Frito-Lay posted steady growth for Q2, fueled by excitement and consumer engagement through flavor competitions, says PepsiCo’s chairman and CEO Indra Nooyi.
Frito-Lay North America grew net sales 2% for the second quarter of fiscal 2014 – bigger than PepsiCo America Foods (PAF) at 1% and Latin America Foods (LAF) that remained flat. Lay’s, Doritos and Cheetos were the strongest brands in Frito-Lay’s portfolio for the quarter.
The snack major’s flavor campaigns - Lay’s ‘Do Us A Flavor’ and Doritos Jack mystery flavor – had generated plenty of buzz over the second quarter, Nooyi told analysts in PepsiCo’s earnings call.
“Each of these programs has a strong demonstration of how we are leveraging our culinary center to create unique, great tasting products and driving excitement in the vendors to create a consumer engagement,” she said.
The Doritos Jack competition, launched in April, had resulted in nationwide distribution of a spicy street taco flavor – voted for by consumers.
This month, PepsiCo also started stocking the winning flavors from its ‘Do Us A Flavor’ campaign – cappuccino, cheddar bacon mac & cheese, mango salsa and wasabi ginger.
This year’s campaign generated more than 14 million consumer submissions, Nooyi said – “nearly four times the submissions we received for last year’s campaign”.
More marketing activity set for Q3
Asked by a JP Morgan analyst if PepsiCo was worried that Frito-Lay’s organic growth was weaker than it had been in a while, Nooyi said: “Clearly the North American retail environment saw an abrupt slowdown in period five, and we were very careful to manage this business responsibly and not hit the promotional level in order to just drive revenue or volume growth.”
Marketing activity was also delayed from Q2 to Q3, she said. “…The strength of the marketing calendar in the second half, our A&M [advertising and marketing] spending that we’re expecting in the second half, the productivity programs – we feel pretty good about Frito-Lay,” she said.