We're excited to welcome Conagra back to the CAGNY stage. First, please join me in thanking Conagra for the generous sponsorship of last evening's wonderful opening reception. I'm sure like many of you in this room, I'm a bit embarrassed by the sheer magnitude of meat snacks sitting in my room at this very moment, but also oddly comforted by it. It's been quite interesting to watch, the performance of many of Conagra's core brands in terms of how well volume, share, and distribution have held up, even in spite of the necessary pricing actions that have been implemented, and to think back on how this may have played out differently before the company had renovated and contemporized its portfolio.
This is a credit to much of the work done well before the events of the past few years and has set the company up to be much more on its front foot as it leans even further into innovation and supply chain productivity work. With us from Conagra today, our President and CEO, Sean Connolly, and CFO David Marberger. Sean, over to you, and thanks for being here.
Right. Thanks, Andrew. By the way, we are okay with you being oddly comforted. That's all. As long as you're buying it at full margin after this event, we're good. Okay. Good morning, everybody. It is great to be with you here in person. It feels like it's been a long time since we got together in person at CAGNY, this is fantastic. Thank you for attending our presentation. For those of you online, thanks for tuning in. Hopefully, some of you in the room got to attend that reception last night. It was great. I wanna give a shout-out to our world-class stable of chefs, once again showing us how it's done when it comes to great food. We've got a busy day today, let's get into it.
It wouldn't be CAGNY without some forward-looking statements, so please take a second to look at this legal disclosure. All right, let's get into it. These are the key messages we want you to take away from our presentation today. First, we have a strong, well-managed portfolio with leading brands in highly attractive categories. Second, we have clear growth prospects led by our very attractive frozen and snacking businesses. Third, we have promising margin expansion opportunities, as you saw in our quarter two call just about a month ago. Lastly, we have an array of attractive capital allocation options, all part of our balanced approach to allocating capital in the pursuit of shareholder value. This is our agenda for today. I'm gonna take you through who Conagra Brands is today and what we've done to become that company.
I wanna take you through a deeper dive of our attractive frozen and snacks business. I will wrap up with a preview of some exciting innovation that we've got soon to hit the marketplace. At that point, I'll turn it over to our CFO, Dave Marberger, who will take you through our financials and growth algorithm. Together, Dave and I will show you the multitude of ways we are confident we can create value for our shareholders. Let's get into it. Let's start with a quick overview of who we are. Well, the precursor to profits is purpose. For Conagra, that's all about nourishing our people, our planet, and our communities, so it should not come as a surprise to any of you that one of the ways we create value is through our sustainability and ESG efforts.
We think being a good corporate citizen is not only the right thing to do, we think it generates a good return. Be it in the form of greater consumer loyalty, or cost savings, or a better job recruiting and retaining our employees, or stronger communities in which we operate, we think it pays off. In the next couple of weeks, we will be publishing our new citizenship report. It will be on our website. I encourage all of you to take a look. We're very proud of that work. All right. Let's get into the profile of the business. We are $12 billion at net sales, and we are a highly focused company. Over 90% of our sales is in the United States, and over 90% of our sales is in the retail channel of trade.
We like to say that our U.S. centricity enables what we call simplicity at scale. If you think about it, about 80% of our shipments is focused on just 18 customers. At our top customers, we service their shoppers' needs in virtually every aisle of the grocery store. Between the success we've had with our innovation and the sheer scope of our portfolio across the store, we have fostered tremendous relationships with our customers, and that's quite important. Another unique thing about our portfolio is we have many light touch brands that provide tremendous utility to consumers, but also tremendous cash flow to our company. Now, make no mistake about it, consumers love our iconic market leading brands. You can see a smattering of them on the right here. Our brands are found in 96% of U.S. households, they're basically everywhere.
These are brands with stature. 82% of our revenue comes from brands that are ranked number one or number two in their category. Where we play has been an important part of the Conagra transformation story. Over the last eight years, we have curated an enviable portfolio that today is anchored in frozen and snacks. As you can see here, about 70% of our retail sales today is in the highly attractive frozen and snack space. The third piece is our ingredient and enhancer business. This is also a growth business for us. It has tremendous appeal to younger consumers who are finding their way into their kitchen for the first time. The last piece of our business is shelf-stable meals and sides, more of a cash-oriented business.
Our focus has been on sculpting more and more of our revenue base to be in these highly attractive domains of frozen and snacks. Why? Because they're high growth, and I don't see that ending anytime soon. Frozen's three-year CAGR is 7%, snacks is 10%, and if you look back over the last three years, three-quarters of our portfolio growth at retail has come from these two domains. Obviously, our strategy here is working. Now these days, it's important to point out where private label stands in our categories, and the bottom line is it under indexes. If you look at the left-hand side of this chart, you can see that in our categories, private label is about 14%, quite a bit below the peer set, and we have sculpted some of that by way of divestiture, exiting commodity-oriented categories like cooking oil, peanut butter, liquid eggs.
