After a prolonged high court battle, Pringles-maker Procter & Gamble has persuaded a judge that its tube-based snack doesn’t actually qualify as a crisp – a decision that’s likely to save P&G (and devotees everywhere) millions in tax. The judge agreed that the packaging, texture and ‘regular shape’ of Pringles – and more importantly, the fact that they don’t actually contain much potato – meant that they couldn’t be classed as a potato crisp, and so shouldn’t be subject to VAT.
In fact, according to P&G, Pringles’ list of ingredients actually makes them more akin to cakes or biscuits. Whereas proper crisps are (as you’d expect) largely made out of potatoes, just 42% of your average Pringle has ever seen the inside of a spud. The rest is made up of lovely stuff like cornflour, wheat starch, rice flour, fat and emulsifiers – all of which combine to create that special ‘mouth melt taste’, apparently. Makes us feel sick just thinking about it.
However, we imagine that the suits at P&G will be a lot more cheery, because this seemingly trifling crisp/ biscuit/ cake dilemma had a lot riding on it. Potato crisps (like most biscuits) are subject to VAT at 17.5% - whereas generally speaking, dough-based baking products like bread and cakes are not. By ensuring that Pringles fall into the latter category, P&G has just saved itself a fortune.
It’s not the first time that a retailer has stung the Revenue for a big pile of dough. Back in April, M&S finally won a case to prove that its famous teacakes are actually cakes rather than biscuits, leaving the VAT man with a £3m bill for 20 years of incorrectly-paid taxes. And the most famous example is probably Jaffa Cakes, subject of many a playground debate – McVities even baked a giant one to prove that it was really a small cake rather than a biscuit.
P&G will presumably be delighted to follow in these illustrious footsteps. But it does present a marketing dilemma: in a world where healthier and more natural snacks are increasingly popular, how do you go about flogging a crisp that by your own admission has about as much in common with a potato as the person that’s eating it?
Then again, anyone who eats Pringles regularly probably wasn’t that bothered about nutritional value in the first place...