'Better for you' snacks boost PepsiCo in 2003

Related tags Cent Frito-lay Nutrition

Frito-Lay, the snack food arm of giant US food and drink group
PepsiCo, was one of the main drivers of growth for the company last
year, not least as a result of various new product launches
designed to tap growing demand for low carb products.

The North American arm of Frito-Lay posted sales of $9.1 billion for 2003, up 6 per cent on the previous year, while operating profit was 7 per cent higher at $2.4 billion. Volume sales were up 4 per cent.

Salty snacks growth was led by Cheetos, Munchies Snack Mix, Lay's STAX, a new natural/organic line, and dips. In addition, the division's two biggest brands -- Lay's and Doritos -- also contributed to the growth, aided in part by the success of Guacamole-flavoured varieties.

Tapping into the trend for healthier products - a tag which snacks have always struggled to bear with any real conviction - Frito-Lay North America saw a 20 per cent rise in sales of 'better-for-you' products over the year, and these now account for over 10 per cent of the FLNA portfolio on both a volume and revenue basis.

The year was also marked by higher costs related to price inflation in cooking oils and the strategic decision to eliminate trans fats from all FLNA products, and this inevitably took a toll on operating profit, albeit offset by the volume gains.

Outside the US, PepsiCo's snack business and soft drinks arm are combined into the PepsiCo International unit, which reported sales of $8.7 billion in 2003, up 12 per cent on the previous year. The division's operating profits were up 14 per cent to $1.2 billion.

Within this, snack foods posted a 6 per cent volume during the year, with a 10 per cent improvement in the Europe, Middle East and Africa region, a 16 per cent surge in snack volumes to Asia and a 3 per cent increase in sales to Latin America.

With the rest of the world yet to truly experience the Atkins effect - which has seen US consumers become obsessed with carbohydrate intake - there is clearly significant potential for Frito-Lay's 'healthy' snacks outside their home market, and the 'better for you' range is likely to account for even more than 10 per cent of snack sales when the company's 2004 results are issued.

Nor is the company slacking off when it comes to new product developments in this area: just last month it announced the launch of a new line extension of Doritos and Tostitos with less than half the carbohydrates of its regular tortilla chip brands.

Doritos Edge and Tostitos Edge have a total of six net carbohydrates, 10 grams of protein and 3 grams of fibre and will be available in stores across the US in May, presumably followed by an international roll out in countries such as the UK where the Atkins fad has also garnered a significant following.

PepsiCo said it would use soy proteins and fibre to make the lower carbohydrate chip without compromising on the taste, and that the move would result in a 60 per cent reduction of carbohydrates in both products. Doritos and Tostitos have combined sales of nearly $3 billion in the US annually.

More healthy products, this time aimed at those concerned about the state of their hearts, were launched this week (just in time for Valentine's Day, no doubt).

Frito-Lay is collaborating with the American Heart Association to launch Rold Gold Heartzels Pretzels - heart shaped pretzels - the first pretzel to meet the Association's Heart-Check Mark guidelines as a heart healthy food.

Rold Gold Heartzels Pretzels contain no saturated fat, no cholesterol, less sodium than regular pretzels and have been formulated to be a good source of fibre and iron, the company said.

The Heart-Check Mark was established by the American Heart Association's Food Certification Programme to provide consumers with a quick and reliable way to identify heart-healthy foods.

To qualify for the mark, a serving of the food must be low in fat (less than or equal to 3 grams), be low in saturated fat (less than or equal to 1 gram), be low in cholesterol (less than or equal to 20 milligrams), have a sodium value of less than or equal to 480 milligrams for individual foods and contain at least 10 per cent of the Daily Value of one or more of protein, vitamin A, vitamin C, calcium, iron or dietary fibre.

Related topics Business PepsiCo Frito-Lay

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