US food major Conagra Brands has clarified a recent cut in its organic growth guidance was the result of “industry-wide consumption weakness” in the third quarter and not related to any specific company issues.

Addressing the Consumer Analyst Group of New York (CAGNY) investor conference this week, president and chief executive Sean Connolly said that despite share gains in some of Conagra’s key brands, it was not enough to “offset the sudden slowdown” in consumption in the third quarter.

Connolly described the weakness as an “air pocket”, which is now showing signs of “abating”, based on Conagra’s own consumption and shipment data. 

Earlier this week, the second-largest frozen food business in the US after Swiss peer Nestle, lowered its full-year outlook for reported sales, organic growth, the adjusted operating margin and earnings per share.

Connolly explained: “Consumption softness in the quarter first emerged in the foodservice industry, with holiday restaurant traffic weaker than last year. Softness pivoted to retail in January and impacted numerous categories across food, including several in which we compete.” 

The CAGNY presentation showed a sharp drop off in sales and customer traffic in Conagra’s foodservice business in December. “We did not anticipate that extent of a dip,” Connolly told attendees. 

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A chart measuring the company’s retail sales over four-week intervals showed a 4.4% decline to 26 January, compared to a 1.3% drop to 29 December and a 0.6% rise to 12 December.

“We had a broad-based softening,” he said, which was seen across frozen single-serve meals, frozen vegetables and side dishes, and canned tomatoes, not just for Conagra but the industry as a whole.

But data this week shows the industry is “bouncing back”, he added, with Conagra’s retail sales up 5.3% in the week ended 9 February. “We believe we are on the upswing,” he said.

Connolly said aggressive innovation is helping take up the slack, with a host of new products either in the pipeline or already launched such as meat jerky, pork rinds and a new Fire Fries range of crisps, all under its Slim Jim brand, a plant-based jerky from Gardein, on-the-go pickles by Vlasic, and Duncan Hines’ keto cakes.

On the meal front, it is also planning to embrace the carb-replacement trend, roll out vegan and vegetarian meal bowls from Healthy Choice, and a new bowl range of meals from Hungry Man.

The percentage of Conagra’s annual sales driven by innovation is currently at 18%, up from 17% in the last financial year and 9% in fiscal 2015, the CAGNY presentation showed.