BATTLE CREEK, MICH. — Even while describing Kellogg Co. as a “global cereal and a U.S. snack company,” John Bryant, president and chief executive officer of Kellogg, said the addition of Pringles has set the company up well to build a global snack business.
During an Aug. 2 conference call with analysts to discuss second-quarter financials, Mr. Bryant provided an update on the integration of Pringles, which was acquired from Cincinnati-based Procter & Gamble Co. in late May for $2.695 billion.
“The integration is progressing well,” Mr. Bryant said. “Just as a reminder, this was a carveout, not a straight acquisition, and was far more complicated as a result. So we’re pleased the transition is going so smoothly. Our Pringles team and the existing Kellogg teams are working very well together, and we anticipate that we will be able to discontinue our transition services with Procter & Gamble on schedule.”
Mr. Bryant said Kellogg now has improved visibility into Pringles operations and expects ongoing annual synergies to be in the range of $50 million to $75 million.
“We are seeing good sales early in the third quarter and are starting to leverage Pringles through cross-display and marketing activities,” he said. “It is also important to note that our customers around the world have a lot of confidence in the brand and, just like us, are optimistic regarding its potential.”
During the just completed second quarter, Kellogg said Pringles contributed about 3.5 points to overall reported sales growth. The company attributed some of the growth to the introduction of Pringles with more flavors.
“This was a simple idea, but it is one that highlights the opportunities we have to drive this business,” said Todd Penegor, president of U.S. Snacks. “We also have a lot of really great brand-building ideas, and we have savory snack brands that complement each other. So, as you might imagine, we are already doing co-promotions with Pringles and Cheez-It, and see a lot more potential to do this kind of thing as we look across the portfolio.”
Internationally, Pringles has performed well in Europe and also is making a mark in Asia-Pacific and Latin America, Mr. Bryant said.
“The beauty of the Pringles acquisition is it creates a snacking capability to add to our international business to help transform our international business from largely a cereal business to a cereal and snacks business,” he said.