Conagra Brands, Inc. (CAG): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at the structural reality of this packaged food giant as of late 2025, and frankly, the picture is tight. With an adjusted EPS landing at $2.30 for fiscal 2025, the core challenge isn't just managing inflation; it's navigating the immense leverage held by a few key players. Consider this: a single customer accounted for 29% of consolidated net sales last year. That concentration, combined with rising supplier costs, fierce competition from both established rivals and nimble private labels, means every strategic move is critical. If you want to know exactly where the pressure points are-from supply chain disruptions to the threat of new direct-to-consumer entrants-dive into this five-forces breakdown below.

Conagra Brands, Inc. (CAG) - Porter's Five Forces: Bargaining power of suppliers

You're looking at the supplier side of the ledger for Conagra Brands, Inc., and honestly, it's a tight squeeze right now. The power suppliers hold is definitely being felt in the P&L, even as the company works to get its operations back on track.

Cost inflation for raw materials, packaging, and energy remains a headwind. For the upcoming fiscal year 2026, Conagra Brands is projecting a total cost of goods sold (COGS) inflation of approximately 7%. This figure is split, with 4% attributed to core inflation and an additional 3% stemming from tariffs. This persistent pressure is what caused the adjusted gross margin to compress by 194 basis points to 25.7% in the full fiscal year 2025. It's clear that productivity improvements aren't fully keeping pace with external cost hikes.

Supply constraints for key inputs, like chicken for frozen meals, caused fiscal 2025 production disruptions. We saw this play out with stalled chicken production and a shortage in frozen vegetable products during fiscal 2025. To manage this, the company had to put customers on a strict product allocation for frozen vegetables from January through March 2025. Still, management noted service levels were fully restored to 98% by the first quarter of fiscal 2026, which is a solid operational win, but the lingering cost of those disruptions is still present.

Here's a quick look at the major cost drivers management highlighted:

Commodity-based inputs are generally available from multiple sources, limiting long-term leverage. While the company states that raw materials are generally available from numerous sources, the specific pressure points show where supplier power is concentrated. For instance, the protein basket is seeing double-digit inflation, and tariffs on tin plate steel are a major factor for canned goods. To be fair, the company's joint venture in milling, Ardent Mills, has acted as a 'very nice hedge' during volatile times, but exiting that structure wouldn't be simple.

Hedging activities are used to mitigate price volatility, but cannot eliminate all risk. Conagra Brands actively uses derivative instruments to hedge forecasted consumption, and historically, the impact of hedging gains or losses is excluded when calculating adjusted earnings per share. As of the first quarter of fiscal 2026, the company reported having 85% commodity coverage for the second quarter, showing a clear effort to lock in costs. However, management has also stated they may not be able to generate sufficient cost reductions or effectively hedge for all inflation, as evidenced by the need to reaffirm fiscal 2026 guidance despite an expected $150 million negative impact on operating profit from net inflation.

• Fiscal 2025 Adjusted EPS: $2.30
• FY2026 Adjusted EPS Guidance Range: $1.70 to $1.85
• Productivity Gains in Q1 FY2026: In excess of 5% of COGS
• Net Debt Reduction in Q1 FY2026: Over $400 million

Finance: draft 13-week cash view by Friday.

Conagra Brands, Inc. (CAG) - Porter's Five Forces: Bargaining power of customers

The bargaining power of customers for Conagra Brands, Inc. is demonstrably high, driven by market structure and the sophistication of the remaining buyers. You see this pressure reflected directly in the company's financial outcomes and strategic commentary.

The most immediate indicator of this power is customer concentration. For fiscal 2025, the single largest customer, Walmart, Inc. and its affiliates, accounted for approximately 29% of Conagra Brands' consolidated net sales. This level of reliance on one entity gives that retailer significant leverage in negotiations regarding pricing, shelf placement, and promotional spending.

Retailer consolidation continues to be a major theme, creating fewer, but much larger and more powerful buyers. These large-format retailers and e-commerce giants possess the scale to operate with leaner inventories and, critically, to develop and market their own retailer brands. This capability acts as a constant threat, as customers can easily shift volume to private label alternatives if Conagra Brands' branded offerings do not meet their price expectations. For instance, in the fourth quarter of fiscal 2025, snack volumes fell by 3.6%, partly because consumers shifted towards private label brands sold at major retailers like Walmart and Kroger.

