by Michael Moss
When Riskey called up a new set of the company’s sales data and parsed it with the cohort technique, a new, far more encouraging picture emerged. The baby boomers, in fact, were not eating fewer salty snacks as they aged. Quite the contrary. “In fact, as those people aged, their consumption of all those segments—the cookies, the crackers, the candy, the chips—was going up!” Riskey said. “They were not only eating what they ate when they were younger, they were eating more of it. And that was what was causing the big success for all the snack food companies all those years.”
To be sure, the baby boomers couldn’t hold their own against twenty-year-olds, who wolfed down more salty snacks than the boomers could even dream of consuming. But the good news for Frito-Lay was that baby boomers were eating more at age thirty than they had at twenty—and they weren’t alone. Everyone in the country, on average, was eating more salty snacks than they used to. When Riskey ran the numbers, he found that the rate of consumption was edging up about one-third of a pound every year, with the average intake of snacks such as chips and cheese crackers pushing past twelve pounds a year.
Riskey had a theory about what had caused this surge in snack eating by the boomers. Eating real meals had become a thing of the past. Baby boomers, especially, seemed to have abandoned the traditional concept of breakfast, lunch, and dinner—or, at least, they were not conducting these rituals as regularly as they once had. They began skipping breakfast when they had early morning meetings. They skipped lunch when their day was lost to those same meetings, and they needed to catch up on work. They skipped dinner when their kids stayed out late for baseball practice or grew up and moved out of the house. The boomers weren’t going hungry through all this. When they skipped these meals, they replaced them with convenient snacks—pulled from cupboards, convenience stores, or the office vending machine. “We looked at this behavior, and said, ‘Oh my gosh, people were skipping meals right and left,’ ” Riskey told me. “It was amazing.” This led to the next realization, that the baby boomers “was not a category that is mature, with no growth. This is a category that has huge growth potential. So we started working hard to realize that growth.”
To Riskey and the other marketing executives at Frito-Lay, this put the Topples and Stuffers in a new light. They didn’t fail because aging Americans were growing less fond of snacks likes these. Nor did they fail because people were growing more leery about salt. They failed because Frito-Lay had gotten a bit lax in how hard it had marketed them, which was easy enough to fix.
Thus began the final phase of Frito-Lay’s history, when all hands were called to duty and all the stops were pulled out in creating and marketing salty snacks for Americans of all ages. And it didn’t hurt that Frito-Lay’s owner, PepsiCo, was already battle-tested from its war with Coke.
PepsiCo was a marketing machine. A year after acquiring Frito-Lay in 1965, it had moved its headquarters from Park Avenue in midtown Manhattan to a sprawling campus in Purchase, New York, but no one at PepsiCo got sleepy in the suburbs. They prided themselves on being the aggressor in soft drinks, finding ways to embarrass and outmaneuver the Goliath, Coca-Cola, wherever they could. Dwight Riskey’s revelation about baby boomers setting records for consumption came just as Pepsi—which also now owned Kentucky Fried Chicken, Pizza Hut, and Taco Bell—topped $1 billion for the first time in 1990. That same year, PepsiCo put a symbol of its mission—and our growing appetite—on the front of its glossy annual report. The entire cover was taken up by the portrait of a humongous sumo wrestler, in the ready position with his game face on.
A year later, in 1991, PepsiCo installed one of its most prized corporate warriors, Roger Enrico, into the top spot at Frito-Lay. The son of an iron-ore smelting plant foreman, Enrico would go on to run all of PepsiCo from 1996 to 2001 and come to rival Coke’s fabled chairman, Robert Woodruff, as a mastermind of marketing. But when he arrived at Frito-Lay, he was already a star of the soft drink division. It was Enrico who convinced Michael Jackson in 1984 to turn his hit song “Thriller” into a commercial for Pepsi’s “New Generation” campaign, and it was Enrico who sunk New Coke a year later with the brilliant counteroffensive that touted Coke’s reformulation as a victory for Pepsi.†
As the CEO of Frito-Lay, Enrico would deploy the marketing strategy known as “up and down the street,” using Pepsi’s delivery crews to maximize sales in convenience stores where America’s kids were forming their snack food habits. The crews began delivering Frito-Lay’s brands along with the company’s soda, and Enrico galvanized his snack food managers with exhortations to dominate the convenience stores. Dwight Riskey recalled one speech that Enrico delivered to company executives in Orlando in which he groused that the beer company, Anheuser-Busch, was stealing some of Frito-Lay’s turf in potato chips with its Eagle Snacks brand.
