Dive Brief:
- Kellanova saw a 4% year-over-year increase in organic net sales in its most recent quarter, the company shared in its latest earnings report Thursday. Net sales were down 5%, which the report attributed to currency translation issues and the divestiture of its Russian business last year.
- On Thursday’s earnings call, CEO Steve Cahillane pointed to Pringles as the company’s most successful brand, referencing Circana data showing the chips growing in net sales in the last quarter.
- Cahillane said innovation is shaping the company’s business strategy for the remainder of the year, which includes the launch of Pringles Mingles puffed snacks in October.
Dive Insight:
Since the snacking giant entered a new era last October, spinning off the cereal brands, Kellanova has focused on driving growth for its household name brands in order to better compete with competitors in the category like Mondelēz International and PepsiCo’s Frito-Lay.
Kellanova’s volumes in North America improved 2% in its most recent quarter, which Cahillane attributed largely to Pringles. The company’s move to increased distribution and shelf availability of the chips paid off, he said.
“It’s a full commercial activation, gaining momentum,” Cahillane said. “That will continue into the third and fourth quarter actually improve as activation around Cheez-It and some of our other brands starts to catch up to what we’ve done with Pringles.”
In response to a question from an investor about managing the competitive pricing environment, the CEO said in order to keep consumers purchasing its products, Kellanova must make sure it is hitting the right price points, packaging sizes and sales promotions.
“We have to make sure that we’re continuing to invest in our brands and innovation, meeting the consumers where they are,” Cahillane said.
Robert Moskow, financial analyst at TD Cowen, told investors in a statement that Kellanova is in a stronger position than its CPG peers because the company was able to restore volumes this year after facing supply chain constraints in 2022 and 2023.
“While the sales beat came from hyperinflation in Nigeria, we view the results and management’s comfort level with their 2H as a refreshing sign of stability in a snack industry under pressure,” Moskow said.
Some snacking brands and grocers have cut prices on food items in recent months as consumers cut back on spending. Last month, PepsiCo CEO Ramon Laguarta told investors the company planned to cut back on the price of some items like unsalted potato chips and tortilla chips in order to win back consumers. Earlier this week, Mondelēz CEO Dirk Van de Put told analysts the Ritz and Oreo maker will add “value” items to its portfolio to attract lower income consumers.