|The event is being called a 'missed opportunity' by critics.
Though heavy-hitters such as Kraft Foods, Sara Lee Corp., General Mills and Kellogg Co. were all in attendance, sending their CEOs up to the stage as they have each year armed with a slew of data to try to persuade analysts to push their stocks, this year’s program netted them very little.
“The presenting companies did not step up to set their businesses and long-term growth prospects apart in an increasingly competitive consumer-staples space,” said Lehman Bros. analyst Andrew Lazar in a note to investors in which he mentioned that his rankings of the top companies did not shift following the conference. Mr. Lazar said, in fact, that he saw this year’s CAGNY as a “missed opportunity given the captive attention of 500-plus consumer-product analysts.”
Credit Suisse analyst Dave Nelson summed up CAGNY 2006 with a comparison to the film “Groundhog Day”: Presentations sounded similar to those in the past, and did not provide much new news.
Kraft Foods and Sara Lee Corp., both in the midst of major turnaround plans, only reiterated previously announced efforts to consolidate and focus on their strongest equities. Kellogg Co. CEO Jim Jenness outlined the myriad ways it planned to sustain momentum, from more efficient distribution to improved return on marketing.
Campbell Soup Co., however, stood out from the pack, offering news of sodium reductions in its soups by 2007 and a focus on premium soups including Select Gold Label varieties and its refrigerated Stock Pot brand. Both nuggets seemed to solidify Campbell’s place in the turnaround Hall of Fame and win CEO Douglas Conant -- and the company’s stock -- big points.
Not such good news
What Mr. Nelson called Campbell’s “important and resonant big ideas for transforming soup” garnered the company his prize as “the best opportunity in our universe of not just meeting, but exceeding corporate growth objectives.”
The fact that offering news at CAGNY could be so positive for Campbell begs the question of why others did not do the same. The reality is, many may not have such good news to share. Prudential Securities analyst John McMillin, though believing there was actually more news shared than some of his colleagues suggested, said that much of the “news” at these conferences is often bad and overall presentations this year seemed far less downbeat than during the past two years, when many companies were forced to lay out significant turnaround plans.
Still, Mr. McMillin’s theme for the 2006 conference was “Running to stand still.” And other analysts noted that food companies are struggling just to maintain their woefully small margins as the cost of business rises, including in the area of marketing.
As Lehman’s Mr. Lazar pointed out: “Beyond just the input-cost pressures that have been plaguing manufacturers over the past several years, companies must spend more to differentiate their products in consumers’ eyes ... both in the media and retail.” As a result, he said, increasingly long-term focused package-goods companies are struggling to find the funds enough for brand building just to remain competitive in the years leading up to 2010 -- let alone to grow. When they figure out that Catch-22, maybe then they’ll have some big news.