Popchips Sidelines Katy Perry As it Seeks Mainstream Growth

Company Fends Off 'Popped' Competition From New Entrants Like Wheat Thins

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Katy Perry's Recent Video for Popchips
Katy Perry's Recent Video for Popchips

Popchips is ditching its celebrity-first ad strategy as the seven-year-old snacking upstart changes tactics under a new executive team and ad agency.

Katy Perry and Ashton Kutcher -- who have both appeared in ads in recent years -- will be sidelined as the company puts more emphasis on the chips and less on its star endorsers and investors.

Popchips is "going to use a broader voice than we have in the past. It's going to be less focused on a personality and more focused on the product," said Marc Seguin, who was recently hired as the company's chief marketing officer after serving as VP of marketing for Paramount Farms, whose brands include Wonderful Pistachios. "We want to stay relevant and be a cool brand that is in the know," he said. But Popchips no longer wants to be "strictly a celebrity brand," he added.

The campaign is still in development and is expected to debut later this year. It could include a national TV buy, which would be a departure from the brand's most recent strategy of using celebrities in digital videos.

The company's new ad agency is Dandelion, a boutique agency in New York City founded by Kirt Gunn. The shop replaces Zambezi, of Venice, Calif., whose last campaign for Popchips came last summer. That effort included a 3-minute digital film starring Ms. Perry and her sidekicks, the "Popcats."

"Zambezi amicably parted ways with Popchips in June 2013 after three great years of partnership," agency founder Chris Raih said in an emailed statement.

Ms. Perry became a minority investor in the company in 2012, joining a list of financial backers that have included Mr. Kutcher, Heidi Klum, Jillian Michaels and Sean Combs, according to published reports.

Mr. Seguin said the company still has "several celebrity investors," but did not share specifics.

Popchips was co-founded in 2007 by Silicon Valley entrepreneur Keith Belling. He pioneered a processing technique that uses a combination of heat and pressure to create a snack that is neither baked nor fried. The chips are promoted as having "half the fat of fried chips." The brand emerged as a darling in the snacks industry, winning media attention while pursuing a grassroots marketing approach that used hyperlocal and social marketing.

Mr. Belling is still on the company's board of directors. But day-to-day management is overseen by CEO Paul Davis. Mr. Davis, a longtime Frito-Lay exec, was hired in December after most recently serving as CEO of Coinstar. Popchips is also transitioning its headquarters from San Francisco to Los Angeles.

Mr. Kutcher is still listed as "president of pop culture" on the Popchips web site. The brand drew some heat in 2012 when the actor appeared in "brownface" and used an Indian accent in a digital ad.

But today, Popchips biggest concern might be aggressive competition coming from larger food marketers that are coming out with their own "popped" versions of established brands. The latest is Mondelez International, which in April debuted Wheat Thins Popped. The launch was promoted with an event in Times Square featuring celebrity Kelly Osbourne and an interactive sculpture made from 400 balloons that people could "pop" from afar by using the hashtag #PoppedWheatThins.

Sales of Popchips flagship potato variety plummeted by nearly 20% to $50.8 million in the 52 weeks ending April 20, according to IRI. Mr. Seguin said most of the decline came in the most recent quarter as the company transitioned from 3-ounce to 3.5-ounce bags, which are priced the same. "It's really cost us almost a full month of sales," he said. But "we think ultimately it's worthwhile to provide the consumer with a better value."

In doing so, the brand hopes to lure more mainstream consumers, rather than relying on urban markets, where Popchips had run aggressive field marketing and sampling programs. "We've done a good job of reaching our initial market and now we have to take it out to everybody who is in the salty snacks category, which is basically everyone." The strategy includes new varieties such as veggie chips and rice chips.

Popchips is considering a range of mainstream media options for its new campaign, including TV, outdoor and radio. The company is also reviewing media buying and planning agencies.

Mr. Seguin used plenty of star-studded campaigns while at Paramount Farms, including the recent Stephen Colbert campaign for Wonderful Pistachios that debuted in the Super Bowl. He said celebrities work if brands are able to leverage the notoriety to create more awareness for products.

But because of Popchips relatively small size, the brand was being overshadowed by its celebrities, he said. "We think it's better for us to talk about the brand first," he said. "There are probably still celebrity opportunities for us down the road, it's just not going to be our focal point for our campaign."

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