Pringles facing crunch time

CINCINNATI - It's crunch time for Pringles.

Procter & Gamble Co. has unleashed the four-decade-old snack in a barrage of new flavors, shapes and sizes with new marketing even as speculation grows that Pringles could be among the next P&G brands to be sold or spun off.

"More and more, we're hearing from Procter & Gamble that the food business doesn't fit in with the rest of their portfolio," said Ali Dibadj, an analyst with Sanford C. Bernstein, which hosted P&G officials at a New York conference in late May.

Since P&G sold Folgers coffee, Jif peanut butter, Crisco shortening and Sunny Delight drinks in recent years, the Pringles potato crisp is the last major food brand the Cincinnati-based company has left.

The $3 billion November sale of Folgers was among several moves the world's largest consumer products maker has taken in the last year to focus on business it believes has higher growth potential, such as beauty and grooming products. P&G has acquired several high-end businesses in those areas, including men's skin care line Zirh and The Art of Shaving grooming brand in June.

Glenn Pappalardo, the retail and consumer industry strategy team leader for PricewaterhouseCoopers, said many companies have been adjusting their portfolios, which has presented opportunities for buyers to gain a foothold in new categories.

Procter & Gamble chairman A.G. Lafley, who stepped aside as CEO on July 1, told analysts earlier this year that P&G will "continue to prune" some brands while seeking bigger positions in other businesses.

But it may not matter to consumers how P&G goes about this. Pringles loyalists like Michelle Spelman, a married mother of three sports-playing boys, say they'll stick with the snacks in part for their convenience.

"Pringles travel well; we do a lot of tailgating and stuff like that," she said. "Being from Cincinnati, I like having Cincinnati brands in my world, but if they (P&G) sell Pringles, I wouldn't stop buying them."

P&G spokesman Paul Fox said the company won't comment on speculation about what it could sell or buy.

Analysts have said Duracell batteries and Braun electric appliances, other billion-dollar P&G brands, could have flickering futures with the company. But Jack Russo, an Edward Jones analyst, says — while P&G probably will continue to explore divesting them and is cutting costs under new CEO Bob McDonald — he could have different ideas on the portfolio.

Spokeswoman Maribeth Badertscher declined to say whether J.M. Smucker Inc. — the Orrville, Ohio, jams and jellies maker whose profit has risen solidly since it bought Jif, Crisco and Folgers from P&G — would be interested in buying Pringles or any other P&G brands.

Chicago research firm Mintel International estimates PepsiCo Inc.'s Frito-Lay division controls about half of the salty-snacks market, where Pringles has a comparatively small foothold.

Pringles' new flavors include Mexican Layers Dip, Buffalo Wing, and Mozzarella Sticks & Marinara, and the snacks are now offered in "stix" form, bags and a larger, 100-crisp "Super Stack" version of its original cylindrical container, still shaped like a tennis balls can.

"We continue to have a full pipeline of new ideas and products we will be bringing to market over the next 12 months and beyond," Pringles spokeswoman Kay Puryear said.

New marketing includes a digital banner ad developed with Cincinnati-based Bridge Worldwide Inc. that recently won a Cannes advertising award. And celebrity look-alikes handed out limited-edition cans at the Wimbledon tennis tournament.

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On the Net:

Pringles banner ad: http://awardshome.com/cannes2009/pringles/can-hands.html

Procter & Gamble: http://www.pg.com

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