Frito-Lay is the undisputed chip champ of North America. The company makes some of the best-known and top-selling savory snacks around, including Cheetos, Doritos, Lay's, Ruffles, SunChips, and Tostitos. On the sweet side, Frito-Lay also makes Grandma's cookies, Funyuns onion-flavored rings, Cracker Jack candy-coated popcorn, and Smartfood popcorn. It also makes a line of chips made with the fat substitute Olestra under the Light brand name. Owned by PepsiCo, Frito-Lay North America's operations span the US and Canada and account for about a quarter of the soda maker's sales. Frito-Lay's Mexican sales are reported within PepsiCo's Latin America Foods segment.
The company counts on regular snackers for its revenue. Despite the economic downturn in recent years, consumers have helped Frito-Lay log slight sales increases. It has found sales successes with its classic mainstays. Its Lay's brand grew by double digits in 2010, whereby Ruffles followed closely with high single-digit sales growth. Chips that have not stacked up include its mutigrain SunChips and Tostitos tortilla chips.
Frito-Lay offers healthy snacks and dips through a 50-50 joint venture with the Strauss Group. Formed in 2007 the Sabra Dipping venture makes fresh hummus, spreads, Mediterranean salsas, and other vegetarian foods. In 2011 Frito-Lay and Strauss extended their collaboration to markets outside North America.
Continuing concern about obesity has led the company to refine some of its snack foods and begin making healthier versions of them. It has embarked on a plan to reduce sodium, fats, and sugar in its products, as well as introduce more whole grain foods to its line-up. It now offers a line of 100-calorie-per-portion products repackaged as Mini Bites and a variety of real fruit and vegetable crisps called Flat Earth. Hoping to reduce the overall salt content of its products by 25%, it makes low-sodium versions of its top-selling brands, including Lay's and Ruffles potato chips, Tostitos tortilla chips, and Fritos corn chips. To maintain their flavor, the company works with seasoning partners to improve the taste of its current product and work up new tastes.
The company also looks for opportunities to partner with other snack makers. Frito-Lay collaborates with beef-jerky maker Jack Link's to sell a line of Matador meat snacks. Aimed at younger, busy adults, the product takes advantage of Jack Link's meat-product manufacturing know-how and Frito-Lay's expertise in distribution, sales, and merchandising.
While Frito-Lay stands alone at the top of the fragmented snack food market, Diamond Foods is coming on strong. The snack maker, best known for its nuts, has agreed to acquire Pringles (the world's best selling brand of potato chip) from Procter & Gamble. Pringles may benefit from the change in ownership, as the brand is currently out of place within P&G's household and personal care business segment.