“They had very high quality, and they were getting very good shelf space,” Riskey said. At Enrico’s urging, Frito-Lay scrambled to improve the crunch and the taste of its chips and lower its prices enough to spur increased sales. “I think we gained three share points a year for eight years in a row after that,” Riskey said. “It was an amazing thing to watch the company respond to the challenge that Enrico laid out. The guy was a business genius.”
The food technicians at Frito-Lay also stopped worrying about inventing new products like Topples, and instead embraced the industry’s most basic—and reliable—method for getting consumers to buy more food: the line extension. They took their existing snacks and spun them into endless varieties. The classic Lay’s were joined by Salt & Vinegar, Salt & Pepper, and Cheddar & Sour Cream. They put out Frito’s in Barbecue and Chili Cheese varieties, and Cheetos—which had nearly twice as much salt as potato chips—were transformed into twenty-one varieties.
These were no run-of-the-mill extensions. The science corps at Frito-Lay prided itself on quality invention, putting their all into the taste, crunch, mouthfeel, aroma, and overall appeal of each of these items. The ingredients they used weren’t extraordinary: fat and salt, along with sugar in some of the brands like Cheetos, as well starch from potatoes or corn and sundry spices. The magic comes in the weaving, and to get a better feel for this, I called on Steven Witherly, the food scientist who had worked on cheese sauces for Nestlé. Witherly has written a deeply fascinating guide for food industry insiders entitled “Why Humans Like Junk Food,” and I brought him two shopping bags filled with a variety of chips to taste. He zeroed right in on the Cheetos.
“This … is one of the most marvelously constructed foods on the planet, in terms of pure pleasure,” he said, ticking off a dozen attributes of the Cheetos that make the brain say more. A key one is the puff’s uncanny ability to melt in the mouth like chocolate. “It’s called vanishing caloric density,” Witherly said. “If something melts down quickly, your brain thinks that there’s no calories in it, and like popcorn, you can just keep eating it forever.” The only thing more spectacular than Cheetos, he said, was another Frito-Lay creation—the Doritos 3D, a puffy, spherical version of the flat chip: “The added dimension increases the surprise factor when you take a bite,” he said. And surprise is a very good thing for increasing consumption.
Even without Robert Lin, Frito-Lay had a formidable research complex near Dallas where nearly five hundred chemists, psychologists, and technicians conducted research that cost up to $30 million a year. Their tools included a $40,000 device that simulated a chewing mouth to test and perfect the chips, discovering things like the perfect break point: People like a chip that snaps with about four pounds of pressure per square inch, no more or less. While they worked to hone the product formulas, the company’s sales force of ten thousand revolutionized the food industry’s supply system by carrying handheld computers that tracked shortfalls and ensured that the bags on the store shelves were always fresh.
To be sure, with stories beginning to appear in newspapers about America’s growing waistline, Frito-Lay did not neglect the concern that consumers developed for their
nutritional health. As early as 1988, the company began test marketing low-fat chips aimed at nutrition-conscious consumers. “If we can do for our category what light beer did for beer, it would be a tremendous growth opportunity,” a company vice president said at the time. The low-fat chips performed poorly, but another creation, Sun Chips—made with whole grains and less saturated fat and salt—proved to be a huge success among people wanting to eat better.