Look at the right-hand side of this chart. Private label over the last year has actually shrunk in our categories. Why is that? Well, we think it's because our portfolio tends to be center of plate, snacking, or categories that have relentless innovation. Those are the attributes of categories that tend not to perform as well with respect to private label. Not everybody in this room is familiar with what we've done in the last eight years, so let me hit the highlights quickly. I joined the company about eight years ago. It's hard to believe. When I got to Conagra, I saw the opportunity was clear. The company had become too complex. It had outdated capabilities, had some challenges in terms of capital allocation, and frankly, the performance was disappointing.
I believe the company needed a fresh start, and that's what we decided to do, a wholesale transformation. As you might imagine, transforming a nearly 100-year-old company is a heavy lift. We had a clear vision, and we had a tremendous amount of confidence in our playbook, so we went for it. This is our journey since we implemented our playbook back in 2016. First, the transform phase. That was literally about unwinding 95 years of norms, of structure, all the things that were baked in place, including culturally. Came the build phase. It was all about modernizing our brands, bringing new people onto the team, implementing new processes, new capabilities, and refreshing the culture. The accelerate phase, where we sit today, which is all about winning in the marketplace and winning in the workplace.
As you'll see, we've been accelerating and don't see that stopping anytime soon. Our playbook is called The Conagra Way. It's built on these five differentiated capabilities that we have implemented over the last several years. Starts with demand science, which is all about mining the data to understand what is growing within food and beyond, and then asking ourselves, what are the attributes that are driving that growth, and would it make sense to design those attributes into our categories and our brands? If the answer is yes, we bring in our design team, and they design everything from the culinary to the packaging, everything we need to go to market. We hand it off to our world-class sales team, who focuses on what we call progressive selling.
This is about helping our retailers understand the deep insights behind our innovation so that they can have confidence that our innovation will outperform that of our competitors, but more importantly, drive overall category sales, which it has. We hand it off to the marketing team and focus on modern marketing. All of this is underpinned on a winning culture. We're a big company, but it's a very entrepreneurial, very flat, very agile team. As many of you know, The Conagra Way playbook has been very successful with respect to innovation. On the left-hand side of this chart, you can see the compounding effect of multiple years' worth of successful innovation. Each color represents a different year. You can see our innovation is sticky, and it is working.
On the right, several other data points showing you how successful our innovation's been in the marketplace. I'll point to the one in the middle, which is just a good reminder that our innovation isn't only working for consumers, it's working for our retail partners, where we have built tremendous credibility. Today they are giving us 1.4 times the number of total points of distribution they gave us just a few years ago. Through that innovation, we have premiumized our portfolio. What I'm showing you here is total Conagra average price per unit indexed back to fiscal 14, the year before I started with the company. If you look at the bar, the bar on the right, past 52 weeks, it's up 44%.
We've dramatically premiumized this portfolio over the last eight years, and these products still represent an excellent value to our shoppers, which you can see in our sales line. This is our sales line since fiscal 16. It has built consistently. In fact, it's accelerated. Importantly, our market share is improving as well. It's grown virtually every year since we implemented our playbook. I should point out it's not just about revenue and share. How about profits? Take a look at this. This is our EPS CAGR since fiscal 16. This is a sustained period of time. We have averaged over 10%. Look at how that compares to our five near-end peers and the broader peer set, which includes some of the confection and snacking folks. It's been outstanding EPS performance. Despite this, we remain a great value today.
Here's total shareholder return since fiscal 15, the year I joined. You can see it's been fully competitive versus the broader peer set and quite a bit ahead of near-end peers. I should point out this does not include the incredible value we created with the successful spin-out of Lamb Weston, which has been a home run. Yet we still remain a great value. Our momentum is building. These are the numbers we put up one month ago at our 2Q earnings call. You can see organic net sales up nearly 9%. Importantly, adjusted gross margin up over 300 basis points and nearly back on par with pre-pandemic. Strong operating margin performance and EPS up nearly 27%. We're not done. We've navigated the pandemic. We've proven that we can pass through inflation-justified pricing.
Our brands have proven resilient in the face of that pricing, we have what we believe is the best team in the business. When you put it all together, we remain highly confident that we're a compelling investment opportunity. All right. Let's take a closer look at our highly attractive frozen and snacks businesses. I'm going to start with frozen. This is a business where we've not only driven the success of our brands, but as you'll see in a minute, we have driven the massive frozen category overall. First, I have to take you back to 2015. Not that long ago, frozen was an undermanaged and underappreciated space, to say the least. There was virtually no innovation. The food quality was terrible.
