Texas Business Report: Frito-Lay Focuses on Fancy Snacks

The Plano-based company will be adopting a "1 percent-99 percent strategy" by emphasizing both high-end products, like Stacy's Pita Chips, and "value" items, like Cracker Jack.
Fri June 15, 2012 9:57 pm

The Texas economy is one of the most robust in the world. Wildly profitable companies and ingenious entrepreneurs call this state home, and what happens here influences businesses around the nation. Here’s a slice of the profits, losses, big deals, and backroom decisions happening across Texas this week.

Lay of Luxury
Feeling the crunch of falling soda sales, PepsiCo is reconfiguring its marketing strategy to focus on the high and low ends of the snack market. Plano-based Frito-Lay is leading the charge, adopting what the  New York Times calls a “1 percent-99 percent strategy” by emphasizing high-end products (such as pita chips, dips, nuts and whole-grain snacks) as well as “value” items like low-priced tortilla chips and the immortal Cracker Jack.

A Frito-Lay spokeswoman told the  Times that the new strategy is a reaction to a growing divide among consumers: “The rich are getting richer and the poor are getting poorer.” An aging population and a shift in ethnic demographics were other factors in the company’s decision to shift focus.

The Bottom Line: Pepsi has the numbers to back up its claims. While growth in the middle of the salty snack market is stagnant, the premium end has grown about seven percent in the last two years, and the bottom segment is expected to grow by four percent annually

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