The Economic Side of a Pringle

During the 1950s, a Procter & Gamble chemist developed a potato chip that would not crumble in the bag. Actually, there never was a bag and regulators said it was not a potato chip.

It was called Pringles.

Pringles History

Called Pringle’s NewFangled Potato Chips, the new stackable snack food in a tin initially tasted terrible. It took until the 1960s for P&G to perk up the taste, shorten the name, and test market it in the Midwest. As the step before an expensive national launch, test marketing saves money. Manufacturers can research the response, tweak the ads and packaging, and then proceed.

With Pringles, the approach did not quite work. It flourished in Evansville, Indiana and then flopped nationally. Still, P&G persevered. They pivoted their marketing to a younger crowd, improved the taste, and the rest is history.

There were though some problems along the way. Made from a paste of dehydrated potatoes, the Pringles chip did not fit the U.S. FDA definition of a potato chip. So, in 1975, they had to call it a potato crisp or snack. Then, in the U.K. they had the opposite problem. If a court agreed that it was not a potato chip, the tax bite would have been less. But, on appeal, Procter & Gamble lost the case.

Our Bottom Line: Pringles Economics

Most economics courses begin with the land, labor, and capital from which all goods and services are made. And yes, the Pringles story started with a chemist trying to combine those factors of production in a new way. He wound up with a stackable chip that was sold in a tin. From there, supply and demand take over through test marketing and national distribution. We also had Pringles trying for a competitive advantage through its product differentiation. Finally, we can add a taste of fiscal policy that relates to taxes and regulation.

But perhaps the key economic thread is that always, Pringles economics required tradeoffs. In 2012, Procter & Gamble said they sold Pringles to Kellogg because they wanted to focus on “beauty, grooming, and household care.” Devoting more time and resources to Pringles meant less was available elsewhere.

My sources and more: During my walk this morning, the WSJ daily podcast referred to a Pringles shortage. I never discovered the shortage but did wind up investigating Pringles economics, starting with its history. This article describes their tax problems. Here, there is more about why they are not a chip. Meanwhile Delish, here, ranked their flavor and Food & Wine told us more about them. But perhaps the perfect article was from the NY Times in which they wonderfully describe the U.K. debate about what makes a potato chip a potato chip.