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As Beyond Meat, Conagra sees $ 30 billion opportunity in Gardein plant-based meat alternatives



Conagra Brands Inc. says it sees an opportunity in the range of $ 30 billion from its recently acquired Gardein brand, which offers products in the growing plant-based meat category.

Conagra

                            
                            
                                  
      
      
      
      
      
      
      
                                  
                                     CAG, + 4.29%

acquired Gardein alongside a host of other brands including Duncan Hines, Log Cabin and Birds Eye as part of the $ 10.9 billion Pinnacle Foods deal, completed in October.

Conagra Chief Executive Officer Sean Connolly said the company looked at plant-based alternatives to meat as well as almond milk as an alternative. to cow's milk, finding that big business could wait for the company in this category.

Read: Beyond Meat stock climbs after the unveils new Beyond Beef product for later this week

"" That means the opportunity here could be in the range of $ 30 billion just in the US, "he said, according to a FactSet transcript. “And you know, there's even more opportunity internationally.”

Shares of plant-based meat company Beyond Meat Inc.

                            
                            
                                  
      
      
      
      
      
      
      
                                  
                                     BYND, -1.37%

have soared since its trading debut in March, up 104.5% in the past month. Beyond Burgers, Impossible Burgers (owned by Impossible Foods) and plant-based meat alternatives from a host of other companies are gaining favor as diners look for options that are better for their health and the environment.

Even traditional meat companies like Tyson Foods Inc.

                            
                            
                                  
      
      
      
      
      
      
      
                                  
                                     TSN, + 1.37%

are going meat-free

Though plant-based citizens have gotten a lot of attention, Conagra says chicken sales are growing fastest among consumers, up 26% year- over-year compared with 11% growth in beef and fish, and 9% growth in pork.

Altogether, Conagra says meat alternatives are a $ 800 million business, up 22% from a year ago.

See: Beyond Meat at risk as competitors Like Impossible Burger take root

“Our view is that the relative size of animal protein consumption serves as a useful guide for how to think about the market opportunity for planting based alternatives, "Connolly said on the call.

"As you can see, citizens are important but this market extends well beyond beef patties or even beef."

Conagra thinks Gardein is well-positioned with an established, diverse portfolio of products. The unit had $ 50 million in sales in plant-based chicken alternatives, $ 47 million in alternatives and $ 25 million in other products, including fish alternatives, in the 52 weeks ended April 21.

“The current burger platform is underdeveloped and we "It's in the process of creating the next generation of beefless citizens to better compete in this popular segment," Connelly said. “If we do, we expect accelerated growth at retail and in food services. But we also plan to compete across the important hot dog and sausage categories. ”

Don't miss: Tyson, America's biggest meat producer, is taking a bite out of the vegetarian market

However , Conagra's stock, down 12.1% in Thursday trading, not reacting to the excitement around plant-based meat, but rather the fourth quarter earnings and sales shortfall the company reported before the market opened.

Conagra experienced sales declines across many of its categories, including grocery and snacks, which was down 7.1% to $ 746 million due to the division of the Wesson oil business and declines in brands including Hunt's and Chef Boyardee.

"In Our Hunt's canned tomato business, our pricing actions translated to shelf-price increases, ”said Connelly.

Watch: How AI can take the guesswork out of farming

"But what we did not anticipate is that private label would stay flat and, in some instances, actually decrease price. By the end of the quarter price gaps were simply too wide for consumers to ignore and we lost volume. ”

In addition, there was a 14% year-over-year increase in the price of steel cans, which is what both the Hunt's and Chef Boyardee brands use for packaging.

Harley-Davidson Inc.

                            
                            
                                  
      
      
      
      
      
      
      
                                  
                                     HOG, + 0.67%

said it would move some of its motorcycle production overseas to avoid tariffs on foreign steel and aluminum that the Trump administration has imposed on the European Union.

Read: Harley-Davidson to make small motorcycles in China

"Q4 clearly was disappointing, but the fact is, it was largely due to transitory issues," said Connelly. “But now we are in a position to play offense and our innovation pipeline is both broad and full. So despite the speed bum, we're clearly still advancing our playbook. ”

Conagra stock has rallied 19.1% for the year to date, though the shares have fallen 6.2% over the last three months. The S&P 500 index

                            
                            
                                  
      
      
      
      
      
      
      
                                  
                                     SPX, + 0.58%

is up 16.7% for 2019 so far.


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