BOCA RATON, FLA. — What can you say about a brand approaching $2 billion in revenues?
“This is a great brand — a great global brand,” said Chris Hood, president of Kellogg Europe.
That “brand” is Pringles. Acquired by Kellogg from Cincinnati-based Procter & Gamble Co. in late May 2012 for $2.695 billion, Pringles has transformed Kellogg’s global snacks footprint in a relatively short period of time. With Pringles in the fold, global snack sales at Kellogg grew to $6.5 billion in fiscal 2014, up from $4.8 billion in fiscal 2011, prior to the acquisition of Pringles. The brand has provided a notable boost outside North America. In 2011, about 12% of global snack sales were outside of North America, but in 2014 that percentage was about 25%.
In a Feb. 18 presentation at the Consumer Analyst Group of New York conference in Boca Raton, Mr. Hood elaborated on the value of Pringles and how Kellogg continues to use the brand to transform its business.
In Russia, Pringles has expanded Kellogg’s snacks presence by more than 50%, and in the Middle East it has doubled the size of its business, he said. To accommodate the growth, Kellogg recently started up a Pringles production line in Kutno, Poland, in the third quarter of fiscal 2014, and Kellogg has plans to add more lines around the world.
“What is great about this brand is that it is truly a global equity, fantastic brand no matter where you go in the world, you will find the exact same product, maybe some local variations on flavors, crab flavor in Russia for example, seaweed in Japan,” Mr. Hood said. “So some local flavors variation but the exact same product, the exact same package, the exact same shape and the exact same brand positioning, and this allows us to really create and leverage scale despite being a relatively small player in the snacks category up against a very large player. We’ve got a very, very differentiated proposition.
“Over two-thirds of Pringles are sold outside of North America today. It is a very, very global brand, and we’ve got very strong horizontal and vertical channel penetration, which we have invested in really strong go-to-market capability in order to drive that.”
As a strong growth engine for Kellogg, Pringles’ performance has prompted the need for new capacity, new innovation and new package and sizing capability. In terms of package and sizing, Mr. Hood said Kellogg has invested in formats that not only hit on key price points, but also on formats that allow Pringles to get penetration into new channels such as convenience stores and hotels.
“The brand is ubiquitous and we have really invested a lot in sizing capability to make sure that we’ve got the capability to drive that,” he said.
Meanwhile, the roll-out of Pringles Tortilla in the United States in 2014 has been a home run for the company with more than 50 million units sold, according to the company. Kellogg now is in the midst of a global roll-out of the product, with plans to expand in Europe within the first half of 2015.
Even with its early success under the Kellogg umbrella, Mr. Hood said he believes Pringles still has “great room to grow.”
“The growth has been consistent globally,” he said. “We have been growing in every geography, high-single digits. We brought new capacity on-line in order to supply that demand. We have increased brand building and we have increased brand building behind innovation but also behind what we call commercial innovation … which don’t require any change to the product but drive strong activation and consumer interest.“And the business has really been transformational for the company especially in emerging markets — especially in emerging markets but even in places like the U.K. or France, it has significantly expanded our scale as well. It added about 20% to our business in those countries as well. And in Germany, it doubled our business. So transformational especially in emerging markets but significant scale advantages also in more developed geographies.”