Retailers were focused on ultra-low price points, and we believe this was an enormous missed opportunity, in part because we saw frozen as nothing more than a temperature state and the perfect temperature state for today's consumers. You can basically take whatever food you can imagine in the frozen section and flash freeze it from the peak of freshness. It's convenient, ready when consumers are. There's limited food waste and spoilage, and basically, you can get restaurant quality at home when it's done right at a great value. Our attitude when it came to frozen was, if you can dream it, we can freeze it. In 2015, we set out to build what would prove to be a relentless stream of innovation in the frozen space, innovation that would ultimately change the way consumers and our customers thought about frozen.
It all started with data to understand the attributes that drive growth in CPG more broadly, then our great design team bringing it to life. You know what? It worked. Frozen today is a vibrant area driving total retail store sales. Look at the left-hand side of this chart. These are all the departments that you see in the IRI data. The number one department in terms of growth in the past three years is frozen, over 10%. Look on the right. You can see that frozen appeals to people of all ages, but most importantly, it has excellent appeal, as it always has, to the younger generation, a generation where we will have structural headwinds going forward. I want to point out that the success in frozen is not a pandemic-only phenomenon.
On the left-hand side of this chart, you'll see frozen was outpacing food more broadly pre-pandemic, and since the pandemic, it has accelerated and the gap has widened. It shouldn't surprise you that today we are the largest player in frozen food in the United States at six and a half billion dollars. Look at the size of the entire market. We're just getting warmed up. Not surprisingly, you can see the effect of innovation in our categories. Our categories are outpacing frozen more broadly. Look at this data point on the right if you really want to appreciate the impact of innovation in frozen. Our categories have contributed 71% of all the growth in that massive frozen space. When you get after it comes. Private label underdeveloped in frozen, you can see in this chart.
I will also point out that our largest frozen subcategory, frozen single-serve meals, is much, much lower than this even. Now, to win in frozen, you have to have scale and you have to have scope, and we've got both. These are the five frozen categories where we compete, meals, vegetables and sides, breakfast, desserts, and plant-based protein. All of these areas are big and all of these areas are growing. When we start our work in frozen, it always starts with these four brands. Why? Because they are juggernauts. These four brands have driven 87% of our growth in frozen. Marie Callender's and Birds Eye are a billion and a half dollars scanned at retail. Banquet is now $1.1 billion, and Healthy Choice is rapidly approaching $1 billion. Absolute powerhouse brands. Our success in frozen has been more broad-based than those four brands.
In fact, if you look at our cumulative market shares overall, you can see outstanding performance here, now over 41%. Our innovation, again, robust and sticky. Here are a couple of metrics we look at. On the left, we call this renewal rate. It's the percentage of our annual sales in frozen that came from items we've launched in the past three years. We put up a number over 14%. You can see our peer set is quite a bit behind that. On the right, you can see the sheer magnitude of this innovation and again, how sticky it's proven. To really get an appreciation for how differently these brands show up today versus the past, I'm going to show you in these next few slides a bit of a side-by-side.
What it looked like in the old days on the left, what it looks like now on the right. Here's Healthy Choice. This is a brand that was invented in the 1980s. It was all about heart health for the elderly. We completely remade the brand. You see our Healthy Choice Power Bowls line on the right, which has been a home run, because health appeals to people of all ages and it means many different things. Notice the average scan price change here as we've done this premiumization. Here's Marie Callender's. Look how old-fashioned it was on the left, not that long ago. Look at it now on the right. Premium, modern, and working $1.5 billion brand. Now, here's one that many of you probably wrote off about 10 years ago, maybe more. Banquet.
It was stuck at $1 forever. Nobody believed that would ever change. We liberated the brand from $1. We completely remade the quality. We launched the Mega line. This is a brand that about 5 years ago was scanning a little over $500 million. Today, it's scanning nearly $1.1 billion. It is a juggernaut. Look at the average scans here as we've liberated this brand from its historical form. Guess what? Consumers love it. They think it's a better value. Birds Eye. We got a lot going on at Birds Eye, our strategy on Birds Eye is premiumization. That's where the action is. That's where the profit pool is, not plain veg. You can see how we've premiumized this portfolio over time. This is our vegetable and sides business with oven roasters, skillets, etc.
Look at the scan. Birds Eye is not just about vegetables and sides. These days it's about meals, and you can see how our Voila! line has changed with skillet meals, sheet pan meals, and oven bake meals. Look at the scans. Premiumization in action, still a superb value. P.F. Chang's has been modernized and extended into attractive areas like multi-serve meals, protein only, and appetizers. Our plant-based meat alternative business is Gardein. Here, when everybody was chasing food service in the meat counter, we stuck to our wheelhouse in frozen and we ultimatized Gardein. You can see the new ultimate line on the right, which is premium and has been a home run. Look at the change in average scan. We've been gaining dollars, we've been gaining share. How do we market these brands and all this innovation? In a word, effectively.
