Private Label Buyer

ConAgra: Deal With Ralcorp ‘Compelling’

November 28, 2012

A day after ConAgra Foods announced it agreed to buy Ralcorp and create the largest private label food manufacturer in North America, its president of sales there was much work yet to be done.

“Between now and mid-March, (ConAgra CEO Gary Rodkin and Ralcorp CEO Kevin Hunt) will work together to identify opportunities,” ConAgra President of Sales Doug Knudsen said. “After the deal closes we’ll be prepared to talk about integration.”

The combination would create a $4.5 billion annual powerhouse in the industry and provide ConAgra with an extended reach into private label that it has been aiming for since embarking on a growth strategy 18 months ago.

“The real driver has been 18 months ago, putting on a piece of paper what our priorities in the company were. And we followed that,” he said.

While declining to discuss the details of the latest talks that led to the deal – a sale that Ralcorp three times rejected in 2011 – Knudsen said ConAgra was excited to see the potential from its biggest private label acquisition come to fruition.

“It’s so compelling because of the growth we see in store brands,” he said. “We know how important store brands are with our customers. It’s very important to us, and acquisitions we’ve made – National Pretzel has a significant private label business – we really like and we like the growth prospects of it.”

But beyond the traditional private label reach, Ralcorp’s business in the foodservice channel also appeared to be a source of new business for a company that has some foodservice customers in its pipeline already.

“It allows us and affords us windows and opportunities into channels where we may not have been as developed as in the past,” he said. “There’s an opportunity both in consumer and commercial customers, and that’s a nice development. We have strong business on the commercial side as well as Ralcorp does. But there are two or three large distributors in the business, and they have their own brands, so that gives us even more opportunity to get behind the house, so to speak.”

Knudsen said the deal would help his sales team be able to take a broad portfolio out to their customers, and Ralcorp’s customers.

“We do think it does give us opportunities because of the importance of customers’ brands to the business,” he said. “It makes us somewhat unique in this industry, and we think we can use and leverage that as a strong connection point with our customer.”