Frito-Lay going after 'demand moments'
by Eric Schroeder
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PURCHASE, N.Y. — A “revamp” of the business during 2011 and 2012 contributed to “a terrific” 2013 at Frito-Lay North America, said Indra Nooyi, chairman and chief executive officer of parent PepsiCo, Inc.
While PepsiCo has sustained sluggish results in its other grain-based foods unit, Quaker Foods North America, no such problems exist at F.L.N.A. Organic revenue gains, productivity initiatives and lower commodity costs benefited the F.L.N.A. segment, which had an operating profit of $3,877 million in the fiscal year ended Dec. 28, 2013, up 6% from $3,646 million during fiscal 2012. The segment had revenue of $14,126 million, up 4% from $13,574 million.
Reflecting on how far the F.L.N.A. business has come in just a few years, Ms. Nooyi in a Feb. 13 conference call with analysts said PepsiCo looked at a number of factors, ranging from what was going on in the consumer landscape to how should the company think about product positioning to what competition to go after.
“This was a fundamental relook at everything we did at Frito-Lay,” she said. “We relooked at the cost synergies that really took root during that time. In 2012, we stepped up investment behind this whole model on demand spaces and insights that we’d worked on. We’re beginning to see the benefits of that in 2013. You’ll see more of that going into 2014, 2015 and 2016, because we have the entire macro snack space that we can go after with our strong salty snack base.
“That’s our plan, to selectively go after certain ‘demand moments’ with the salty snack base that we have.”
Ms. Nooyi said innovation also has played a role in the growth of the Frito-Lay business. Specifically, she mentioned strong response to Tostitos Cantina, Lays Do Us a Flavor, Cheetos Mix-Ups and new flavors of Doritos Jacked and Tostitos Artisan.