales well over $20 billion. It gained its stature through a remarkable mix of conservative fiscal management and aggressive expansion through acquisitions and joint ventures. With its 60-plus operating unitsselling everything from livestock feed to microwaveable dinnersConAgra seemed well positioned to absorb the cyclical trends of the food industry. Building on the strengths of his predecessor, Fletcher was transforming ConAgra into a leaner, more efficient company, and given his track record, the companys future seemed in good hands.

Principal Subsidiaries

ConAgra Agri-Products Companies; ConAgra Diversified Products Companies; ConAgra Grocery Products Companies; ConAgra Meat Products Companies; ConAgra Red Meat Companies; ConAgra Poultry Company; ConAgra Trading and Processing Companies; ConAgra Broiler Co.; ConAgra Frozen Foods Co.; Beatrice Co.; Camerican International Inc.; Monfort Inc.; Country General Stores Co.; E.A. Miller Inc.; Decker Foods Co.; United Agri Products Cos.; General Spice Inc.; Agrichem Co.; Arrow Industries Inc.; Camerican International Inc.

Further Reading

Burns, Greg, How a New Boss Got ConAgra Cooking Again, Business Week, July 25, 1994, p. 72.

ConAgras Quantum Leap in Buying Beatrice Co., Mergers & Acquisitions, September/October 1990, p. 54.

Henkoff, Ronald, A Giant That Keeps Innovating, Fortune, December 16, 1991, p. 101.

updated by Maura Troester

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ConAgra, Inc.

ConAgra, Inc.

ConAgra Center
One Central Park Plaza
Omaha, Nebraska 68102
U.S.A.
(402) 978-4000

Public Company
Incorporated:
1919 as Nebraska Consolidated Mills Company
Employees: 42,993
Sales: $9.5 billion
Stock Index: New York

In 1919 Alva Kinney brought four grain milling companies in south central Nebraska together to take advantage of increasing grain production in the Midwest, and the Nebraska Consolidated Mills Company was born. Seventy years and a name change later, ConAgra is a diversified international company whose products range from agricultural supplies such as fertilizers, pesticides, and feeds to prepared gourmet dinners for a new age of consumers.

Officially formed on September 29, 1919, the Nebraska Consolidated Mills Company (NCM) was headquartered in Grand Island, Nebraska. At first Kinney concentrated on milling the bumper postwar wheat crops at his four Nebraska locations. But soon, to accommodate his growing business, Kinney added a mill in Omaha, in 1922, and moved the headquarters of the company there. He continued to run a profitable and relatively quiet company solely in Nebraska until he retired as president in 1936.

Kinney was succeeded by R. S. Dickinson. Initially, Dickinson followed his predecessors simple but successful policy of milling grain in Nebraska. World War II and the postwar boom kept the demand for grain high and the milling business profitable.

During the early 1940s Dickinson began to use the companys profits to expand. Other successful milling operations, such as General Mills and Pillsbury, were expanding both the number of plants and the number of products they offered, and NCM followed the same trend. In 1942 Dickinson opened a flour mill and animal feed mill in Alabama. He also promoted research into new types of prepared foods that used flour, which led to the development of Duncan Hines cake mixes, introduced in the early 1950s.

The Alabama expansion was profitable, but Dickinson found that it was more difficult to gain a foothold in the prepared-foods market. Cake mixes, though only a small proportion of the total flour market, accounted for as much as $140 million a year in retail sales by 1947. But the market was dominated by General Millss Betty Crocker brand and by Pillsbury, each with one third of the market share, while Duncan Hines controlled only 10-12%. Unable to increase its share of the highly-competitive cake mix market, NCM eventually decided to get out of prepared foods and use the money it raised to expand in basic commodities: grains and feeds. So, in 1956 the company sold its Duncan Hines brand to Proctor & Gamble.

The new president of Nebraska Consolidated Mills, J. Allan Mactier, used the proceeds from the sale to expand aggressively. In 1958, NCM built the first major grain processing plant in Puerto Rico through its subsidiary, Caribe Company. The $3 million plant processed flour, corn meal, and animal feeds at Catano in San Juan harbor. Production at the plant did not compete with the parent companys already-existing concerns; none of the flours and feeds produced there were exported to the mainland.