Overall, the company’s usage of salt appeared to be following the industry trend: Levels dipped through much of the 1980s and 1990s, but only slightly. When Robert Lin analyzed Frito-Lay’s snacks in 1981, he found that they averaged 180 milligrams of sodium per ounce, with potato chips ranging up to 240 milligrams. Three decades later, the basic Lay’s potato chip clocked in at 170 milligrams, but it had been joined by flavored chips and other snacks whose sodium reached much higher: Salt & Vinegar chips, 230; Xxtra Flamin’ Hot Cheetos, 300; 2nd Degree Burn Fiery Buffalo Doritos, 380. At that level, every handful of the Doritos had one-quarter of the daily maximum limit for the 143 million Americans who faced the highest risks from excessive sodium.
In response to my questions about its salt reduction, Frito-Lay said that it was taking its responsibility seriously. A company spokeswoman said that the initiatives showing the greatest promise included something Robert Lin had been looking at thirty years before: using a finer grade of salt to minimize the amount of salt needed while maximizing the rush. In March 2010, PepsiCo announced that it was launching a program to slash the salt in its products by an average of 25 percent, which was coupled with plans to promote less sugary drinks. This was the same move that had sparked cheers at Coca-Cola, according to Jeffrey Dunn, the former Coke president. He described for me how his current friends at Coke viewed their counterparts at PepsiCo as having a momentary lapse of sanity, which Coca-Cola planned to take advantage of by doubling down on their own efforts to market Coke.
When it came to snacks, however, Frito-Lay’s executives took pains to assure Wall Street that they had not lost their minds. In private meetings, out of earshot of nagging consumer advocates, the company’s leaders described detail after detail of the latest marketing operations they were launching to make their snacks an even bigger part of every American’s life. Frito-Lay’s efforts to tout these campaigns reached a crescendo in March 2010, when PepsiCo hosted a two-day meeting with analysts from Goldman Sachs, Deutsche Bank, and other investor powerhouses. The company brought the Wall Street executives to the Legends Room of Yankee Stadium, where they were greeted by one of Pepsi’s newest frontmen: Derek Jeter. “We Yankees love to win, and PepsiCo is a winning company,” the shortstop said, and the Pepsi and Frito-Lay executives took over from there.
Doritos, an executive vice president for global sales and marketing told the attendees, had already been turned into the biggest selling corn chip in the world “through a relentless focus on teens.” But the company wasn’t resting on their laurels. Every product and every segment of the population was being pursued as only Frito-Lay knew how.
Another fat target was the millennials, or Generation Y, born in the 1980s and 1990s and numbering 65 million Americans. The challenge with them lay in their widespread underemployment, Frito-Lay said, which increased the competition for their limited funds. “A dollar can also buy a double cheeseburger or a favorite song from iTunes,” the chief marketing officer, Ann Mukherjee, noted. “So we need to think about it differently on Doritos, and we call it the ‘And Effect,’ which is how do we deliver more than just an intense snack?” Thus, the strategy for millennials became “snackable entertainment.” The company’s chips would be promoted through sporting events like the Super Bowl and games like the Xbox. Already, these efforts had brought double-digit gains in sales.
In another maneuver aimed at the millennial, Frito-Lay had its technicians come up with ways better to compete with the fast food chains, and their first efforts looked like pure magic. They had created a series of compounds they called Flavor Plus, which mimicked not only the taste of fast food but the smell as well. Just that year, Frito-Lay had released a line of tortilla chips called Late Night (230 milligrams of sodium and 150 calories per ounce) in as many of the fast food flavors and aromas the company’s food scientists could come up with: cheeseburgers, tacos, jalapeño poppers. All together, the impulsive, late-hour snacking inspired by these chips pushed sales to $50 million in year one.
The boomers weren’t being neglected, the Frito-Lay executives hastened to say. At 180 million people in the United States and 1.4 billion worldwide, they remained the fattest target of all. And with them in mind, Frito-Lay had acquired Stacy’s Pita Chip Company in 2006, a $60-million-a-year business that had been started by a Massachusetts couple who made food cart sandwiches and started serving pita chips to their customers waiting in line. In Frito-Lay’s hands, the pita chips (310 milligrams sodium and 130 calories per ounce, in twelve varieties) were pure gold, Mukherjee explained. They were irresistible to boomers.
