Frito-Lay
Frito-Lay, Inc. (/ˈfriːtoʊ leɪ/) is an American subsidiary of PepsiCo that manufactures, markets, and sells corn chips, potato chips, and other snack foods. The primary snack food brands produced under the Frito-Lay name include Fritos corn chips, Cheetos cheese-flavored snacks, Doritos and Tostitos tortilla chips, Lay's and Ruffles potato chips, Rold Gold pretzels, and Walkers potato crisps (in the UK and Ireland). Each brand generated annual worldwide sales over $1 billion in 2009.[3]
For the chips the company is named for, see Fritos and Lay's.Company type
The Frito Company
H.W. Lay & Company
September 1961[1]
Merged with Pepsi-Cola Company to form PepsiCo, remaining as a subsidiary
Worldwide
Steven Williams (CEO)
Frito-Lay began in the early 1930s as two companies, "The Frito Company" and "H.W. Lay & Company", which merged in 1961 to form "Frito-Lay, Inc". In 1965, Frito-Lay, Inc. merged with the Pepsi-Cola Company, resulting in the formation of PepsiCo. Since then, Frito-Lay operates as a wholly owned subsidiary of PepsiCo. Through Frito-Lay, PepsiCo is the largest globally distributed snack food company, with sales of its products in 2009 comprising 40 percent of all "savory snacks" sold in the United States, and 30 percent of the non-U.S. market. In 2018, Frito-Lay North America accounted for 25 percent of PepsiCo's annual sales.
History[edit]
The Frito Company[edit]
In 1932, Kansas City, Kansas-born Charles Elmer Doolin, manager of the Highland Park Confectionery in San Antonio, Texas, purchased a corn chip recipe, a handheld potato ricer, and 19 retail accounts from a corn chip manufacturer for $100, which he borrowed from his mother. Doolin established a new corn chip business, The Frito Company, in his mother's kitchen. Doolin, with his mother and brother, produced the corn chips, now named Fritos, and had a production capacity of approximately 10 pounds per day and roughly 30 cents per product. Doolin distributed the Fritos in 5¢ bags. Daily sales totaled $8 to $10 and profits averaged about $2 per day.[4] In 1933 the production of Fritos increased from 10 pounds to nearly 100 pounds due to the development of a hammer press. By the end of the year, production lines were operating in Houston and Dallas. The Frito Company headquarters also moved to Dallas to capitalize on the city's central location and better availability of raw materials. In 1937 The Frito Company opened its research and development lab and introduced new products, including Fritos Peanut Butter Sandwiches and Fritos Peanuts, to supplement Fritos and Fritatos Potato chips, which had been introduced in 1935.[5]
In 1939, the company purchased Fluffs pork skins and incorporated the Dallas business. Frito relocated the operation from Haskell Avenue to a new facility at 2005 Wall Street. Alice Rupe, who was one of Fluffs' original six all-woman crew, was placed in charge of operations. In 1940, she was named assistant treasurer and manager; in 1949 she was promoted to treasurer.[6]
In 1941, the company opened its western division in Los Angeles with two sales routes, which would become the prototype for The Frito Company's distribution system. In 1945, The Frito Sales Company was established to separate sales from production activities. Expansion continued with the issue of six franchises through the Frito National Company in the same year. In 1950, Fritos were sold in all 48 states.[7] The Frito Company issued its first public stock in 1954. In 1958, Frito entered the Midwest potato chip market by acquiring the Nicolay Dancey Company, which made New Era potato chips.[8] At the time of Doolin's death in 1959, The Frito Company produced over 40 products, had plants in 18 cities, employed over 3,000 people, and had sales in 1958 in excess of $50 million. By 1962, Fritos were sold in 48 countries.[9]
H.W. Lay & Company[edit]
In 1931, Charlotte, North Carolina-born salesman Herman Lay (1909–1982) sold potato chips in the Southern United States out of his car. In 1932, he began a potato chip business in Nashville, Tennessee. Lay was hired as a salesman for the Barrett Food Products Company, an Atlanta, Georgia, manufacturer of Gardner's Potato Chips, and eventually took over Barrett's Nashville warehouse as a distributor. Lay hired his first salesman in 1934, and three years later had 25 employees and a larger manufacturing facility where he produced popcorn and peanut butter sandwich crackers.[10]
A representative of the Barrett Food Company contacted Lay in 1938, offering to sell Barrett's plants in Atlanta and Memphis to Lay for $60,000. Lay borrowed $30,000 from a bank and persuaded the Barrett Company to take the difference in preferred stock. Lay moved his headquarters to Atlanta and formed H.W. Lay & Company in 1939. He later purchased the Barrett manufacturing plant in Jacksonville, Florida, along with additional plants in Jackson, Mississippi; Louisville, Kentucky; and Greensboro, North Carolina. Lay retained the Gardner trademark of Barrett Food Products until 1944, when the product name was changed to Lay's Potato Chips.[11]
Lay expanded further in the 1950s, with the purchase of The Richmond Potato Chip Company and the Capitol Frito Corporation. By 1956, with more than 1,000 employees, plants in eight cities, and branches or warehouses in thirteen others, H.W. Lay & Company was the largest manufacturer of potato chips and snack foods in the United States.[12]
Merger forms Frito-Lay, Inc.[edit]
