When Ken Meyers sold his company to Frito-Lay in 1989 for about $14 million, Smartfood white cheddar cheese popcorn was arguably the hottest snack in America.
The premium-price, ready-to-eat popcorn took New England by storm. The tasty, all-natural snack went from $500,000 in sales during its first year on the market in 1985 to about $18 million in 1988. Itspawned numerous imitators.
Why wouldn't Frito-Lay, the nation's mammoth snack marketer, go after such a gem to add a proven regional brand to its lineup of Doritos and Tostitos tortilla chips, Lay's and Ruffles potato chips and Fritos corn chips?
After all, PepsiCo's snack unit could provide a national distribution system second to none and plenty of marketing advice-although the brand was doing quite well with Mr. Meyers' inventive guerrilla marketing techniques including the Smartfood Ski Demo team that took to the New England slopes in Smartfood bag costumes.
Buying Smartfoods Inc. (the company is Smartfoods, the brand, Smartfood) seemed like a smart move.
But a planned national rollout fizzled. Mr. Meyers, Smartfoods co-founder who remained president of the company when it became a wholly owned Frito-Lay subsidiary, resigned in 1991 to form his own marketing company.
The brand has no ad support, is difficult to find and yet remains the top-selling, ready-to-eat popcorn. What happened?
"Large companies usually are not good at managing small things," said Manny Goldman, analyst at PaineWebber, San Francisco. "Smartfood is not a big thing unless it could become a $100 million brand. Small things tend to get lost."
The irony is that despite little effort by Frito-Lay, Smartfood's sales this year will approach $40 million-just by putting the product on store shelves in about a dozen key markets. More amazingly, Smartfood is the No. 1 ready-to-eat popcorn in the estimated $134 million category, admittedly a declining category (down from $270 million in 1988) that has lost its pop with consumers and apparently Frito-Lay.
"Ready-to-eat popcorn is a small category and the premium segment is even smaller," said a Frito-Lay spokeswoman. "We've more than doubled the Smartfood business since our acquisition in 1989 but clearly our growth opportunities are directed toward potato chips, tortilla chips and pretzels. That's not to say we haven't done well with Smartfood but the category hasn't exploded. It was still a good acquisition."
Others, including Mr. Meyers, acknowledge Frito-Lay's brand focus has changed since the late 1980s under former Chairman Michael Jordan. Succeeding regimes, including PepsiCo veteran Roger Enrico, steered the company back to a core-brand focus and away from niche brands and risky new products.
Perhaps most of all, Smartfood's former success hinged on a marketing approach simply too foreign to Frito-Lay.
By financial necessity in Smartfood's early days, Mr. Meyers took the brand to the streets and invited people to try it. Annual marketing spending was a tiny $250,000.
"Our strategy historically is a little bit left of center," he told Advertising Age in 1990. "Our notion of guerrilla marketing takes our product, our message, our show to the streets to get to the consumer face to face, and surprise them pleasantly, we hope. We make some bold promises and then deliver immediately by handing them a sample. The promise is that we are something different and great and you will love it."
Though Frito-Lay typically takes a more traditional marketing approach, management agreed Mr. Meyers could try to transfer his game plan to a national rollout.
It was a marketing mismatch.
Labor-intensive and costly, in-your-face marketing was tough to execute nationally; and broadcast and print ads didn't work the same kind of relationship-building magic that made Smartfood consumers part of a very with-it cult.
"Everything Ken does is the antithesis of what Frito-Lay stands for," said an executive in 1990 when he worked on the account at Smartfood's former agency Mullen, Wenham, Mass.
Under new management, Frito-Lay decided to establish a Smartfood brand group at its Plano, Texas, headquarters rather than leave the group in Marlboro, Mass. Not surprisingly, the Frito-Lay culture clashed with Smartfood thinking.
Mr. Meyers remained involved in the attempted national rollout in 1990. Plans called for a $10 million introductory campaign, developed by Mullen, that would put the brand on the map. Levine, Huntley, Schmidt & Beaver, New York, took the account after Mullen resigned citing a client conflict.
After some creative differences of opinion between Mr. Meyers and Frito-Lay management, a national radio spot that parodied a samurai warrior produced outrage rather than sales. The spot was pulled and the campaign never fully recovered.
In markets where guerrilla tactics were deployed, the brand did very well and sales were said to have hit $60 million by the end of 1990, but later fell sharply.
In spring 1991, Mr. Meyers resigned citing philosophical differences and Smartfood was left to Frito-Lay's mainstream marketing management. Without an advocate, the brand was overshadowed by the emerging Sunchips brand, the rebirth of Rold Gold pretzels and a renewed focus on megabrands.
"The objectives didn't line up with the way I felt the brand worked best," recalled Mr. Meyers, now president of Silverback Creative, a Wellesley, Mass.-based marketing company. "They turned away from the true brand essence, things changed and the brand began to slide. They tried to mainstream it more than it was meant to be and the brand's equity was diluted. It was that equity that was driving loyalty and sales."
But Frito-Lay isn't giving up on Smartfood; it's just letting it ride. The brand has no ad agency of record but does retain DDB Needham Promotions, Dallas.
"You have to look at Frito-Lay and the priorities that drive our business," said the company spokeswoman. "That's where it comes down to. That's not to say we're taking our eye off ready-to-eat popcorn. As we look ahead, there will be greater support in the future."
She said it could even be next year.
Who knows-maybe Mr. Meyers would be available for a consultation.