Perfect pairing: PepsiCo's Cheetos boost sales, land on limited-edition sandwich

10-Jul-2019 - Last updated on 10-Jul-2019 at 15:40 GMT

Chester Cheetah is the first persona to bear resemblance with KFC's brand character, Colonel Sanders.

Frito-Lay has partnered with the fast food chain in the US market to develop a signature sandwich featuring the cheese-flavored cornmeal snack paired with a Cheetos-flavored sauce.

The Cheetos Sandwich will tack the snack onto KFC’s Extra Crispy chicken filet, served on a toasted bun. It will be available in US outlets only until the end of July. Consumers can also indulge in the Cheetos Lovers Box: A combo meal containing popcorn chicken nuggets covered in Cheetos sauce.

“We have a massive fan base that loves experiencing the Cheetos brand in new ways, and we hope we delight our fans with our best collaboration yet,” said Dena vonWerssowetz, senior director of marketing for Frito-Lay North America.

According to Andrea Zahumensky, chief marketing officer at KFC, the idea was a ‘no-brainer.’

“After a very popular test market, we knew we had to introduce it nationwide, and a sandwich this anticipated needed a Colonel like we’ve never seen before,” she said.

The brand's mascot, Chester, will dress up as Colonel Sanders for commercials airing throughout the US this month. Whereas the Colonel wears wire-rimmed glasses, Chester will sport his signature sunglasses.

KFC has never transformed the Colonel into another persona before, but Zahumensky said, “There was no one better ‘suited’ than Chester Cheetah himself.”

Sales up for Frito-Lay

Stronger sales of PepsiCo’s snacks contributed to a 2.2% bump in overall sales in the second quarter, according to the earnings report released July 9.

Frito-Lay North America led positive returns across all categories with a nearly 5% boost in revenue year-over-year, compared to 2.5% each for Quaker Foods and the North American beverage division.

Quaker also gained 3% in organic revenue – its best quarter in three years. Volume sales of ready-to-eat cereals grew in the mid-single-digits.

Cooperating with Cheetos

Frito-Lay has a short-but-sweet history in collaborating ‘outside the box’ to extend its favored Cheetos brand into new avenues:

In 2017, the snack maker collaborated with Regal Cinemas to release Cheetos-flavored popcorn.
The same year, the $1bn brand also teamed up with Roy Choi – chef and owner of Kogi, a Korean food truck in Los Angeles – to open a pop-up restaurant called The Spotted Cheetah.
It proved to be so popular that the duo ran a second act called The Flamin’ Hot Spot.

“We delivered good net revenue growth in our key trademarks, including Lay’s, Doritos, Cheetos and Ruffles,” said PepsiCo CEO Ramon Luis Laguarta in a call with investors, led by “high single-digit growth in convenience and dollar stores.”

Convenience channels have spurred consumption across the board, as “consumers are willing to be a bit less price sensitive and pay more for every transaction.”

He added the company is seeing balanced growth in the US and very rational pricing in both in snacks and beverages.

“[We’re] trying to understand the different occasions the consumer is going into our categories… everybody is trying to generate value by investing in brands, improving distribution, connecting better with consumers versus just using price as the only lever of attracting consumers to your brands. So I think it’s [a pretty] powerful, good situation for our categories.”

Smaller pack sizes, single servings

Laguarta noted that PepsiCo is commanding higher prices because consumers are moving to smaller pack sizes, as well as buying more single and multipacks online.

Consumer are also seeking higher-value, functional products.

“They’re looking for more benefits in the consumption of our categories, be it snacks or beverages. I think you will continue to see those trends going forward… especially in more developed markets,” said Laguarta.

Emerging markets present “a bit of a different game, where you have to be very mindful of the price points and the affordability lenses." Nonetheless, PepsiCo posted an 8% sales jump in these sectors.

“We have a very, I think, a quite advantaged playbook and we’re demonstrating that in many markets around the world. So you should see us continue to invest in our snacks business internationally, and that should be a big engine of growth for us,” added Laguarta.