Kellanova Faces Economic Pressures
Kellanova, the maker of Pringles, is now feeling the squeeze from broader economic challenges like tariffs, inflation, and shrinking consumer spending. These pressures affected their first quarter, despite Kellanova having avoided such setbacks while competitors struggled over the past year.
In the quarter ending March 29, the company’s net sales dropped 3.7% to $3.08 billion. Adjusted operating profit fell 13.1% to $441 million, and adjusted earnings per share dropped 10.9% to 90 cents compared to the previous year. This contrasts with the previous quarter, when Kellanova exceeded expectations by posting $3.12 billion in sales and a 62% increase in operating profits.
Expectations were high this quarter, with analysts anticipating $3.18 billion in sales and an adjusted EPS of $1.01. The miss lines up with trends seen across the packaged food and beverage sector. For example, Kraft Heinz reported a 6.4% sales decline and shrinking profit margins, while PepsiCo described its recent quarter as “subdued.” Kellanova attributed its profit drop to higher costs, adverse business mix, and ongoing softness in the category.
Like many in the industry, Kellanova raised product prices to cope with rising input costs—an average increase of 8.1% last quarter. This led to a 1.2% decline in organic volumes, foreshadowing this quarter’s results. North America saw a 4% fall in organic net sales due to volume drops in snacking and frozen foods, which slashed operating profits by 9%. Europe’s price hikes helped offset volume losses, but net sales still declined 3%. Latin America was hit hardest, with net sales down 15%, affected by currency issues and weaker categories like cookies, powdered drinks, and cereal.
Despite these results, CEO Steve Cahillane remains positive. He highlighted improvements in category share in key markets and explained the company is preparing for ongoing global economic uncertainty while gearing up for its future as part of Mars’ global snacking portfolio.
Can Kellanova Reverse Its Fortunes with Personalized Data and Partnerships?
Kellanova plans to boost its market share by using artificial intelligence (AI) and machine learning to better understand consumer needs and refine campaigns in real time. Charisse Hughes, SVP and chief growth officer, shared that the company invested heavily in testing technologies to improve marketing effectiveness and personalization over the past year.
One example is the addition of QR codes on Pringles as part of the Poptopia campaign. This offered consumers exclusive, personalized content like games and promotions. The campaign increased Kellanova’s first-party data by 30%, a critical asset in a world moving away from third-party data.
In the UK, Kellanova ran personalized campaigns using AI and clean room technology on platforms like Meta and Pinterest. By analyzing over 20 million records, they identified three valuable audience segments based on purchase behavior, demographics, and attitudes. The results were strong: sales rose 9% on Meta and 36% on Pinterest, with brand consideration increasing nearly a full point—three times the industry average.
These efforts reversed declines in household penetration and provided a fresh model for reaching audiences dynamically. Kellanova is now applying these strategies across its brands globally.
Co-branding Collaborations to Capture New Audiences
Kellanova is also expanding reach through co-branding collaborations. For instance, it partnered with Wendy’s to blend Pop-Tarts into Wendy’s Frosty milkshakes. Another collaboration with Miller Lite brought limited-edition Pringles flavors inspired by beer-infused barbecue dishes, such as Beer Can Chicken and Grilled Beer Brat.
Unexpected partnerships have caught consumer attention as well. A licensing deal with Crocs produced Mr. P-themed clogs and slides, including a “Crush Boot” with a Pringles can holder that sold out in 1.5 hours. This campaign also featured a watermelon chili lime flavor and generated 1.6 billion impressions, ranking it among Kellanova’s top campaigns for earned media.
Additionally, Kellanova teamed up with Caviar Co to launch the “Crisps and Caviar Collection,” pairing popular Pringles flavors with premium caviar kits. This collaboration amassed over 10 billion views on TikTok, showcasing strong engagement.
For sales professionals, Kellanova’s approach highlights the importance of leveraging data-driven personalization and creative partnerships to maintain relevance and drive growth even in challenging economic times.