Marketing: The Potato-Chip War

When is a potato chip not a potato chip? Not when it is “made from potatoes cooked, mashed and dehydrated, resulting in potato granules which are later moistened, rolled out, cut into pieces and fried.” So say officers of the Potato Chip Institute International, which represents almost 400 chip makers from the U.S. and abroad. The group is trying to stop two huge companies from promoting as potato chips some dehydrated potato products that are now being test-marketed.

The institute has taken its semantics argument into court in Lincoln, Neb., aiming to enjoin General Mills from advertising its Chipos potato snacks as “newfashioned potato chips.” The institute also intends to sue Procter & Gamble for advertising its potato Pringle’s as “newfangled potato chips.” Harvey Noss Sr., executive vice president of the institute, complains that both companies “are trying to capitalize on the good name of the potato chip, which has been built up over 100 years.”

At stake is a $900 million industry, mostly made up of small companies that market their products locally. Institute members are obviously afraid that the new dehydrated potato snacks could nibble into potato-chip markets and drive some of the small chip companies out of business. Dallas-based Frito-Lay, which claims to be the biggest chip maker in the U.S. and uses Comic Buddy Hackett to munch chips on TV commercials, sides with the institute. But Frito-Lay is hedging its bet by test-marketing Munchos, a potato snack that it carefully labels “potato crisps.” Francis X. Rice, president of the institute, concedes that “synthetic” chips do have advantages. Pringle’s, for example, have a longer shelf life and are not nearly so fragile as potato chips because they are uniformly round and come neatly stacked in tall cardboard canisters. Partly because of the costly packaging, the dehydrated chips cost about 15% more than regular chips. Pringle’s taste and look much like real potato chips, but they are not as crisp.

Long War. The chip controversy is the latest battle in the long war that traditional foods have been losing to various substitutes. Fewer calories, less cholesterol, no refrigeration, uniform quality and many other claims have been used to persuade the U.S. consumer to switch to nondairy creamers in her coffee, orange-flavored breakfast drinks, soybean meal in hamburger, and simulated bacon. Sales of fabricated foods are rising, but many people feel that the old-time products taste better.

Even some major food processors are traditionalists. Robert Wise, head of Wise Potato Chips, a division of Borden, Inc. does not feel the least bit threatened by Chipos or Pringle’s, nor does he plan to make a similar product. “We are not interested in competing with ourselves,” he says.