The way we market these days is very modern, progressive, and it gives consumers what they want. We operate in the digital and social realm. We have an entire team of people who focus on nothing other than building relationships with influencers and thought leaders in the digital and social realm and let them help them tell their personal stories of how our brands fit into their lives. It's very real, it's very authentic, it's very effective. Take a look. Let's go to the tape.
It's Kevin, the Fit Men Cook here, and I love finding new ways to hack meal prep and my diet. These are definite game changers. Tell me that's not good. That's so good. Let's see if I still got the finesse. Tuck and roll, baby. Tuck and roll. Buffalo chicken wrap using the Gardein tenders.
My favorite meal is one that takes less than 15 minutes to make. Tonight I am making a 10-minute vegan chicken parm with Gardein's Ultimate plant-based chicken fillets.
I want chicken parm.
I want chicken Alfredo.
Since taking my toddler out to eat in public is absolute chaos, sources say Marie Callender's duo is my best option. Tonight, I'm making Healthy Choice flatbread pizza. These protein-packed pizzas are a perfect end to my day. I always come home from my workouts super hungry, so I usually opt for a Healthy Choice meal. They're quick, they're filled with lots of quality ingredients, they're flavorful, convenient, and they keep me satisfied. What I eat in a day is a D1 athlete. For lunch, I have this Birds Eye creamy Parmesan garlic chicken. I love these meals because they're so good and easy to make. It is so much fun to take simple, ordinary treats and adding the whoosh of wonder on top. Reddi-wip makes every moment big or small rewarding.
I totally forgot this was a thing and I immediately had to go to the store. About to invent a new snack.
All right, let's keep moving. We're not done. Looking ahead, several frozen tailwinds exist, starting with family formation. Yes, millennials and Gen Zs are settling down. They're beginning to have kids. When that happens, their frozen consumption per capita goes up. When they have more kids and more kids, it goes up and up again. That's a tailwind. We believe that the shift to at-home eating and the shift to remote working will remain elevated versus pre-pandemic, and that's good for business. Finally, it's impossible to argue with the notion that frozen offers superior relative value compared to perishable or away from home, which is also good for business. That's frozen. Let's talk snacks. You obviously know people love snacks, look at the per capita consumption increase. They're eating more and more every year since 2016. It's just remarkable.
Well, in 2018, after we got our frozen business up and rolling, we turned our attention and our playbook to snacks. You can see here that it has worked. The results have been stellar. It really was all about running it like a snack business, which is all about relentless innovation and an intense focus on price pack architecture. Again, it's been quite effective. Not surprisingly, we have become a top 10 player in the overall snack space at over $3 billion. Look at our growth rate. We're outpacing the larger snack players and snacks overall at 10%. It's been a fantastic roll we've been on. Now, I should point out we are not a direct store delivery snacking company.
We enjoy the benefits of being a warehouse delivered snacking company, whether it's supply chain efficiency on the balance sheet or through enhanced margins, which this is certainly a good margin business for us. When you look at our snack business big picture, there are two parts to it. On the left, it's our permissible snack business, which has grown at about 11%. This is a protein-forward business. It's all about being on the go, being in distribution at all points of purchase, and having an intense focus on price pack architecture. There's our sweet treat business on the right. You can see that's all about at-home indulgence and over-the-top experience. These are some of our permissible snack brands. Meat snacks led by Slim Jim.
We have several great brands that combine to lead the way in popcorn and then our great seeds business with David's and BIGS super strong relative market share again. These are some of our sweet treat brands, puddings and gels with Snack Pack, our baking business with Duncan Hines, and our hot cocoa business with Swiss Miss. Very high share brands, very successful in the marketplace. I'll point out once again, private label underdeveloped in our snacking category. It's underdeveloped in snacks overall. Look at our snacking categories, permissible and sweet treats relative to snacks overall, very low private label development. Our two big platforms, meat snacks and popcorn, incredible momentum. On the left, you can see our meat snacks platform is now over $1 billion with a 12% compound annual growth rate. Our popcorn platform rapidly approaching $1 billion, 10% CAGR.
Clear momentum on our BIGS, the vast majority of our snack business. We have additional growth opportunities elsewhere. Look at Snack Pack, David and BIGS, and Swiss Miss, and look at these growth trends versus three years ago. Just stellar growth-oriented businesses for us. Looking ahead, what are we going to stay focused on? Well, it's about distribution expansion and engaging consumers. With respect to distribution expansion, it's about showing up everywhere snacks are sold and standing out through provocative innovation. With respect to engaging our consumers, again, it's about engaging these consumers we call irrefutable advocates, real people to tell real stories about our brands in their own words. I'm going to show you what that looks like in snacks. One of the brands I'm going to show you here is Slim Jim.
