Key Points:
- Conagra Brands, based in Chicago, is expecting a significant increase in cost of goods sold (COGs) inflation for fiscal 2026, with a combination of 4% core inflation and a 3% rise due to tariffs, totaling around 7% according to the company’s recent earnings release.
- The company anticipates a 50% tariff rate on imported tin plate steel and aluminum, a 30% rate on select imports from China, and a 10% reciprocal rate on imports from other unnamed countries, potentially adding over $200 million annually to COGs.
- Animal proteins like beef, chicken, pork, eggs, and turkey are expected to have the largest impact on core inflation, with costs projected to increase by double digits in fiscal 2026.
Insight:
Conagra Brands reported a decline in net sales for fiscal Q4 and fiscal year 2025, citing challenges such as higher-than-expected inflation, foreign exchange headwinds, and supply constraints in the second half of the year.
Efforts are being made to mitigate the impact of steel tariffs on packaging materials used by Conagra, with a focus on seeking alternative suppliers, negotiating cost-sharing arrangements, and exploring ways to reduce the use of tariffed items.
The company is striving to improve sales volumes, maximize cash flow in its canned food business, innovate for margin relief, and streamline its network to reduce overhead costs while strengthening its supply chain.