Caribes foothold on the island led to further Puerto Rican expansion in new areas. A second subsidiary, Molinos de Puerto Rico, took over Caribes animal feed business on the island while also developing Puerto Ricos virtually nonexistent beef industry as a market for its products. In Molinos first five years of operation, consumption of animal feeds in Puerto Rico increased from 136,516 tons, of which 100,314 were imported, to 249,267 tons, of which only 46,723 were imported. The company also profited from an increased demand for meat and milk on the island.

Elsewhere, however, flour millers faced shrinking profits as demand leveled off in both domestic and foreign markets. European grain production had recovered from the disruption of World War II, and prosperity at home in the 1950s and 1960s allowed consumers to buy more expensive food items, leading to lower flour consumption.

Large millers turned to diversification to offset declining profitability. Industry leaders General Mills and Pillsbury developed their consumer foods lines and introduced new types of convenience foods, while the third of the Big Three in flour milling, International Milling company, Inc., diversified primarily into animal feeds. Nebraska Consolidated Mills, perhaps unwilling to compete again in packaged foods after its experience with Duncan Hines, also developed the animal feed end of its business. Throughout the 1960s and into the 1970s, the company developed mills and distribution centers for feed and flour in the Southeast and Northwest.

NCM also turned to another basic commodity: chicken. It developed poultry growing and processing complexes in Georgia, Louisiana, and Alabama during the 1960s.

In 1965 the company also began to expand into the European market by going into partnership with Bioter-Biona, S. A., a Spanish producer of animal feed and animal health products and breeder of pigs, chickens, and trout.

By 1971 Nebraska Consolidated Mills had outgrown its early base in Nebraska as well as its name. It chose a new name to reflect its new concerns: ConAgra, meaning in partnership with the land. ConAgra was listed on the New York Stock Exchange in 1973.

The new name, however, did not necessarily mean continuing success. The early 1970s, in fact, brought the company to a low point. Many of its acquisitions during the expansion of the 1960s and early 1970s were only marginally profitable at best. In 1974 the company posted net losses and suspended dividends. Heavy losses in commodity speculations brought ConAgra to the brink of bankruptcy in 1975.

ConAgras first high-profile chief executive, former Pillsbury executive Charles Harper, was named president in 1975 with a mandate to turn the ailing company around.

Harper first sold nonessential operations to reduce debt. He then began to buy agricultural businesses at the low end of their profit cycles and turn them around. Harper originally intended to stick with ConAgras emphasis on basic commodities rather than compete with the packaged-food giants. When he purchased Banquet Foods Corporation in 1980, he claimed that the acquisition was not an entry into prepared foods but a way to increase ConAgras chicken capacity. ConAgras chicken production did increase by a third, bringing the company from eighth to fifth place among chicken producers. Harper expanded into fish as well as poultry in the 1970s with investments in catfish aquaculture.

Another of Harpers acquisitions put ConAgra in the forefront of its original flour market. In 1982 ConAgra bought the Peavey Company, a Minneapolis-based flour miller and grain trader, giving it 16.3% of the nations wheat-milling capacity and a system of grain exporting terminals. Political barriers to U.S. grain exports had depressed Peaveys profits, and so far the acquisition has not been the success story that Banquet was for ConAgra. But by 1986, Peavey had shown a $16.4 million profit on sales of $1.2 billion, a promising upward trend.

Harper also kept to a commodity-oriented approach by diversifying into agricultural chemicals. ConAgra expanded into fertilizers, and in 1978 acquired United Agri Products, a distributor of herbicides and pesticides. Higher grain prices, Harper reasoned, would mean increased demand for such chemicals.

But, in an attempt to counter the cyclical profit pattern of basic agricultural commodities, Harper also entered areas that didnt mesh well with the companys traditional orientation: pet accessories, a Mexican restaurant chain, and a fabrics and crafts chain, among others. These acquisitions have yet to be as profitable as anticipated.

In a dramatic change of direction during the 1980s, ConAgra decided on prepared foods as a better way to balance cyclical profits in the food industry. In 1981 the company bought Singleton Seafood, the largest shrimp processor in the country, and Sea-Alaska Products. In 1987 ConAgra bought Trident Seafoods and ODonnell-Usen Fisheries, the producer of Taste O Sea frozen seafood products, thus positioning the company to compete against the leading frozen seafood brands, Mrs. Pauls Kitchens, Gortons, and Van de Kamps.

