PepsiCo has a “huge runway” to grow its multi-billion-dollar snacking empire, despite owning a portfolio that includes decades-old favourites such as Doritos, Fritos, and Cheetos among its best-selling offerings.
PepsiCo continues to “experiment and think about different” ingredients, packaging formats, flavours, and unique combinations—such as the merging of salty and sweet—to strengthen its already dominant presence in the snacking category.
PepsiCo’s snacking business is composed mostly of Frito-Lay and Quaker Oats, which together generated a little over a quarter of the CPG’s $79 billion in global sales.
The giant food and beverage company has also done an effective job of taking a global brand and localizing it to make it relevant in many different markets while simultaneously investing in smaller, emerging brands that cater to fast-growing trends like healthier snacks.
The snack portfolio and the investments PepsiCo has made to drive growth within snacks are key reasons why the company is a top-tier growth story within consumer staples.
A key part of PepsiCo Foods’ strategy to boost the reach of its snacking offerings came in response to the pandemic. The company created its growth office in late 2020.
The operation, which Raval oversees, was put in place to increase the efficiency of product development by bringing together different divisions throughout the company—from marketing and the supply chain formation and sales.
PepsiCo Foods has observed that not only are more consumers turning to snacks in place of meals, but when they choose to eat, different options are changing, too. For example, Doritos chips are no longer only eaten around lunch, and Quaker granola bars are not seen as just for breakfast. It’s caused the company to be more thoughtful in how it goes about commercializing its brands.
Frito-Lay debuted Minis, bite-sized and portable versions of its classic Doritos, Cheetos, and Sun Chips, last November. These increased the portability and stability of the chips by packaging them in canisters. And a few months earlier, it rolled out a line called Tostitos Toppers. These bottles of sauces and dressings for meals brought the snack brand deeper into another eating occasion.
The company has responded by introducing items such as its Frito-Lay Family Time Mix, which includes Doritos, Munchies Crackers, Chewy Granola Bars, and Cap’n Crunch’s Oops! and all Mega Berries cereal snack pouches.
The company has also doubled down on where shoppers can buy its products.
In 2020, PepsiCo Foods launched two direct-to-consumer websites from which shoppers can order an assortment of products. One of them, Snacks.com, enables consumers to buy more than 100 of their favourite Frito-Lay products, including Lay’s, Tostitos, Cheetos, and Ruffles, as well as dips, crackers, and nuts.
Snacks.com not only provides Frito-Lay and Quaker with another way to reach consumers, but also creates an outlet to sell harder-to-find brands or flavour extensions not carried on store shelves.The platform also offers a valuable way for Frito-Lay and Quaker to observe consumer shopping behaviour, such as how people assemble a basket of different snacks or what they are looking for in a specific product. Executives overseeing the brands have observed from Snacks.com and retailer data that shoppers regularly gravitate towards products that are regionally focused or harder to find on store shelves.