December 22, 2016 / 9:51 PM / 2 years ago

Where's the Reddi-wip? ConAgra lowers product profile during shortage

CHICAGO (Reuters) - Reddi-wip, the top-selling U.S. ready-made whipped cream, is going into hiding for the holidays.

ConAgra Foods production facility is seen in Oakdale, California, December 18, 2015. REUTERS/Fred Greaves/File Photo

ConAgra Brands (CAG.N), maker of Reddi-wip, is scaling back on promotions and merchandising as the nation faces a shortage of ready-made whipped cream, Chief Executive Sean Connolly said in an interview on Thursday.

The short supply is due to an August explosion at an Airgas Inc facility in Florida that killed one worker and disrupted the supply of nitrous oxide, the gas used to propel whipped cream from containers and keep it airy and light.

“What we have to do when we have supply constraints like this is back off some of those merchandising activities,” Connolly said. “You don’t want to have an ad in the grocery store flyer and then not have product on display.”

ConAgra, contrary to its usual preference, also wants retailers to place whatever supplies of Reddi-wip they have in less-visible parts of grocery stores.

“There are refrigerators that are really in high-traffic, high-visibility places. You don’t want to put them there,” Connolly said.

If Reddi-wip occupied prime store space, that could push demand to “exceed supply and then you’ll have out-of-stocks, and that’s not an efficient use of the customer’s shelf,” he added.

The disruption in nitrous oxide supplies comes at a bad time for makers of ready-made whipped cream because sales typically rise during the holidays as consumers use it to top hot chocolate, pies and cakes.

Connolly declined to say how much ConAgra may lose in sales because of the shortage. On Thursday, the company reported better-than-expected profits for the quarter ended Nov. 27.

“We continue to try to make sure we get every bit of nitrous that we can get our hands on,” Connolly said.

Aaron “Bunny” Lapin, an inventor from St. Louis, created Reddi-wip in 1948, and milkmen initially delivered it door to door, according to the company’s website.

In 2016, the U.S. market for products such as ready-made whipped cream was expected to reach $505.3 million, up from $407.2 million in 2011, according to market research firm Euromonitor International.

ConAgra has previously said that a full supply of Reddi-wip should be available by February.

“We’re not losing sleep over it,” Connolly said of the shortage. “It too shall pass.”

Reporting by Tom Polansek; Editing by Dan Grebler

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