I should point out that about one year ago, Slim Jim debuted on TikTok. In one year's time, Slim Jim has amassed over 4 million followers, making Slim Jim the fastest-growing brand in TikTok history. Let's look at the tape.
I like when it rains. I have a real treat for you.
This is Duncan Hines' second drop of their Dolly Parton baking collection. When I think of things that are pure and sweet and wholesome, I think of Dolly Parton, and then I think about cake.
To the thirty. To the twenty.
Are you eating Angie's BOOMCHICKAPOP in my class? Is this Angie's BOOMCHICKAPOP?
This one. This one. I want them to get a touchdown on this play. Yay, touchdown! I just want to eat some popcorn and watch a movie.
All right. Yes, those are real people. Overall, it's undeniable. Conagra is winning in these highly attractive areas of frozen and snacks. Look on the left here. 84% of our growth over the last five years has come from these two domains. It's clearly working. It's driving the overall company performance. On the right, you can see our market share improvements. This is the last piece of my presentation before I turn it over to Dave. This is where I give you a blitz sneak peek of the innovation to come. I will move quickly, so buckle up. Everybody loves pizza, but these days, not everybody loves carbs. Well, we can give you great pizza without the carbs. These are our new Banquet MEGA Crustless Pizza offerings. They're fantastic. Healthy Choice Power Bowls, we're going to continue to keep the pedal to the metal here.
These are two new great seafood varieties that are totally incremental to what we already do. All right, here we go. Marie Callender's. Additional focus on sides. It's been successful in the marketplace. These are indulgent sides. If you're on a diet, you might want to go back to Healthy Choice. These are iconic favorites like green bean casserole, great at the holidays, great year-round. You know, we have a big Marie Callender pie business, but when we talk to our pie users, some of them, too, are cutting back on sugar. We ask them, "What can we give you?" It's obvious, less sugar, we're giving it to them. Our P.F. Chang's franchise continues to extend, this time in vegetables. These are great easy to prep sides that are pre-seasoned and sauced. Teriyaki broccoli is a good example.
P.F. Chang's is a premium product, and these days, sometimes consumers are looking for a more value-oriented innovation. What we're doing is taking the iconic La Choy business out of center store and introducing it to the freezer section. Fantastic products, filling more of a value void in that high-growth Asian space. Ton of stuff happening on Birds Eye. This is one of my favorites. These are dips. Who doesn't like dips? It's kind of an extension of snacking, right? These are spinach artichoke dip and buffalo cauliflower dip as an example. I encourage you to get these for all your game day events. These days, you can't be in the vegetable business without having a spectacular Brussels sprout, right? These are flame-grilled, fire-roasted Brussels sprouts. You just heat them up, and they're ready to go.
You don't need any culinary skill, just buy Birds Eye. These are fusions. It's a combination of things. It's all about elevated vegetables and sauces. We have a kids business, Kid Cuisine. It was one of the last businesses that we got to in terms of our modernization efforts, and it's been growing robustly this year in the marketplace since we did that. We're going to build on that momentum with this Level Up line extension. It's all about a fun, interactive experience built around our Dino Nuggets platform. Our Gardein Ultimate line will continue to expand. We know a lot about bowls, so why not bring the great Gardein Ultimate lineup into bowls as you can see here. We also have the Purple Carrot brand, which you may know as a vegan meal kit that's home delivered. We sell this product in the grocery store.
This is an example, our new vegetable fried rice line. Here's a fun one. Everybody loves Wendy's chili. You've never been able to buy Wendy's chili before at the grocery store until now. We are launching Wendy's chili nationally. We have a sizable chili business with a lot of regional stars around the country. We've got a national brand. It's one of the most well-known chili brands you can find. You saw the success in popcorn, particularly in microwave popcorn, now that people are getting their entertainment at home. A lot of our consumers these days are all about robust flavor. They want to control their amount of flavor. We're launching this new line of Orville Redenbacher's popcorn seasonings spanning savory to sweet. Slim Jim, back in the game on innovation because we had some capacity constraints over the last year during COVID.
This is an example of our Monster line, Chili Limón. You know, this business is just a phenomenal brand. Our Duncan Hines EPIC Kits have been a success for us. Now we're partnering with Cinnabon in the area of muffins, which is incremental to our portfolio. Really great product, easy to make. Give it a try. Of course, our Dolly Parton partnership has been a home run. Who doesn't love Dolly? Everybody loves Dolly. Last year we did cakes. This year we're doing biscuits, cornbread, and brownies. You can't beat it. Much like in pies, where our pie users said, "Hey, some of us are on a low sugar diet now," same insight applies to Swiss Miss. What are we doing? We're giving you a keto-friendly alternative. Another fun one, Mrs. Butterworth's. You're looking at pancake mix and syrup here.
