This audio was auto-generated. Please let us know if you have any feedback.
Kellanova is taking a big gamble by spinning off its cereal business in 2022 and focusing on snack brands to compete with rivals like Mondelēz International and PepsiCo’s Frito-Lay. The goal is to turn Pringles, a household staple of stackable, curved potato chips, into a $4 billion brand.
At a meeting with Wall Street investors in August, CEO Steve Cahillane said: KellanovaPringles is one of the brands in the company's arsenal that has yet to reach its full potential. The executive said chips have enormous potential to take over the world, based on the company's ability to adapt to changing market trends through new product innovations.
Sarah Reinicke, vice president of savory snacks marketing at Kelanova, told Food Dive that the brand's broad appeal makes it a unique fit for the company's growth.
“This is a brand of processed crisps that are precisely designed to break up all those broken, greasy potato chips into a can,” Reinicke said.
According to Reinicke, Pringles’ secret weapon is the brand’s ability to accurately replicate more than 160 flavors worldwide, from Carnitas Taco to Everything Bagel. This allows the chip to adapt to different cultures as it launches new varieties internationally.
“We can take all these regional flavors and put them on a chip, whether it’s shrimp from Asia or Texas barbecue from the United States,” Reinicke said.
The company, formerly known as Kellogg, first acquired Pringles in 2012 for $2.7 billion, tripling the size of its snack business. Pringles now generates $3 billion in annual revenue, Kelanova said in a presentation to a New York consumer research group earlier this year.
Kellanova has also been experimenting with new flavors and formats for the brand over the past year. In May, the company introduced Pringles Mingles, a puffed snack with a crispy exterior and light interior that comes in a bag instead of a tall container. The snack is shaped like a bow tie, a nod to its mascot, Mr. P. Pringles Mingles will launch in October in three flavors: Cheddar & Sour Cream, Dill Pickle & Ranch, and Sharp White Cheddar & Ranch.
“Taking Pringles out of the bag is a big deal. We think it’s a huge lever for transformational growth for the brand,” Reinicke said. “We’re not leaving the can behind, but as we scale the business, we’re giving people a new way to innovate and drive shareable moments of consumption.”
Pringles Harvest Blend made with a variety of grains and sweet potatoes.
Courtesy of Kellogg
Innovating the Iconic Chip
Some of the innovation has stayed true to the traditional chip style: Last year, the company launched Pringles Harvest Blends, made with a mix of multigrain and sweet potato ingredients, targeting consumers looking for a healthier alternative to traditional potato chips.
Kelanova is hoping its innovation gamble is starting to pay off. In the most recent quarter, the company’s organic sales rose 5.4% year-over-year, partly due to a 4.8% price increase.
Pringles' R&D pipeline is driven by a desire to experiment with new ways to enhance sensory experiences and innovate on existing chips.
According to Reinicke, spicy products have been a big boost for the brand in recent years. In 2020, the brand launched Pringles Scorchin', its first dedicated collection of spicier varieties. There has been a huge surge in spicy snacks of all kinds in recent years, largely driven by the growth of Frito-Lay's Flamin' Hot flavored snacks, which were launched as their own brand earlier this year.
Pringles views its flavors as a “global library,” which allows it to cross-pollinate based on the different regions where it sells its chips, Reinicke said. She cited as an example the Mexican Street Corn flavor, which was created downstream of a trend the company observed.
The company is confident that the strength of its brands will help it weather a growing consumer concern: high inflation on grocery store shelves.
“We can charge the price we need because we deliver strong consumer value with our chips,” Reinicke said.
