Frito-Lay Unit Targeting High-End and Hispanic Markets

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HispanicRetail360.com: PepsiCo's Frito-Lay unit is venturing beyond the middle-market and into the realm of high-end snacks as part of its new business strategy, reports the New York Times. It is now building a "company within a company" to pursue a dual strategy of appealing to customers with the income to purchase premium snacks as well as those looking primarily for value.

"Demographics, the aging population and changing ethnic mix, and bifurcating income are the trends reshaping the way people are eating," said Ann Mukherjee, chief marketing officer at Frito-Lay North America. "We're snacking more often during the day, and we're looking for snacks that are more satisfying physically and healthier."

Newly introduced high-end snacks include Stacy's Pita Chips and the Sabra line of refrigerated dips. New value items include Olive Coast kettle-cooked chips and Taqueros tortilla chips. Cracker Jack is also being reworked to appeal to value-seeking consumers.

"Whether you look at it in terms of price points or customers, there's just more happening on the edges of the market than in the middle right now," said Daniel Naor, senior vice president for growth ventures at Frito-Lay North America. His unit operates as a distinct business within Frito-Lay and has generated approximately $400 million in sales since launching 18 months ago, according to the report. Naor compared the unit to Toyota's Lexus brand.

"In the background, there are some common elements -- the same factories make both products -- but the materials used may be different and they are sold in different outlets," he said.

The unit is also launching Frito-Lay's first resealable bags and using a new distribution system that cultivates relationships with grocery store deli managers and brokers who sell niche snacks. It uses warehouses to supply them rather than deliver products to stores via Frito-Lay trucks.

Some of Frito-Lay's new premium products are already on sale in high-end food markets and deli sections and natural aisles of major grocery chains. Taqueros goes on sale in dollar stores, bodegas and discount outlets this summer and will be primarily aimed at the Hispanic market.