They also detailed closer coordination between PepsiCo's drinks business and its Frito-Lay salty snacks business, including a marketing campaign this summer using digital media and outdoor billboards.
There will also be some borrowing of brand names. For instance, PepsiCo plans to introduce Ruffles Max potato chips this year that will be sold alongside its successful zero-calorie Pepsi Max soda.
The plans should translate to low-single-digit volume growth and mid-single-digit revenue growth in Frito-Lay North America this year, Tom Greco, president of that division, said at the Consumer Analyst Group of New York conference in Boca Raton.
PepsiCo's snacking business is the largest in a segment that the company estimates generates $400 million a year globally. However, plenty of companies are nipping at its heels to try to capture on strong growth taking place in the category.
Last week, Kellogg Co. offered to buy the Pringles from Procter & Gamble Co. for $2.7 billion, with plans to use the chips brand to grow its snack business globally. Companies like ConAgra Foods Inc. and Campbell Soup Co. are also trying to grow their respective snacks businesses.
In North America, most of Frito-Lay's business is in the mainstream segment that includes its marquee brands, but the category is seeing more growth in both lower-priced and premium snacks. PepsiCo lost share in the value segment last year and will try to grow across the playing field this year.
"We're maniacally focused about gaining share in all of these segments in 2012," Greco said.
On the low end, PepsiCo plans to introduce a value popcorn under its Cracker Jack brand and a low-priced tortilla chip called Taqueros Del Sur. It will also go hard after the Pringles business with its Lays Stax brand, which, like Pringles, is sold in a can.
PepsiCo executives outlined the strategy for snacks a few weeks after unveiling plans to cut costs through layoffs and other initiatives so that it could increase its marketing budget by up to $600 million, primarily in North America and behind a dozen key brands.
Some analysts had suggested that PepsiCo split up into a drinks business and a snacks unit, since growth in the beverage division has been lagging. However, PepsiCo plans to remain together and will continue to promote strong ties between the divisions.
PepsiCo plans to include products from both sides in marketing materials so that consumers think about the company's snacks and drinks together throughout the year rather than only for special events, like the Super Bowl, said John Compton, chief executive of PepsiCo Americas foods and global snacks.
PepsiCo executives said it has been able to raise prices on Frito-Lay products in North America enough to offset higher costs but has not done so in its soda business.
From the February 27, 2012, Prepared Foods' Daily News.