Word: fritos
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Dates: during 1990-1999
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Certainly, over the past six years, Frito-Lay has beaten the daylights out of big companies and small through a combination of restructuring, new products and lower prices. "That's exactly what a competitor is supposed to do, get more efficient and gain market share; and that's what they did," says August Busch III, president and chairman of Anheuser-Busch Cos. Busch should know, having lost somewhere north of $500 million trying to make Anheuser's Eagle Snacks division a power chip. In February, Eagle gave up; it recently sold four plants to Frito-Lay. A-B launched Eagle...
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...