Word: frito
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Another casualty was Borden, the one-time dairy king, which believed it could develop a highly profitable position as the No. 2 player by assembling a group of regional snack-food companies. Not only did Frito-Lay beat Borden until the cows went home, but the damage was so severe that Borden, once a $5.6 billion independent company, nearly imploded, and was eventually bought by Kohlberg Kravis Roberts. Borden, having sold all its snack units except for its Wise Foods and Moore's Quality lines, now has a market share of 5%, down from a high...
Dozens of independent regional snack companies have folded in recent years. "Frito-Lay makes no bones about it," says Spencer Hill, vice president of sales and marketing of Clover Club Foods, a $60 million manufacturer of salty snacks in Kaysville, Utah. "They want to be the only salted-snack company in the country." Another food-company executive says Frito-Lay fields marketing "warlords" assigned to ride herd on regional companies. "They are the best-run company in the food business," this executive says, without rancor. "They are terrific at what they are doing--and we don't want anything...
...Justice Department got interested in Frito-Lay while monitoring the firm's acquisition of the Eagle Snacks factories. The department cleared the Eagle deal in April, but its inquiry raised concerns that spurred the new investigation. Nonetheless, Sean Orr, senior vice president and chief financial officer of Frito-Lay, told Time last week that the company had learned of the probe only through news reports. "We have a very strong market position, and they have a right to investigate us or anybody like us anytime they want," Orr said. "We'll be as cooperative...
...Fortress Frito-Lay began to assume its present state in 1991 when Roger Enrico, now CEO of parent PepsiCo, was put in charge of the division. The company's market share had fallen to 38% from 42%, but profits were solid because Frito-Lay kept raising prices. Raising prices while losing share is a recipe for disaster in an era in which value is a driving force in consumer behavior. Worse, when Frito-Lay compared its snacks with those made by Eagle, it concluded that its rival's were better...
...Frito-Lay is now a virtually unassailable stronghold that provided a more than bite-size 31% of PepsiCo's $3.5 billion in operating profits last year. Frito-Lay's 1995 profits hit $1.13 billion, up from $617 million in 1991. The company has added some 9,000 jobs since it reorganized, bringing its payroll to 35,000. Sales have been rising 10% to 11% a year, while other big food companies, such as Campbell Soup and Nabisco, have eked out gains of no more than...