This is gonna make you feel old. It's celebrating the 20th anniversary of Elf, the movie, because we know that Will Ferrell's Elf loved pancakes and syrup. I'll wrap up with Vlasic, the best snap in the pickle business. Sometimes you like some heat. We're gonna give you that in a partnership with Frank's RedHot. That's just a sneak peek of some of the things we've got coming our way. I'll turn it over to Dave by wrapping up with the messages we want you to take away from our presentation today. We have a strong, well-managed portfolio with leading brands in highly attractive categories. We have clear growth prospects, as you can see, especially in frozen and in snacks. We have promising margin expansion opportunities. We're already putting those points on the board. You saw that a month ago.
An array of attractive capital allocation options. That's it for me. I'm gonna turn it over to our CFO, David Marberger, to walk you through our financials and growth algorithm. Dave, over to you.
Thanks, Sean. Good morning, everybody. It was great to see some of you last night at our dinner. Let me start with our framework for driving strong total shareholder return at Conagra. It starts with our Conagra Way playbook for driving growth, which Sean just went through. It also includes a focus on driving operational efficiency and productivity to improve our margins, which we reviewed in detail at our Investor Day earlier this fiscal year. That results in strong operating cash flow that we allocate to investments in the business, reducing our debt, and providing strong returns to shareholders. This framework continued to pay off, as demonstrated by our strong Q2 and first half financial performance. For the first half, we grew organic net sales 9.1%, and that was driven by our inflation-justified pricing and moderate elasticities of demand on our unit volume sold.
Our adjusted gross margin for the Q2 was up 310 basis points to 28.2% and was up 140 basis points for the first half, driven by the strong net sales and productivity. Our operating profit and operating margins for the first half were up significantly, this is while we were increasing our investments in both A&P and SG&A to drive growth in the business. That strong operating profit, combined with really strong performance from our Ardent Mills joint venture, resulted in a H1 EPS growth of 22% versus year ago. This strong first half performance resulted in us increasing our fiscal year 2023 guidance on all metrics at our recent Q2 earnings call. Today, we are reaffirming this guidance. We expect organic net sales growth of +7% to +8%.
We expect adjusted operating margin in the range of 15.3% to 15.6%. We expect adjusted EPS of $2.60 to $2.70, which is an increase of 10% to 14%. We expect our net leverage to approximate 3.7 x by the end of fiscal 2023. In the quarter, a product recall was announced on our Armour canned meat business, and this was due to issues we were having with damaged cans. We don't expect this to have an impact on the full year financials, but it will have a timing impact on net sales between Q3 and Q4. I just talked about significant gross margin inflection in the Q2 . This chart, a bit busy, lays this dynamic out.
It's no secret that all of the food companies, every company is dealing with record inflation. We estimate that our gross market inflation through the end of fiscal 2023 will be up over 30% on a three-year stack. We also talked about we were one of the earliest food companies to get hit with inflation. It hit us starting in the Q4 of fiscal 2021 with gross market inflation of 9%, which you can see on this chart on the blue bar. You can see inflation accelerated significantly from there. As a result, we took aggressive pricing actions, which you can see by the green bars on this chart. We've talked about often, and we were one of the first companies to talk about it because inflation hit us early, the lag.
The lag between when that inflation hits your P&L and when you can communicate a price increase, get that price increase into market, and get the benefit in your P&L. You can see looking at this chart, it wasn't till the Q1 of this fiscal year that pricing actually caught up with inflation. You can see in the Q2 that accelerated. That's what drove our significant gross margin improvement in the Q2 . We expect this dynamic to continue in the H2 of our fiscal 2023. Importantly, the line below this is our elasticities of demand, and our elasticities have remained completely consistent over the last eight quarters, as you can see here, coming in about 0.5 of a coefficient. That's favorable to pre-COVID historic trends on elasticity.
Given the dynamics of COVID, the record inflation that we all had to deal with, the pricing that we had to take to deal with that, there's a lot of complexity in the short term. We like to look at our recent consumption data versus three years ago versus pre-COVID, and that's what this chart does. This is our retail consumption on a 52-week basis ended January versus three years ago. We're showing it on a dollar basis and on a unit volume basis. It's for us and for our near-end competitors. We have tremendous respect for our competitors because we've all been dealing with this in crazy environment for the last three years.
