strategic-management

190 KRISTOPHER J. BLANCHARD
Customers today view food as an expression of their cultural and social identity and
are therefore asking a lot more from producers than just good quality. Environmental
concern, social responsibility, and economic viability are commonly identified as the three
pillars of sustainability. With global inequalities becoming more pronounced, food costs
climbing, and global warming becoming a major political issue, food producers are simultaneously
cast as perpetrator and potential healer. Meeting the needs of the present without
compromising the future has to be taken into account by the food industry without undermining
bottom line balance sheets.
Competitors
Kraft Foods Inc. is the second largest food processing company in the world, second only
to Nestle. Nestle is more than just a food company; it also produces health and beauty and
pet care products. The majority of Nestle’s revenues are from international sales, whereas
Kraft Foods Inc. is primarily a North American company. Domestically Kraft Foods Inc.
competes with a number of companies, a few of which include ConAgra Foods, Heinz
Company, and Sara Lee. Beyond other packaged food companies, Kraft also finds itself
competing with generic products and retailer brands, wholesalers, and cooperatives. These
products are most likely going to be the largest competitive threat to Kraft Foods Inc.
Many consumers are cutting back on their spending by switching to store-brand products.
Additionally, as the U.S. dollar gains strength overseas, this will make Kraft Foods products
more expensive.
ConAgra Foods
ConAgra Foods, ticker symbol CAG, is the largest publicly held firm that Kraft Foods
competes with in the U.S. market. As indicated in Exhibit 5, ConAgra Foods is a leading
branded foods company and is the trusted name behind many leading brands, including
Healthy Choice, Chef Boyardee, Egg Beaters, Hebrew National, Hunt’s, Orville
Redenbacher’s, PAM, and Banquet, among others. Their consumer brands are found in 97
percent of U.S. households, and 26 are ranked first or second in their category. ConAgra
Foods also has a very significant presence in commercial food products and is one of the
nation’s leading specialty potato providers to restaurants and other foodservice establishments.
With a vision statement: “One company growing by nourishing lives and finding a
better way today one bite at a time,” the company is dedicated to providing customers
and consumers with food they can count on to taste great and provide good nutrition at a
fair value.
Like Kraft Foods, ConAgra Foods has undergone a number of changes since 2005.
Many of these changes are the result of Gary Rodkin being named CEO in 2005. While
addressing industry leaders at the 2009 CAGNY conference, Rodkin stated:
EXHIBIT 5 Kraft versus ConAgra
Kraft ConAgra Food Industry
Market Cap: 37.50B 8.25B 1.21B
Employees: 98,000 25,000 3.50K
Revenue 41.55B 12.54B 1.03B
Gross Margin 33.70% 21.28% 33.70%
EBITDA 6.14B 1.39B 127.92M
Oper Margins 12.54% 8.57% 13.68%
Net Income 1.96B 555.60M N/A
EPS 1.981 2.159 1.98
CAG = ConAgra Foods, Inc.
Source: Based on information at www.finance.yahoo.com.