BusinessTN

As Frito-Lay’s Stax and Pringles duke it out for dominance, workers in Jackson are sure to wonder where the stacked chips may fall.

It’s been a year since Frito-Lay introduced Stax to compete with the Jackson-made Pringles. Some analysts say the fight means Pringles sales will slow and likely decline. Others say the competition will convince Pringles’ owner Procter & Gamble to divest the unit and focus on its growing core of health and beauty products.

Slow growth or a sale could mean turmoil for the 1,000 workers in Jackson who help make Pringles one of 14 P&G brands with annual sales of more than $1 billion. Another plant in Belgium, built in the 1990s, also makes Pringles.

But for now, competition with Stax has fired up the brand. Pringles is moving ahead with increased production globally—the chips are more popular abroad than at home—and has contracted with a food manufacturer in China to begin making a Pringles product there.

Pringles officials say the first year of competition has encouraged growth in the “canister snack” category. The company claims that its share of the category has grown a surprising 7% since Stax was introduced.

“We see this as healthy competition,” says Jackson plant spokesman Randy Kennedy. “Imitation is the sincerest form of flattery.”

The unique stacked chips have been made in Jackson since P&G engineers conceived them in the early 1970s. As the first major snack food to compete directly with Pringles, the Stax product is selling extremely well. In its most recent quarter, Pepsico reported that Stax is one of Frito-Lay’s fastest-growing new products. Also, Frito-Lay spokesman Charles Nicolas said Stax is fueling growth across the whole “stacked crisp” market.

Pringles should be on guard, says ex-Pringles brand manager Jeff Dufresne. Dufresne now runs a marketing firm in Cincinnati, the home of P&G.

“Frito-Lay has put many people out of business,” Dufresne says. “Any illusion Pringles had of growing is pretty much over.”

Frito-Lay is a fierce competitor and is responsible for the demise of many other snack ventures, including products from Eagle and Keebler, Dufresne says.

In the U.S. market, Frito-Lay’s extensive in-store merchandising network provides Stax a significant advantage over Pringles, which must rely on store employees to stack product. The fight will be tougher in the global market. Dufresne feels that Stax was designed specifically to challenge Pringles abroad.

But Pringles has no plans to cede any of its markets without a fight. In May, the Jackson plant rolled out a product targeted at children—Pringles Prints. These crisps are imprinted on one side with Hasbro’s Trivial Pursuit Junior questions, animal facts or jokes. Doug Christopher, who researches P&G for Crowell, Weedon & Co. in Los Angeles, says the new product is a great way to snag some interest with the key demographic:
“You have to make it fun and interesting for kids. Other snacks are doing things with shapes and designs. You have to do something to stand out.”

But consultant Dufresne says marketing to young children is a “strategic flaw.” While Pringles Prints are a “nice, little novelty, [the product] won’t help win the war against Stax,” he says.

He says Pringles should try to appeal to teens and young adults, not kids.

“If you go after the slightly older market, you will draw in the younger kids,” Dufresne says. “If you make the brand hipper and cooler, that pulls in the young kids because they want to be like the older crowd.”