What you see here is when you look at dollar sales on a three-year CAGR basis, we rank second versus the near and peer set at an annual growth of 7.8%. When you look to the right side, you see unit volume sales on a three-year CAGR. We are number one in the peer set, and we're slightly below flat. If you look at this same chart on a 13-week and four-week basis ended January, the rankings would be the same. No change. We could not deliver this pricing execution and this volume performance if it wasn't for the strength of our brands and the superior relative value that the Conagra Brands bring to the consumer. We follow a balanced approach to capital allocation. Since fiscal 2016, we've made significant operational and capital investments in the business.
We've executed acquisitions and divestitures to reshape our portfolio for growth, and we continue to look for opportunities to reshape our portfolio. We prioritize debt reduction, and we remain laser-focused on our long-term leverage target of 3 x while providing attractive returns to our shareholders and maintaining our commitment to a solid investment grade credit rating. Today, we're also reaffirming our long-term financial algorithm, which as a reminder, is after fiscal 2023. For fiscal 2024 and beyond, we expect organic net sales growth of low single digits. We expect operating margin in the mid to high teens, and we expect adjusted EPS growth of mid to high single digits based on our expectations of sales and margin performance.
We expect continued strong cash flow from the business exceeding $1.2 billion annually. We expect our CapEx as a percentage of net sales to accelerate to 4% to 5% through fiscal 2025 as we fund our supply chain investments in capacity and automation. We expect that CapEx to come back down to 3.5% to 4% after fiscal 2025. We target a dividend payout ratio of 50%-55% of EPS. We're focused on our long-term leverage ratio of 3 x. In conclusion, hopefully it's clear why Conagra is well positioned to drive shareholder value. We have made significant investments in innovation which have strengthened this portfolio for growth. The strengthening of the brands has enabled us to price to offset the record inflation and recover our margins.
While not fully where we wanna be, our supply chain is normalizing as evidenced by our improved service levels. We've also fully integrated the Pinnacle acquisition and delivered over $300 million of cost synergies, which is 10% of Pinnacle's revenues. We finished all that while dealing with COVID, which is a testament to the executional excellence of all our awesome Conagra people. Finally, we remain committed to strengthening our balance sheet and retaining our solid investment grade credit rating. That includes our prepared remarks. We're now gonna take some questions. All right. Do I need this? No, we don't need it.
Room, first from Andrew Lazar.
Thanks very much. Sean, Dave touched on this a little bit, but the last couple of periods of scanner data from a consumption standpoint, both from Conagra and the industry as a whole, have decelerated quite a bit, particularly on volume. I was hoping you could put a little context to that in the context of your earlier comments on elasticity. Maybe more importantly, what that may mean or is that incorporated, meaning the recent data points in sort of the full year guidance that you provided. Thank you.
Yeah. Let me take the back end first because it's probably most important to you. We had our call, earnings call about a month ago. We updated our guidance there. What you're seeing is absolutely incorporated into that guidance. Now, let me give you a little perspective on what you're seeing. What you should not do is look at changes in trend versus year ago in short-term windows and draw a conclusion that something is changing with respect to elasticities. That is a faulty analysis. It's gonna give you the wrong answer. In our case, you can see a bit of a trend shift in January, and it's not due to elasticities. Our elasticities remain benign, they remain well below historical norms, and they remain among the best in the food space.
What you're seeing instead has to contemplate other factors. In our case, a particularly strong year ago period where a lot of companies were on allocation. We were coming off allocation in some very big categories. Our customers were eager to get our products and put them on the floor. In addition, there's some timing of events. There's also supply chain disruptions. I told you all in January that while we're making good progress in supply chain, it's not back to normal. We expected in the year to go outlook that things would pop up. You just heard about the latest thing, which is a recall in our canned Vienna sausage business. Those are the things that can affect that, those comps versus year ago. Importantly, what we're seeing is contemplated. I'll give you a better way to try to understand volumes.
Look at volumes, be it the past four weeks, 13 weeks or 52 weeks versus a stable base period, which is pre-pandemic. When you look at that across 52 weeks, last quarter, 13 weeks or the last four weeks, you will see that Conagra unit performance ranks number one amongst our near and peer set, which we look at, which is six companies.
We'll go to Ken Goldman.
Hi, thank you. Clearly, a lot of your brands and categories are doing great. You talked about frozen in general doing very well. I was just curious if you could elaborate a little bit more on what we're seeing in scanner data about the frozen veggies category and maybe some of the share losses that you're experiencing in measured channels there, and how you expect to kind of get that back a little bit?
Well, first, overall in frozen, same story with elasticities. We really haven't seen some change. There's some dynamics within frozen in terms of where we were a year ago, where we are now. In vegetables in particular, I would direct you back to the comments we made today. Our strategy on Birds Eye is all about value added.
