Lay's Potato Chips is PepsiCo's third-largest brand by sales, after Pepsi Cola and Mountain Dew, but the massive multinational still sees plenty of upside in the popular snack sector... and much of that upside resides in China.
According to Tim Minges, chairman of Pepsi China, potato chips are virtually unknown in China's vast, populous interior. Overall, Chinese consumers are chomping chips at just 1/15th the rate of American snackers and they down 1/7th the amount of carbonated drinks per capita. One might attempt to correlate these figures with obesity rates in both countries but maybe, just maybe, the evidence is circumstantial.
In any case, PepsiCo's challenge is to turn Middle Kingdom munchers on to Lay's Potato Chips. Trouble is, existing non-Chinese Lay's flavors like Cheddar & Sour Cream, Hidden Valley Ranch, and Dill Pickle are more likely to turn off potential customers who find the concept of cheese abhorrent and who wouldn't know a dill pickle if one walked up and bit 'em.
Maybe Lay's low sales in China stem from a “throw it against the wall and see if it sticks” approach.
Would anyone, Chinese or not, want to eat Blueberry Potato Chips? Lay's Hot & Sour Fish Soup flavor seems more on target and less off-putting. Clearly, PepsiCo needs to get their ducks in a row – Duck flavor potato chips, anyone?
CEO Indira K Nooyi lay'd, er, laid out the company's chip strategy while opening PepsiCo's sixth Chinese food factory earlier this week. The plant has the capacity to turn out up to 15,000 tons of potato chips annually and concurrent efforts are being made to prime the domestic market.
According to Nooyi, PepsiCo is planning to invest $2.5 billion in China with the funding spread out over the next three years. Included in the plans are a Shanghai-based food research center charged with developing snacks flavored to suit Chinese tastes. Lay's Braised Pork flavored potato chips may be the first such snack to hit Chinese store shelves... actually, that sounds good enough to sell just about anywhere! (via Want China Times and Gunaxin Grub)