Kellogg's snacks on Pringles
Kellogg's will pay $2.7 billion for the chips in the cardboard tube. Pringles gives Kellogg's a bigger stake in the after-breakfast market.
Kai Ryssdal: OK, here's today's 'you have got to be kidding me' business story. Kellogg's said this morning it's going to pay $2.7 billion to buy Pringles from Proctor and Gamble -- $2.7 billion for potato chips in a can.
If that seems like a lot of cash for a processed, loaded-with-salt snack at a time when people are paying more attention to what's in the foods they eat, yeah, we thought so too. So we asked Marketplace's Amy Scott to find out what gives.
Amy Scott: Oh sorry. Um, just a second. Wow. I usually save these for road trips, but Robert Passikoff with consulting firm Brand Keys says plenty of people indulge when they want to.
Robert Passikoff: While most consumers know that they ought to eat more healthy foods, you know, they’re still dipping their hands into bags of salty snacks.
Or in this case, cans. Lots of them. Pringles did about $1.5 billion in global sales last year. It’s the fourth-biggest snack brand in the world. Marketing consultant Jonathan Salem Baskin says Pringles has been expanding its offerings lately.
Jonathan Salem Baskin: There are umtpy-ump versions of Pringles, with jalapeno peppers, with extra salt.
I think he’s kidding about that one, but there are multigrain versions, and honey mustard -- even soft shell crab in Asia. The deal will make Kellogg the second largest savory snack maker, after PepsiCo, and give it another advantage in the grocery store -- more shelf space.
Baskin: So if Kellogg's owns Pringles, it owns that access to that space.
Baskin says the deal may be an odd fit, since Kellogg promotes itself as a healthier cereal company, with brands like Special K and Rice Krispies. But he says Kellogg should let Pringles stay Pringles.
Baskin: Pringles should just embrace its inner bad self, so that if and when it’s time to enjoy that comfort food of identically shaped, potato-processed something or anothers, Pringles is the go-to choice.
So maybe the mustached guy on the can should trade his bowtie for a leather jacket.
Baskin: Why not?
Oh yeah, I’m Amy Scott for Marketplace.