February 23, 2024

Once a Great Flop, Now Sold for Billions

The $2.35 billion deal with Diamond Foods is also a milestone for Procter as it sheds its last food brand after having already sold Jif peanut butter, Folger’s coffee and Crisco shortening.

The company’s expertise in edible oils was used widely by the potato chip industry in the 1950s and 1960s, and shaped the invention of Pringles, the thinly sliced saddle-shaped crisp. Company officials still aren’t sure how the chips got their name, but one theory holds that two Procter advertising employees lived on Pringle Drive in Cincinnati and the name paired well with potato.

The creator of the famous Pringles can was so proud of his invention that he asked that his ashes be buried in one.

Yet Pringles, which is basically dehydrated potato flakes that are rolled and then fried, was not universally loved.

It was such a dud in its early years that some called for Procter to dump the brand. The brand did not take off until the company tweaked the flavor in 1980 and introduced the “Fever for the Flavor of Pringles” advertising campaign.

By the late 1990s, Pringles had become a $1 billion a year brand. On the television series “Ally McBeal,” Ally got into a grocery store skirmish with a woman over a can of Pringles.

“When I was there 30 years ago, it was dead,” said Charles Jarvie, vice president of Procter’s food division in the late 1970s. “It’s a great example where they just didn’t give up.”

Nonetheless, the sale of Pringles was not unexpected, as Procter has refocused its attention on the core businesses of beauty, grooming and household care. “Pringles is an iconic, billion-dollar snack brand with significant global manufacturing and supply chain infrastructure,” said Michael J. Mendes, chief executive of Diamond Foods, in a statement. The $2.35 billion transaction includes $1.5 billion of Diamond stock, which goes to P. G. shareholders who elect to participate in the deal, and the assumption of $850 million of Pringles debt by the merged company.

The sale will barely make a dent in Procter, with $80 billion in annual sales.

“It really didn’t fit what they are looking to do,” said Jason Gere, an analyst at RBC Capital Markets who tracks the company. “For a long time, this was one of those products that felt more appropriate in someone else’s portfolio.”

Pringles has kept up with some of its rivals in the flavor department, offering salt-and-vinegar, cheddar and pizza versions. While Pringles’ sales had been growing of late, Mr. Gere said that they had not been nearly as robust as many of P. G.’s other megabrands.

Mr. Jarvie said the company had hoped to replicate the great science breakthroughs it had with laundry detergents, toothpaste and disposable diapers. But, he said, “food is as much an art as it is a science. Procter never got that.”

In the 1950s, roughly 25 percent of the company’s sales were in food, particularly in shortening and other cooking oils.

“We provided most of the oils to the potato chip industry,’ said Greg McCoy, a corporate archivist. “We were already frying up potato chips to test the oils.”

But it lacked a distribution network to ship perishable bags of chips to grocery stores, so it directed its researchers to come up with a longer-lasting chip that could be distributed with P. G.’s existing distribution network.

“They knew from the get-go that they wanted it to be uniform in size, texture and taste,” Mr. McCoy said. Procter wanted to create a perfect chip to address consumer complaints about broken and stale chips and air in the bags.

The task was assigned to a chemist named Fredric Baur, who from 1956 to 1958 created Pringles’ saddle shape out of fried dough and also its can. But Mr. Baur could not figure out how to make the chips taste good, and he eventually was pulled off the Pringles job to work on another brand. In the mid-1960s, another Procter researcher, Alexander Liepa, dusted off Mr. Baur’s work and set a out to improve on the Pringles taste, which he succeeded in doing.

Another theory for the Pringles’ name comes from Mr. Liepa’s patent, which credits research done in the 1940s by Mark Pringle, Mr. McCoy said.

The chips were test marketed in Evansville, Ind., in 1968 and were an “overnight sensation,” Mr. McCoy said. But when the chips went national in 1971, the taste issue resurfaced. Officially, Pringles are called crisps rather than chips, the result of a long-ago fracas between competitors and regulators over what could be called a potato chip.

In the 1993 book “Soap Opera: the Inside Story of Procter Gamble,” the author Alecia Swasy writes that Pringles were considered one of the great flops in company history, “the P. G. Edsel.” Mr. McCoy maintains, however, that Pringles gained traction after a makeover in 1980s, which included a thicker chip and a new focus on the taste, rather than the can.

Mr. Baur never lost his affection for the Pringles’ can, which he invented. When he died in 2008, his children honored his request to bury his ashes in a Pringles can. In an interview with Time, Mr. Baur’s son, Larry, said he and his siblings stopped at a Walgreen’s to pick up a can of Pringles on the way to the funeral home.

“My siblings and I briefly debated what flavor to use,” Mr. Baur said, in the Time interview. “But I said, ‘Look we need to use the original.’ ”

Article source: http://feeds.nytimes.com/click.phdo?i=228f11528c5b5eedfb728e55d3575624

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