Procter & Gamble has been trying to offload Pringles for years. So when it announced, last April, that it was selling to former walnut company Diamond Foods in a $2.3bn paper and cash deal, it appeared P&G was ready to overlook the questionable price tag in favour of getting rid.
And then, last week, disaster! Or so it appeared, as the deal was called off, amid allegations of accounting irregularities at Diamond, and the dismissal of its CEO and CFO. But what’s this? Out of nowhere this week, in steps Kellogg’s. And it pays up $2.7bn. Even more. And in cash.
Talk about a sweetener! Execs at P&G must be ecstatic.
Whether retailers feel the same way is a moot point. Pringles is the brand that buyers hate, at least in the UK, because they can’t really sell the tubes of tasty tatties unless they’re on deal, and they get a significantly reduced margin as they’re not margin-maintained by P&G.
So what happens next? If there’s any company likely to maintain such a position, you would think it’s another highly corporate brand-dominated American company like Kellogg’s. On the other hand, in the UK, Kellogg’s does not seem to have maintained that much control in the breakfast cereal promotions melee. We shall have to see.
But Kellogg’s won’t be overworried about the UK. The main reason to buy Pringles was elsewhere. It’s only the UK where Pringles is sold exclusively on deal. In developed and developing nations alike, there’s a lovely opportunity, as well as some fantastic synergy opportunities in support of a global sweet and savoury ambient snacking business that could give not only a chastened PepsiCo a run for its money, but create an alternative vision to Kraft’s Irene Rosenfeld and her sweet snacking global model.
The people you’ve got to feel most sorry for, though, are the chaps at Kettle UK. It’s a fast-growing business. But the parent company has been badly destabilised, will surely end up being sued, and my bet is either Kettle, or Diamond itself, will be acquired.