“As I mentioned before, they snack a lot,” she said. “But what they’re looking for is very different. They’re looking for new experiences, real food experiences … things that they’ve never tried before. That’s what these boomers are looking to snack on.”
Even salt and the persistent concern about its health effects were playing perfectly into the company’s marketing plans, the Frito-Lay executives said. They told the Wall Street investors of the company’s ongoing pursuit of a “designer sodium,” which they hoped, in the near future, would take their sodium loads down by 40 percent. No need to worry about lost sales there, the CEO of Frito-Lay, Al Carey, assured the room. The boomers would see less salt as a bright green light giving them the go signal to snack like never before. In explaining the psychology of this phenomenon, Carey used the old industry term permission again.
“The big thing that will happen here is removing the barriers for boomers and giving them permission to snack,” Carey said in describing the designer salt. “It has great taste. There is no difference. You cannot taste the difference between Lay’s today and this product …. I mean, a mom could look at this product and feel good about feeding it to her children or eating it herself. And I think this is a difference from the way people viewed the snack food category over the last several years.”
The prospects for lower-salt snacks were so amazing, Carey said, that the company had set its sights on using the designer salt to conquer the toughest market of all for snacks: schools. He cited, for example, the school food initiative championed by former president Bill Clinton and the American Heart Association, which had sought to improve the nutrition of school food by limiting their loads of salt, sugar, and fat. “Imagine this,” Carey said. “A potato chip that tastes great and qualifies for the Clinton AHA alliance for schools …. We think we have ways to do all this on a potato chip and imagine getting that product into schools where children can have this product and grow up with it and feel good about eating it and their parents would, too.”
This phrase, “feel good about eating it,” sounded familiar to me, so I went and started digging through the file cabinets in which I stored the research materials I had gathered for this book. I finally found it in a confidential memo, from 1957, that I had obtained.
The author was a psychologist named Ernest Dichter, who counted Sigmund Freud among his friends before emigrating from Austria to the United States in 1938. Dichter started a consulting business in the village of Croton-on-Hudson, New York, through which he coached American companies on the art of motivational research. Dichter became famous in industry circles for encouraging food companies to market their products based on the “sex of food”—as in, Rice Krispies for women and Wheaties for men. For Frito-Lay, however, he had something else in mind, aimed at making its salty snacks more acceptable to Americans. He gave his white paper the title “Creative Memo on Lay’s Products.”
The company’s chips, he wrote, were not selling as well as they could for one
simple reason: “While people like and enjoy potato chips, they feel guilty about liking them. There is so much fear about the consequences of eating them. Unconsciously, people expect to be punished for ‘letting themselves go’ and enjoying them.” He then quoted a consumer who explained, “I love them but I don’t like to have them around, as they’re so fattening. You can’t stop eating them once you start.”
In talking to consumers, Dichter counted up seven “fears and resistances” to the company’s chips, which he ticked off in list fashion: “You can’t stop eating them; they’re fattening; they’re not good for you; they’re greasy and messy to eat; they’re too expensive; it’s hard to store the leftovers; and they’re bad for children.”
On the last point, he quoted a consumer from Schenectady, New York, who sounded a lot like mothers today when she told his researchers, “Children eat too much of that stuff. They shouldn’t be eating it at all. I’d like to see them eat carrot sticks, peaches and apples.”
This was a problem, Dichter wrote, and he spent the rest of his 24-page memo laying out the solution. There were numerous tactics Frito-Lay could deploy to counteract all this fear and resistance, he wrote. In time, his prescriptions would become widely used not just by Frito-Lay, but the entire industry.
Starting with the bad-for-you issue, Dichter suggested that Frito-Lay avoid using the word fried in referring to its chips and adopt instead the term toasted. In the most recent incarnation of this strategy, Frito-Lay in 2010 won a coveted award from the advertising industry for a campaign called “Happiness is Simple,” which, according to the company’s description of the ads, sought to dispel “perceptions it was the poster child for junk food.” The ads didn’t show potato chips soaking in oil; they depicted a sky full of flying potatoes magically popping into chips, midair.
