Conagra Sees Consumers Shift Away From Ready-to-Eat Toward Cooking

Amid ongoing financial challenges, Conagra Brands is seeing consumers’ desire to save on food spending finally outweigh their demand for convenience, with a shift towards cooking from scratch.

The food giant, parent company of Slim Jim, Reddi Wip, Swiss Miss and many other popular brands, shared on a call with analysts Thursday (Oct. 5) discussing its first quarter fiscal 2024 financial results how it has seen consumers’ food consumption behavior shift in recent months.

“Within food, convenience-oriented items — typically a top consumer priority — have lagged as shoppers have turned to more hands-on food prep to get additional bang for their buck. And as they’ve done this, not surprisingly, they have shifted from meals per one to meals per many, even if not everyone is home at the same time to eat together,” Sean Connolly, the company’s president and CEO, said on the call.

Indeed, many consumers are finding their food budgets pressured. According to the report “Installment Plans Becoming a Key Part of Shopper’s Toolkit,” among the 60% of consumers who have used some type of installment payment plan in the past 12 months, 34% have done so to purchase groceries. That is, one in five shoppers have resorted to using such plans to get their basic food needs met. The report was a collaboration between PYMNTS Intelligence and Splitit, which drew from a survey of  more than 2,500 U.S. adults.

Plus, PYMNTS Intelligence’s study “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down,” which drew from a survey of more than 2,000 U.S. consumers, found that 57% of consumers have cut down on nonessential grocery spending.

This observation marks a shift from earlier in the year, when brands were seeing an uptick in consumers seeking out prepared meals and other quick, easy options to meet their demand for convenience while saving on the cost of ordering in from a restaurant.

The shift has taken a hit on frozen food sales, with Conagra noting in a presentation shared with analysts that the category saw a 4% year-over-year decrease in retail sales in the category, driven by a decrease in single-serve options. Yet the company maintains that, given consumers’ longer-term increase in demand for such foods, the shift will prove short-lived.

“Frozen meals has been one of the fastest growing categories in in-home consumption over the past 40 years,” Connolly said. “… This expansion has been fueled by the long-term sustained consumer demand for convenience as well as the addition of innovation and quality ingredients, … which consumers have come to increasingly rely on. This is central to why we believe the current softness is temporary.”

Indeed, consumers do generally look for quick food options. PYMNTS Intelligence’s study earlier this year, “Connected Dining: Ready-to-Eat Meals are Eating Restaurants’ Lunch,” which drew from an April survey of more than 2,300 U.S. adults, revealed that more than 96 million consumers had bought ready-to-eat meals in the past month. Plus, 28% of consumers reported purchasing ready-to-eat meals every week, with more than half of those who have purchased these items citing time savings as a key reason for purchasing more.