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Dive Briefing:
- Kellanova reported in its latest earnings report Thursday that organic net sales rose 4% in the most recent quarter compared to the previous year. Net sales fell 5%, which the report attributed to currency translation issues and the sale of its Russian business last year.
- In an earnings call Thursday, CEO Steve Cahillain singled out Pringles as the company's most successful brand, citing Circana data showing net sales of the chips increased last quarter.
- Cahillane said innovation is shaping the company's business strategy for the remainder of the year, which includes: Pringles Enjoy Mingles Puffs snacks in October.
Dive Insight:
Since the snack giant entered a new era by spinning off its cereal brands in October last year, Kelanova has focused on driving growth for its popular brands to compete more effectively with category rivals such as Mondelēz International and PepsiCo’s Frito-Lay.
Kellanova's North American sales rose 2 percent in the most recent quarter, which Cahillane said was largely due to Pringles. He said the company's moves to increase distribution and shelf availability of the chips were paying off.
“We’re getting full commercial traction,” Cahillane said. “We’ll see real improvement in Q3 and Q4 as the activations around Cheez-It and other brands start to catch up with what we did with Pringles.”
When investors asked about managing a competitive pricing environment, the CEO said that Kelanova must implement appropriate price points, packaging sizes, and sales promotions to keep consumers buying its products.
“We need to continue to invest in our brands and innovation and meet our consumers where they are,” Cahillane said.
TD Cowen financial analyst Robert Mosco told investors in a statement that Kelanova is in a stronger position than its CPG peers because it was able to recover volumes this year after facing supply chain constraints in 2022 and 2023.
“While sales were hurt by hyperinflation in Nigeria, we view the second half results and management’s reassurance as a refreshing sign of stability in the stressed snacks industry,” Moscow said.
Some snack brands and grocery stores have cut food prices in recent months as consumers cut back on spending. Last month, PepsiCo CEO Ramon Laguarta told investors that the company planned to cut prices on some items, such as unsalted potato chips and tortilla chips, to win back consumers. Earlier this week, Mondelēz CEO Dirk Van de Put told analysts that the maker of Ritz and Oreo would add “value” items to its portfolio to attract lower-income consumers.
