ConAgra scarfs up store brands with Ralcorp deal
NEW YORK — ConAgra Foods is set to become the nation's biggest maker of store-brand foods, with a $5 billion purchase of Ralcorp that expands its stake in the growing market for cereals, crackers and other packaged foods sold under private labels.
The deal announced Tuesday caps a year of acquisitions for ConAgra, which makes brands including Banquet, Chef Boyardee and Marie Callender's. The company, based in Omaha, made multiple attempts to buy Ralcorp last year.
The latest bid for Ralcorp occurs at a time when private-label brands — also known as store brands or house brands — are gaining popularity with price-conscious shoppers. Supermarkets and drug stores have been working to improve the image of their brands as a way to control the rising costs for name brands.
In a conference call with analysts, ConAgra CEO Gary Rodkin noted that private-label products are growing at twice the rate of name brands and now account for 18 percent of the overall packaged food market.
In a new report this week, however, market researcher SymphonyIRI wrote that the growth of private label products has ebbed and “hit a proverbial glass ceiling.”
Ralcorp shares jumped $18.59, or 26.5 percent.
, to $88.82 in Tuesday afternoon trading. ConAgra gained $1.40, or 5 percent, to $29.69.