Frito-Lay wants to help you eat your five a day

IDEA SPOTTING: Looks to shelve new fruit, veggie chips in the produce aisle

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Next time you swing by the produce aisle, be sure to pick up a bag of chips.

At least that's what Frito-Lay hopes you'll do with its line of baked, vitamin-fortified fruit and vegetable chips it intends to shelve alongside the apples and carrots. The snack giant that markets Lay's and Doritos plans to use symbolism like flying pigs to show that its Flat Earth "healthful" snack brand defies belief by not only tasting good-it's also worth paying more for.

Despite the departure earlier this year of its CEO and better-for-you snack champion Irene Rosenfeld, the $10 billion PepsiCo snack unit remains focused on building its more healthful portfolio under the leadership of Al Carey.

The initiatives are intended, of course, to improve Frito's image as critics rally against obesity-causing fatty foods like its mainstay potato and tortilla chips. It's also aimed at improving margins with more wholesome offerings that command price tags that more than recoup the company's cost to produce them.

At $2.99 for a single-serve bag, Flat Earth chips are expected to come in as many as six varieties including apple chips and veggie assortments. Unlike competitors, Frito will tout Flat Earth's nutritional benefits, such as 30% of the recommended daily amounts of vitamins A and C in some varieties. According to an executive close to Frito, the snacks will likely be sold in the produce aisle to capitalize on the halo effect.

But it may be a tough sell. Sales of fruit-and-vegetable snacks total less than $50 million in food, drug and mass outlets. The category is not particularly fast-growing for the niche brands that play there, including Hain Celestial Group's Terra, Snyder's of Hanover's Eatsmart, Seneca Snack Co.'s Seneca and Good Health Natural Foods' Veggie Stix. Sales of Eatsmart, for example, fell 2% to $13 million in those outlets for the 52 weeks ended Aug. 13, according to Information Resources Inc.

'not mainstream'

Consumption of these healthful chips "is not mainstream behavior yet by any stretch of the imagination," said Steve Gundrum, president-CEO of Foster City, Calif.-based food- and beverage- innovation firm Mattson. That said, he noted that every company is looking at how to get more fruits and vegetables into snacking behavior in a meaningful way although "finding that sweet spot where a snack is indulgent, consumers want to eat it and it offers better nutrition is going to be hard." It's not impossible, he said, but it's going to take time.

Keenly aware of that, Frito created the Flat Earth name and flying-pig logo as a whimsical way to communicate it's created a good-for-you snack that tastes "Impossibly good."

Due to the niche nature of the category, the company is eschewing TV advertising for the line's initial launch, using print ads from Omnicom Group's Goodby, Silverstein & Partners, San Francisco, as well as sampling to get the word out.

Healthful efforts have been a mixed bag for Frito. Despite the launch with much fanfare of its natural and organic line featuring some of the company's top mainstream brands in 2003, the line only garnered $25 million in sales for the 52-weeks ended Aug. 13, IRI figures show.

Baked versions of some signature brands, such as Lay's-the Baked line that has been most supported with marketing-show sales up double digits, while others, such as Baked Doritos, are way down. Its SunChips multigrain snacks have been a big success, growing 17% to $128 million in food, drug and mass outlets excluding Wal-Mart for the Aug. 13 period.

Despite awarding the account to Omnicom's GSD&M last year, Frito has not done any advertising for SunChips this year. But an executive close to the company said he expects some to break next year as production capacities are expanded to exceed demand.

Frito is also working quickly to reduce the fat in its Lay's and Ruffles products by 50% with the conversion by year end to a heart-healthful Sunflower oil, NuSun.
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