Frito-Lay's Australian buy could free up $12m business

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SYDNEY -- Around $12 million in advertising business here is likely to be reviewed, following the announce- ment that PepsiCo subsidiary Frito-Lay is to spend $440 million to purchase some of British-based United Biscuits salty snacks businesses, including Australia's Smith's Snackfood Company, which holds 60% of the local market segment, and The Original Pretzel Co.

Frito-Lay will also be forced by the Australian Competition and Consumer Commission to sell off several brands after the sale, to meet anti-competition requirements. The ACCC will be investi- gating the position over the next fortnight, says spokeswoman Lyn Enright.

Arnotts Biscuits, a fully-owned subsidiary of U.S. Campbell's Soups, would be the most likely new player after shelling out $20 million last year to make an entry to the salty snacks market by buying the Kettle Chip brand.

An agency review would involve some of Australia's best known snack brands, such as Twisties, Nobby's Nuts, CCs, Thins, Ruffles, Doritos and Cheetos.

Smith's is handled by George Patterson Bates, Sydney, while Young & Rubicam, Sydney works on Frito-Lay, with media booking by Clemenger BBDO, Sydney. In a possible conflict, George Patterson Bates also handles Arnotts.

Frito-Lay spokesman Todd MacKenzie says it is too early to comment on brand or advertising arrangements. "Smith's have been a very tough compe- titor, and we've build a number two position," he says.

"Australia ranks about fourth in the world in terms of per capita consumption of salty is a significant market for us. United Biscuits' decision [to sell] gives us an opportunity to come in and get a scale business which gives us the opportunity to drive category growth."

Copyright November 1997, Crain Communications Inc.

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