As fat fight rages, Frito battles back

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As public outcry grows over epidemic obesity and the role fast food and fatty snacks play, Frito-Lay is going on the offensive with a barrage of new, lower-fat products endorsed by the father of aerobics and backed by a substantial advertising and promotional blitz.

The move comes as the food industry faces a mounting backlash over the often high-calorie, high-fat content of their products. Fast-feeders McDonald's, Burger King, KFC and Wendy's are accused in a recent lawsuit of contributing to the plaintiff's obesity and ensuing health problems. A media frenzy was sparked by the debate, and just last week the Los Angeles school board voted to ban soft-drink sales in schools.

"There is concern among those in the food industry and we're all watching very carefully the outcome of the suits and the public discourse on obesity," said Gene Grabowski, a spokesman for the Grocery Manufacturers of America, who said public attention to the issue means "companies are more actively marketing and advertising their [health-oriented] programs." Among them: Subway, Coca-Cola Co. and Gerber Foods (see story below.)

Frito Chief Marketing Officer John Compton denies implications that its products contribute to the problem, and instead points to the growing awareness of active healthier lifestyles as the reasoning behind Frito's renewed effort toward "better-for-you" snacks. While a fraction of Frito's more than $5 billion in sales come from what Mr. Compton calls Frito's "more sensible products," including Baked Lay's, Rold Gold pretzels and Sun Chips, they are the fastest growing in its portfolio, accounting for more than 30% of sales growth so far in 2002

full pipeline

Undeterred by disappointing sales of its olestra-based Wow! chips, (AA, April 1), Frito's pipeline is full of healthier products. Its ad budget for better-for-you brands via Omnicom Group's BBDO Worldwide, New York, (virtually non-existent since the drop-off in interest for the segment in recent years) will grow substantially to reflect that. In addition to this year's launch of Baked Doritos (a replacement of Baked Tostitos) and Rold Gold Braided Twists, Frito-Lay is four months into a two-market test of a line of natural and organic products under its existing trademarks, among them Tostitos Organic and Lay's Natural. In October, Frito plans to launch a Reduced Fat Lay's line that decreases the total fat in the product by 25% and the saturated fat by two-thirds. And that's just the beginning.

Dr. Kenneth Cooper, founder of the Cooper Aerobic Institute, is consulting with PepsiCo's divisions on how to promote the nutritional aspects of existing products and develop healthy new ones. In the initial months of the partnership (which includes Pepsi's $140,000 annual sponsorship of Dr. Cooper's "Healthy Living" syndicated radio show as well as a hefty weekly consultation fee), Dr. Cooper has analyzed a variety of its products, separating them into three classifications he hopes will be used widely for package goods and fast foods (see Fast Facts at right ).

That process has resulted in a plan for early next year to carry Dr. Cooper's seal of approval and his popular health quips such as "Your health is not so much the government's responsibility or your physician's responsibility as your responsibility" on packaging for roughly 18 Frito-Lay products that meet Class 1 requirements. Merchandising displays will house the products together and offer an umbrella theme, yet-to-be finalized but something akin to, "Smart choice, great taste, good snack." Frito-Lay is even eyeing "minor tweaks" in the oils it uses and the levels of sodium in its products to gain Dr. Cooper's endorsement on other products, alterations that Mr. Compton said may or may not be advertised, depending on how consumers respond to such messages in ad testing.

Frito, however, faces a potential problem in its attempt to use better-for-you to rocket it out of the mature snack category it dominates with roughly a 65% share, according to Deutsche Bank analyst Mark Greenberg. "The messaging behind Frito, and why they're incredibly successful is because they make products that are fun and that taste good," he said. "This notion that an aging demographic concerned more about healthier lifestyles is going to fundamentally shift the way they consume ... I don't buy it."

But Mr. Compton said Frito is "in the pioneer seat" with developers of healthy oils that would allow for ingredient modification without sacrificing taste. One possibility could be the use of McNeil's cholesterol-lowering Benecol margarine, which is being tested for use in a biscotti product made with Quaker oats and Tropicana orange juice, according to Dr. Cooper.

Matt Patsky, managing director at Adams Harkness & Hill, sees great potential for Frito's initiative. "Frito-Lay is trying to narrow the gap between the taste of those things that are better for you and those that are clearly not, and if they do that well enough, consumers will switch."

Fast Facts

Class 1 products: Have fewer than 150 calories, fewer than three grams of fat per serving; fewer than 1 gram of saturated fat; fewer than 250 grams of sodium. Dr. Cooper will currently endorse them.

Class 2 products: No standard definition; Dr. Cooper will endorse pending modification.

Class 3 products: No standard definition; "Fun foods" expected to be used in moderation.

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