Conagra Brands to invest US$450M in supply chain as production revamp continues

USA – Conagra Brands is allocating US$450 million in capital expenditures for fiscal 2026, with a portion aimed at strengthening its supply chain following a difficult year of disruptions.

The company announced the plan during its July 10 earnings call, highlighting the need to address setbacks that weighed on operations in fiscal 2025, which closed on May 25.

In that period, Conagra dealt with stalled chicken production, a shortage of frozen vegetables and higher costs from tariffs on tinplate steel used in food packaging.

Chief Financial Officer David Marberger said the additional spending is expected to offset the lingering effects of those challenges, though the company did not specify how much of the funds will be directed solely to supply chain improvements.

Expanding chicken capacity

The spending increase comes as Conagra works to expand chicken production, a move executives say is critical to meeting higher-than-expected demand for its frozen meal products.

The surge in demand was driven by Banquet Mega Chicken Filets, which far outpaced sales forecasts and created the need for more processing capacity.

In February, Conagra reported that it had uncovered product quality issues at its main chicken plant, forcing a temporary shutdown and a shift to third-party manufacturers to maintain supply.

The company has since begun upgrades at the facility, with completion expected by early in the second quarter of the current fiscal year.

Chief Executive Officer Sean Connolly said Conagra is expanding fried chicken capacity using external partners in the short term, with plans to move production back in-house once the facility improvements are completed.

Broader production adjustments

The company has also taken steps to stabilize its frozen vegetable business after a spike in consumption late last year depleted inventory and led to product shortages in stores.

To manage demand swings, Conagra invested in additional surge capacity, which it says has already improved availability in the market.

As part of a wider restructuring, the company closed its pie-filling facility in Fennville, Michigan, in June, eliminating 75 jobs in an effort to streamline its network.

Connolly said margins will remain under pressure due to the combination of inflation, which has added about 11% to costs across fiscal 2025 and 2026, and higher short-term production expenses.

He added that the company expects to realize the benefits of these investments beginning in fiscal 2027, once operations and costs stabilize.

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