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PepsiCo says it will boost advertising and marketing of its North American snack business this year by 35%, and invest in the rapidly growing value category, with products such as Cracker Jack line extensions, say executives. The company also says it pledged to double down on its "Power of One" effort to market snacks and beverages together, a strategy analysts have disliked earlier.
PepsiCo has focused heavily on its snacks business after rolling out plans to revive its beverage division. PepsiCo also says it will increase company-wide marketing by up to $600 million in 2012, focusing on a dozen key brands.
While its beverage business trails behind Coca-Cola, the company's snacks business is thriving by most accounts. Lines such as Lay's, Doritos and Cheetos, help dominate the global savory-snacks category. In 2010, PepsiCo had sales of $29.9 billion, far ahead of Kraft at $5.3 billion. PepsiCo's snack revenue grew 9% and volume was up 4% last year, the company reported. Snacks most likely will overtake its beverages by 2016, growing to 52% of overall revenue from 48%, the company reports.
Frito-Lay will also make moves in the premium- and value-snacking segments. Says Tom Greco, president of Frito-Lay North America, "There's rapid growth in both the premium and value segments within macro snacks."