We look at the total category and about 85%, 90% of the category has now moved to more of a value-added play. There is the bottom 10% to 5%, which is a more of a commodity play. I think everybody here, many of you know about our company, we are focused on value over volume. One of our strategies on Birds Eye has been to move more of the portfolio into the value-oriented set. That's where the growth is, that's where the profit pool is. You will not see us chase low value, non-investment grade volume at the very low end of the tier. That's been part of our strategy all along. You may see that at different customers from time to time, depending upon what their strategy is at the very low end.
We don't chase that volume, we chase value through the innovation we showed you today. If you think back to when we got started with Birds Eye just a few years ago, this brand has never been in better shape. These are premium quality products that are generating high dollar ranks, so it's a very good mix, and it's accretive to where we've been.
We'll come back up front. Bryan Spillane .
Hi. Thanks, guys. Dave, you talked a little about CapEx being elevated the next couple of years. Can you just drill into that a little bit with regards to how much of that is supporting just truly incremental capacity, so more volume? How much of it is modernization? Also how much of it supports, I guess, expansion into some of the more value-added products. Just trying to understand how much of it is maintenance versus growth, I guess.
Yeah.
Also if there is an efficiency kind of margin implications to that CapEx being elevated.
Yeah. Roughly we're 60-ish 40 in terms of growth versus maintenance. That's a rough number in the aggregate. In terms of our investments, I would say a majority of it is actually to drive automation, which we talked about a lot in our supply chain presentation at Investor Day, which is part of what's driving our billion-dollar cost savings target over three years. I would say the majority of the incremental spend is on the automation with some capacity opportunities. You can see our strategic brands in frozen and snacking, there's high demand, you always go through an evaluation when you use a co-manufacturer, the economics can be very attractive of bringing that back in. We look at that on a case-by-case basis, but it's to support the growth in the frozen and snacking businesses.
Yeah. I'll just add, because this is a very important part of our margin program going forward, is the supply chain modernization. If you did not get a chance to see our Investor Day presentation back in July, our Chief Supply Chain Officer, Alexandre Eboli, laid out this $1 billion program in supply chain. It's got all the detail you wanna know about how we are modernizing our supply chain over the coming years and investing CapEx behind it. If you want that detail, go to our website, you'll find that presentation.
Alexia Howard.
Great. Thank you. Can I ask about putting numbers around innovation and marketing? It seems to me pre-pandemic, percentage of sales from innovation over the last three years was the number that people gave out. I'm suspecting we got pulled back a bit on innovation during the pandemic. You've obviously got a lot coming out now. Where are you and where do you hope to get over time?
Yeah. Great question, Alexia. I shared a metric we used today to assess our innovation program. We call it renewal rate. It's a percent of our annual sales that comes from stuff we've launched in the past three years. Pre-pandemic, we had gotten to about 15%. Back when we started, our company was about 8.5%, so you can see the improvement. When the pandemic hit, I thought that number would fall below 10% again. Surprisingly, it did not. We're one of the few companies that kept, at our retailers' request, the pedal to the metal on innovation, and we kept a lot of innovation flowing into the marketplace. Not all of it. In some places, we ran out of capacity, Birds Eye, Slim Jim, things like that. You saw it come down a little.
In frozen today, we're about tracking about 14%. I'm comfortable with that number. 14% to 15%, we think is about the right number for us when the market's hungry for innovation. If you're too far below that, you're probably gonna be outpaced by your competition. If you're too far above that, you run the risk of SKU proliferation and then pulling products out of the marketplace. For us, Alexia, that's about the sweet spot.
Okay. I think we'll take our last question, Cody Ross.
Thank you. You put up an interesting chart up there, your three-year sales CAGR versus your competitors, and also showed your unit volume. Can you just talk about the actions you took prior to COVID that enabled you to take this robust price over the last three years while still seeing volumes hold in there pretty stable?
Yeah, I think it's a great question, Cody. I think you have to look at frozen as the area where it's most vivid. Frankly, the conclusion you can all draw is that pricing was just too low in frozen pre-pandemic. It was too low. When you're selling products at $1 and $2, there are severe limitations to what you can deliver in the form of quality. What we've been able to illustrate for the retailer is that consumers will welcome a $4.50 unit because if you think about it's still ridiculously cheap. Compared to what they're gonna buy away from home at fast casual, it's a phenomenal value, but now it's far better quality.
That's really been the unlock in that premiumization chart I showed, is that the consumer is not looking at our added quality and the increased price as a more expensive product that they're struggling to buy. They're far more eager to buy it because it's still a great price and it's a far better eating experience.
I think that's all the time we have questions for in the room. Thank you for attending the presentation, and we'll see you in our breakout.
Thanks, everybody.