ABOUT THIS COMPANY

ABOUT THIS COMPANY

Fritos, Cheetos, Doritos, and the list of similar-sounding junk food goes on. With more than 200 brands, including eight of the ten largest-selling snack brands in the U.S., Frito-Lay reigns supreme as the king of snackdom. It accounted for 66% of PepsiCo's 1999 earnings; meanwhile, the company has been acquiring like mad. In 1998 alone, Frito-Lay established partnerships with Savoy Brands, a Venezuelan rival which produces Cheese Trix and Pepitos, and several businesses from Britain's United Biscuits.

Money and the munchies

Since its humble 1932 beginnings, the Texas-based snack food giant has been making money off the munchies. Armed with a corn chip and a dream, Texan entrepreneur Elmer Doolin opened the first Fritos manufacturing plant in his mother's kitchen. Doolin fixed chips at night and sold them by day from his Model T Ford, with profits sometimes reaching as much as $2 a day. With the introduction of modern cooking and packaging equipment, and a strategic move to more urbane Dallas, Doolin saw the sales of his crunchy product take off. In short order, the Frito Company became the largest snack food company in the Southwest. By the time of Doolin's death in 1959, Frito corn chips were one of America's most popular foods.

Change in the air

Finalizing a long-term affiliation with H.W. Lay & Company, Frito merged with the potato chip goliath in 1961. In 1965 the company merged with the Pepsi-Cola Company to form PepsiCo, Inc., with Frito-Lay and Pepsi-Cola becoming separate operating divisions. The company was restructured into four regional business divisions in 1989 to be more responsive to local markets and created 22 Sales/Marketing areas in 1991 in an attempt to bring decision-making closer to the consumer. 1991 was also a year of anxiety, however, as Frito laid off 1,800 of its employees.

I'll take some Cracker Jacks

With the help of such successful products as SunChips, Wavy Lays, and Baked Tostitos, the company made a comeback. By 1996 it combined its separate domestic and international offices into a unified animal, the Frito-Lay Company. Growing more expansive by the day, Frito-Lay took centenarian company Cracker Jack from Borden Foods. In 1998 it increased its Latin American presence with a joint venture with Savoy. All told, Savoy added nine South and Central American countries to Frito-Lay's extensive tally.

Wow!

While Wow's 1998 sales may have fallen short of Frito-Lay's expectations, its massive launch brought in figures that overflowed new product sales charts by bringing in a Wow-inducing $347 million. Wow's main ingredient, olestra (a new fat substitute), has caused some uncomfortable side effects among its fat-free fiends. Frito-Lay representatives said that reported discomfort and cramping hasn't slowed down the rise of Wow's market share. However, sales of the Wow chips are now flat, 18 months after their release.

International players

Frito-Lay is a huge presence internationally, including an 81 percent market share in Mexico. It plans to more than double its sales in Latin America from $2.5 billion currently to $6 billion by 2004. To better serve its international customers, Frito-Lay split its international division into two entities -- Frito-Lay Europe/Middle East/Africa, and Frito-Lay Latin America/Asia Pacific/Australia.

Reports from the homefront

On the domestic side of things, Frito-Lay remains the rock of PepsiCo. It is now planning on entering markets it does not already dominate, such as dried fruit, crackers and nuts. Frito-Lay accounts for 70 percent of PepsiCo's profit and 60 percent of its revenues.

Here comes the SunChip

On Earth Day in 2008, which lands on April 22, Frito-Lay will modify one of its seven SunChip plants with solar power, to emphasize the company's "green" credentials. It's part of a wider campaign within Frito-Lay to trumpet its environmentally friendly credentials, with SunChips leading the way as arguably the firm's healthiest snack food. Besides embracing solar power, Frito-Lay has also bought renewable energy credits for its non-solar manufacturing facilities (which is advertised on SunChips packages), and altering its manufacturing processes, for instance using less power and water in the making of everyone's favorite chips. Here comes the sun, indeed.