In 1982, during a low in the poultry cycle, ConAgra moved to take first place in the chicken industry by forming Country Poultry, Inc. By the next year, Country Poultry was delivering more than a billion pounds of brand-name broilers to markets, making it the biggest poultry producer in the country. In 1986, the company formed ConAgra Turkey Company and in 1987 it acquired another poultry company, Longmont Foods, further strengthening its position in the field. But ConAgras poultry concerns no longer focused on the basic bird Harper purchased Banquet for: Country Poultry introduced a number of higher-profit convenience poultry products, such as marinated chicken breasts, chicken hot dogs, and processed chicken for fast food restaurants.

ConAgra moved into another area of processed foods in 1983 when the company purchased Armour Food Company, a processor of red meats such as hot dogs, sausage, bacon, ham, and lunch meats. The acquisition also included Armours line of frozen gourmet entrees, Dinner Classics, which complemented Banquets line of frozen foods. As with many of his other acquisitions, Harper bought Armour in a down cycle for book value ($182 million). By waiting to complete the deal until Armour closed several plants, Harper painlessly eliminated about 40% of the Armours major unions members. Some Armour plants still have unions, but without a master contract labor costs were slashed. Harper then reorganized the company, emphasizing new marketing strategies (reintroducing the familiar Armour jingle to take advantage of consumer recognition) and refocusing product lines. The Dinner Classics line has been hurt by price competition and the introduction of new brands of premium frozen dinners. Armour as a whole was still unprofitable in 1988, but the Classics line has increased profits since the purchase.

In 1986, Harper increased ConAgras presence in frozen foods by purchasing the Morton, Patio, and Chun King brands. And in 1987, the company expanded in red meats with its purchase of E.A. Miller, Inc., a western producer of beef products, and Montfort of Colorado, Inc. Almost a decade earlier, ConAgra had tried to purchase MBPXL Corp., the number-two beef packer in the country, only to be blocked at the last minute by the privately owned Cargill Inc. The Montfort deal, for $365 million in stock, made ConAgra the third-largest U.S. beef producer. Although health-conscious consumers are eating less beef, ConAgra hopes to develop new meat products as it developed new poultry products. Another 1987 acquisition, 50% of Swift Independent Packing Company, a processor of beef, pork, and lamb, made ConAgra a leading meat processor as well. Harper has rounded out his changes at ConAgra to date by developing the companys international trading position and by developing its own financial services subsidiary.

In 70 years, ConAgra changed from a low-profile flour miller into a producer of basic commodities, and then into an acquisition-driven, diversified international food company with interests across the food industry. As such, the company seems well-positioned to balance cyclical trends in foods as well as changing consumer taste. The companys poultry, seafood, and grain concerns appeal to new consumer interests in low-cholesterol eating, while busy families are ringing up profits for ConAgra in its prepared foods division.

Principal Subsidiaries:

AgriBasics Fertilizer Co.; Agricol Corp., Inc.; Alliance Grain, Inc.; Molinos de Puerto Rico, Inc.; CAG Co.; Cropmate Co.; Trekker Co.; Atwood Commodities, Inc.; United Agri Products, Inc.; Armour Food Express Co.; Kurt A. Becher GmbH & Co. KG; Bergerco USA; Bergerco (VI), Inc.; Taco Plaza, Inc.; To-Ricos, Inc.; Atwood-Larson Co.; U.S. Tire, Inc.; Canadian Harvest Process (1988) Ltd.; C & L Grain & Feed Co.; Woodward & Dickerson (Japan) Ltd.; Saprogal; Sapropor (75%); Geldermann, Inc.; United Agri Products Financial Services, Inc.; Weld Agricultural Credit, Inc.

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"ConAgra, Inc.." International Directory of Company Histories. . Encyclopedia.com. 28 Jun. 2017 <http://www.encyclopedia.com>.

"ConAgra, Inc.." International Directory of Company Histories. . Encyclopedia.com. (June 28, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/conagra-inc

"ConAgra, Inc.." International Directory of Company Histories. . Retrieved June 28, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/conagra-inc