In 1945, The Frito Company granted H.W. Lay & Company an exclusive franchise to manufacture and distribute Fritos in the Southeast. The two companies worked toward national distribution and developed a close business affiliation. In September 1961, The Frito Company and H.W. Lay & Company merged to become Frito-Lay, Inc.,[13] combining their headquarters in Dallas, Texas. At this point, the company's annual revenues totaled $127 million, largely generated from sales of its four main brands at the time: Fritos, Lay's, Cheetos, and Ruffles.[14]
Division of PepsiCo, Inc.[edit]
In February 1965, the boards of directors for Frito-Lay, Inc. and Pepsi-Cola announced a plan for the merger of the two companies. On June 8, 1965, the merger of Frito-Lay and Pepsi-Cola Company was approved by shareholders of both companies, and a new company called PepsiCo, Inc. was formed. At the time of the merger, Frito-Lay owned 46 manufacturing plants nationwide and had more than 150 distribution centers across the United States.[15]
The merger was pursued for multiple factors, one of which was the potential for Frito-Lay snacks to be distributed outside of its initial markets of the United States and Canada—via Pepsi-Cola's existing presence and distribution network in 108 countries at the time of the merger. International distribution of Frito-Lay products expanded soon after the 1965 merger, and its U.S. presence grew at the same time, resulting in Lay's becoming the first potato chip brand to be sold nationwide (in all 50 U.S. states) in 1965.[16]
Also at this time, PepsiCo had envisioned marketing Frito-Lay snacks alongside Pepsi-Cola soft drinks. In an interview with Forbes in 1968, PepsiCo CEO Donald Kendall summarized this by noting that "Potato chips make you thirsty; Pepsi satisfies thirst." Plans to jointly promote the soft drink and snack products were thwarted later that year, when the Federal Trade Commission ruled against it.[11]
Controversies and health concerns[edit]
Stereotyping in 1960s commercials[edit]
In 1967, the company introduced a cartoon spokesman, the Frito Bandito, which became the subject of criticism from Mexican-American groups, who expressed concerns that it portrayed a Mexican stereotype. The Frito Bandito (voiced by Mel Blanc) wore a sombrero and bandoliers, had a handlebar moustache, and brandished pistols. Protests from advocacy groups such as The National Mexican-American Anti-Defamation Committee (NMAADC) prompted some initial concessions, such as the removal of the pistols and a thinning of the accent. The Frito Bandito was replaced in 1970 by The Muncha Bunch, and then again by a new cartoon called W.C. Fritos (based on W. C. Fields).[7]
Genetically modified ingredients[edit]
In the late 1990s, the use of genetically modified organisms (GMOs) was rising as a farming practice, as it made for the growth of larger (and thus less expensive to produce) corn crops. Frito-Lay, due in part to its leverage as one of the world's largest purchasers of corn, became the target of lobbying efforts from both proponents and opponents of GMOs. In late 1999, Frito-Lay asked its suppliers not to use genetically engineered corn. A similar announcement followed in early 2000, when the company asked its farmers not to grow genetically modified potatoes. Frito-Lay stated these requests were made in response to consumers' worries, and not in response to protests by the OCA, Greenpeace or other groups. A representative of Greenpeace expressed the perspective that this move was a positive step, stating, "Frito-Lay is about two-thirds of PepsiCo's sales. They realize the handwriting is on the wall and that people don't want to eat GMOs".
In 2012, the policy as stated by Pepsico was:
"Global Genetically-Modified Food And Ingredient Policy
PepsiCo is dedicated to producing the highest quality, greatest tasting food and beverage products in every part of the world. PepsiCo ensures all products meet or exceed stringent safety and quality standards and uses only ingredients that are safe and approved by applicable government and regulatory authorities.
Approval of genetically-modified foods differs from country to country regarding both use and labeling. For this reason, PepsiCo adheres to all relevant regulatory requirements regarding the use of genetically-modified food crops and food ingredients within the countries it operates.
Where legally approved, individual business units may choose to use or not use genetically-modified ingredients based on regional preferences."
Products[edit]
While the product catalog varies significantly by country, PepsiCo divides its snack products into two primary brand categories: those produced within North America, and those produced outside of North America.[45] In certain regions of the world, the company's snack food products are produced under regionally specific names such as Sabritas, Elma Chips and Walkers. The primary snack food brands and products produced under the Frito-Lay name include Fritos corn chips, Cheetos cheese-flavored snacks, Doritos and Tostitos tortilla chips, Lay's potato chips, Ruffles chips, and Walker's potato crisps (distributed in the UK and Ireland under the Walker's brand and in the rest of Europe under the Lay's brand)—each of which generated annual worldwide sales over $1 billion in 2009.[3] Frito-Lay also comprises multiple brands outside of the chip category, including Rold Gold pretzels, Cracker Jack popcorn snacks, and TrueNorth nut clusters and nut crisps.[46] In India, Frito-Lay uses its international brands as well as Uncle Chipps, a homegrown brand that it bought out in 2000.[47] Kurkure, an Indian snack developed and produced by PepsiCo India, announced on March 31 that it was now available in Canada, UAE, and the Gulf region as well.[48] Also, in Poland, there is a subsidiary brand called 'Star Chips' (a snack company). A Polish version of Lay's also exists in the country, based in Grodzisk Mazowiecki.