Sophisticated customers are adept at resisting Conagra Brands' attempts to pass through cost increases. This resistance directly pressures the company's profitability. For the full fiscal year 2025, Conagra Brands reported an adjusted operating margin of 14.1%. This margin is the result of a tug-of-war where powerful buyers demand lower pricing and increased promotions, which directly works against the company's ability to maintain or expand that margin percentage.

The growth of e-commerce provides retailers with yet another channel to exert buying power. They can use online data and direct-to-consumer insights to better understand price elasticity and demand for specific products, which sharpens their negotiating stance against Conagra Brands in both physical and digital shelf negotiations.

Here is a quick look at the financial scale and the associated customer pressures faced by Conagra Brands in fiscal 2025:

The power dynamic is further illustrated by the strategic responses required from Conagra Brands:

• Demand for lower pricing and increased promotions.
• Development of retailer-specific private label products.
• Ability to resist Conagra Brands' price increases.
• Leveraging e-commerce channels for competitive advantage.

To counter this, Conagra Brands has had to focus on driving volume growth, even if it means investing margin in the short term. You can see the effect of this pressure when you look at the full-year results; net sales decreased by 3.6% to $11.6 billion for fiscal 2025. The company's success hinges on its ability to deliver superior value and innovation that justifies a premium over the powerful private-label alternatives its largest customers champion.

Conagra Brands, Inc. (CAG) - Porter's Five Forces: Competitive rivalry

You're looking at a market where Conagra Brands, Inc. is constantly jostling for shelf space and consumer dollars. The rivalry here is definitely intense, driven by a mix of established, deep-pocketed players and the ever-present threat from private label or store brands. Honestly, when private label producers gain ground, the price gap to branded goods shrinks, making the fight even tougher for Conagra Brands, Inc.

To be fair, Conagra Brands, Inc. operates at a different scale than some of the global giants. When you map out the resources, the difference is stark. Rivals like Nestlé and Kraft Heinz command significantly larger financial and marketing war chests, which lets them push innovation and promotions harder across more categories. Here's a quick look at the scale difference based on recent figures:

The pressure from this rivalry is clearly reflected in Conagra Brands, Inc.'s top-line performance. For the full fiscal year 2025, Conagra Brands, Inc.'s organic net sales declined by 2.9% compared to the prior year period. This decline signals the difficulty in maintaining volume and pricing power in the current environment. For instance, in the fourth quarter of fiscal 2025, the organic net sales drop was 3.5%, driven by a 2.5% decrease in volume. That volume pressure is a direct indicator of competitive trade-offs happening on the shelf.

Competition centers on a few key battlegrounds across Conagra Brands, Inc.'s diverse categories. You see it in the push for new products, the fight to offer the best value proposition, and the ongoing effort to secure brand loyalty. Still, managing marketing spend in this environment is tricky; for example, in the fourth quarter of fiscal 2025, advertising and promotional expense decreased by 14.7% to $62 million compared to the prior year quarter. Also, the concentration of sales with a single major retailer shows where some of the buyer power-and thus competitive pressure-originates; Walmart, Inc. and its affiliates accounted for approximately 29% of consolidated net sales for fiscal 2025.

The ongoing struggle is clear when you look at the forward-looking expectations, too. Conagra Brands, Inc. is guiding for fiscal 2026 organic net sales growth to be between (1)% to 1%, with adjusted EPS forecast between $1.70 and $1.85. That tight range suggests management anticipates the competitive dynamics that pressured fiscal 2025 results to persist.

You can see the competitive focus points in the recent performance metrics:

• Domestic retail volume showed progress in the first half of fiscal 2025.
• Volume share was gained in categories like frozen desserts and microwave popcorn.
• The company is focused on its high-potential frozen and snacks domains for fiscal 2026.
• The overall portfolio saw 71% of its brands maintaining or gaining market share in the first quarter of fiscal 2025.

Conagra Brands, Inc. (CAG) - Porter's Five Forces: Threat of substitutes

You're looking at how readily consumers can switch away from Conagra Brands, Inc. (CAG) products to something else, and right now, that threat is multifaceted. It's not just one thing; it's a combination of price pressure, health shifts, and convenience driving substitution.

Private label brands offer direct, lower-cost alternatives across all product lines. Retailers are definitely investing in these store brands to capture cost-sensitive shoppers. In early 2025, we saw that over 50% of low-income households traded down to private-label packaged foods. This pressure is real, especially as large customers consolidate, which increases their negotiating strength for private label placement over branded goods. Conagra Brands, Inc. has to fight hard to defend its shelf space against these value-oriented options.

