FRITO-LAY CAN'T PLAY DUMB WITH SMARTFOOD

How can a company be smart in some areas and so dumb in others? There are lots of examples to choose from but now I'm talking about Frito-Lay, the subsidiary of PepsiCo. Frito-Lay, for my money, has done a brilliant job making ads for such items as Rold Gold pretzels and Tostitos chips. But as we documented last week the same company has failed to capitalize on its acquisition of leading ready-to-eat popcorn brand Smartfood. How stupid. Somehow, the reasons for buying an agile, up-and-coming company get forgotten when it's acquired by a giant corporation. Seagram's practically wrecked SoHo beverages, and Frito-Lay is about to fritter away its advantage with Smartfood. Indeed, the reason for buying Smartfood has changed. As we noted, current management-including Frito-Lay Chairman Roger Enrico, the man most responsible for the company's powerful advertising-is concentrating on its core brands instead of brands like Smartfood. So now Frito-Lay has the leading ready-to-eat popcorn brand on its hands, with sales of a paltry $40 million a year. The company doesn't start to get interested in a product unless it can gain sales of $100 million. Smartfood is stuck in a dozen key markets and going nowhere fast. There has to be a place for little product jewels in big company environments. Surely Frito-Lay's major brands like Doritos, Tostitos and Ruffles could benefit in selected markets from the guerrilla marketing techniques used by Smartfood. What better way to blunt a new product assault by a wily competitor, or mess up its test markets than by fielding, say, a Fritos ski demo team on the New England slopes dressed in Frito bag costumes the way Smartfood did before it was acquired? But I guess it's hard to stay focused on small-fry brands when you've got megabrands to worry about. And, to give the devil his due, Roger Enrico has done a terrific job of re-energizing Frito-Lay's meat-and-potatoes lineup. He's done it, I understand, by taking the responsibility of advertising away from brand managers and placing it squarely on the shoulders of senior management, where it belongs. The Rold Gold spot starring Jason Alexander as the former high school nerd who outdoes the jock and wins the girl is the best commercial on TV. "Let's see what you can do, pretzel man" goes into my Hall of Fame for great ad lines right beside "Where's the beef?" The one for Tostitos in the IRS office is about as good. The guy claims deductions for entertainment expenses, but he doesn't have receipts. The IRS agent asks him what's in his bag and the guy pulls out a bag of Tostitos. The whole office goes up for grabs as the place turns into a big party. "I smell refund," the IRS agent says. "Really?" says the guy. "No," says the agent. My question is, why can't a savvy marketing company like Frito-Lay find room in its bag of tricks for both great advertising for big brands and off-beat tactical maneuvers for niche players? Brand equity is a terrible thing to waste, and Frito-Lay is too smart to be so dumb.

FRITO-LAY CAN'T PLAY DUMB WITH SMARTFOOD

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