Consumer shifts to fresh, non-packaged foods or restaurant meals are constant substitutes. Health and wellness remain top drivers for fresh produce purchases; in fact, 75% of consumers eat produce to maintain a healthy lifestyle. While consumers are price sensitive, fresh produce remains a staple, with shoppers purchasing more items in 2024 than in 2023. Still, the USDA forecast for 2025 shows a total food price increase of 2.0%, with food-at-home prices only expected to rise by 0.7%, suggesting packaged goods might see less price flexibility than fresh items.

The U.S. snacking market is rapidly changing with new, niche products, which means Conagra Brands, Inc.'s snack portfolio faces constant reinvention pressure. Consumers are demanding more functional ingredients, with nearly 50% preferring snacks that offer benefits beyond simple taste. This is fueling growth in areas like protein, where sales of protein-fortified snacks grew 16.8% Year-over-Year in 2024. You need to watch how these niche, high-growth segments pull attention and dollars away from legacy offerings.

New health trends, like GLP-1 use, drive demand for new frozen food types, threatening older brands. The adoption of these weight-loss medications is a seismic shift. Around 23% of U.S. households currently have a member using GLP-1 drugs, and these households are projected to account for more than a third of food and beverage sales over the next five years. For those taking the medication, households reduced overall grocery spending by approximately 5.5% within six months of adoption, with the most significant declines in calorie-dense items. This is forcing Conagra Brands, Inc. to adapt its frozen meals portfolio; for instance, the company launched the 'On Track' badge on select Healthy Choice products to signal they are high in protein, low calorie, and 'GLP-1 friendly.'

The substitution threat is also visible in the health-conscious pivot:

• GLP-1 users often prioritize high-protein, low-fat, or low-sugar foods.
• The global GLP-1 market is projected to reach about $126 billion by 2029.
• Consumers on these drugs are more likely to avoid items high in carbohydrates and sugars.
• Conagra Brands, Inc. is actively reformulating, aiming for its U.S. frozen portfolio to be 100% free from FD&C colors by the end of 2025.

Honestly, the sheer volume of consumers shifting their eating behavior due to GLP-1s creates a massive, immediate substitute threat for any company with a large portfolio of traditional packaged foods. Finance: review the Q2 2026 sales forecast impact based on the latest GLP-1 adoption rates by December 2025.

Conagra Brands, Inc. (CAG) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for a new player trying to take on Conagra Brands, Inc. in the packaged food space. Honestly, the sheer scale required to compete nationally is a massive hurdle.

Building out national-scale manufacturing and, critically, the cold chain distribution network demands serious capital. New entrants face immediate, large-scale investment requirements just to get product on shelves consistently. For instance, in early 2025, the industry saw planned investments like a beverage company earmarking $100 million for a 240,000 sf distribution and office facility in Harrisburg, PA, with construction starting in Summer 2025. Another dairy products manufacturer planned a $110 million expansion and equipment upgrade in Cortlandville, NY, starting Spring 2025. To put Conagra Brands, Inc.'s own commitment in perspective, its total Capital Expenditures for fiscal year 2025 were $389 million.

Then there's the brand equity Conagra Brands, Inc. has built over decades. These names are deeply embedded in the American pantry, which acts as a powerful moat against newcomers. Think about the sheer scale: Conagra Brands, Inc. generated net sales of nearly $12 billion in fiscal 2025. The snacks portfolio alone represents $3.2 billion of that revenue. You can't just buy that kind of recognition overnight.

The established brand recognition is evident across their core categories:

• Birds Eye
• Slim Jim (America\'s #1 meat stick)
• Duncan Hines
• Healthy Choice
• Marie Callender\'s
• Reddi-wip
• Angie\'s BOOMCHICKAPOP

Still, the digital landscape is changing the calculus. E-commerce lowers the distribution barrier, which is a real shift. This allows small, innovative Direct-to-Consumer (D2C) brands to emerge without needing massive upfront investment in physical shelf space or national broker networks. They can start small, test product-market fit, and scale based on direct customer data.

Conagra Brands, Inc. actively combats this by acquiring those successful niche players, effectively buying market share and innovation. For example, in fiscal 2025, Conagra Brands, Inc. acquired FATTY Smoked Meat Sticks to bolster its presence in the premium protein snack market. This follows strategic portfolio reshaping, including the 2024 sale of Chef Boyardee for $600 million and the June 2025 sale of frozen seafood brands Van de Kamp\'s and Mrs. Paul\'s for $55 million.