New Frito-Lay Snacks from PepsiCo

Zacks

PepsiCo, Inc’s (PEP) American snack division, Frito-Lay, recently announced the launch of 2 new Tapatio-flavored Frito-Lay snacks.

The new snacks, Lay's Tapatio Limon flavored potato chips and Cheetos Tapatio flavored snacks are the latest additions to the Tapatio and Frito-Lay brand partnership. Tapatio is one of the most popular hot sauce brands in America. Frito-Lay division already markets many snacks in partnership with Tapatio hot sauce, including Ruffles Tapatio Limon flavored potato chips and Doritos Tapatio flavored tortilla chips.

The Frito-Lay segment manufactures and sells cereals, rice, pasta, dairy and other branded products and includes some popular names like Quaker oatmeal, Aunt Jemima mixes and syrups, Quaker grits, Cap'n Crunch cereal, Life cereal among others.

The segment did significantly well in the fourth quarter of 2012, results of which were announced in mid-February this year. Segment organic revenues grew 5% fueled largely by volume growth and improved market share trends due to stepped-up advertising support. Profits also increased as organic top-line growth and productivity benefits were partially offset by the commodity cost headwinds and increased marketing expenses.

PepsiCo was in news recently for rumors of its possible merger with food giant, Mondelez International, Inc. (MDLZ). The Telegraph of London reported last month that activist investor Nelson Peltz is fast building stakes in PepsiCo and Mondelez, possibly in pursuit of a large $170 billion merger of the consumer giants.

The news daily conjectured that Peltz may push PepsiCo to either take over Mondelez or split it up into 2 separate companies. PepsiCo has, however, denied rumors and issued a statement stating that it is not interested in large acquisitions.

Mondelez emerged from the split of Kraft Foods, Inc last year into two 2 separate companies, Mondelez and Kraft Foods Group (KRFT).

PepsiCo carries a Zacks Rank #3 (Hold). A stock in the beverage industry that is currently performing well is Coca-Cola Hellenic Bottling Company S.A. (CCH) - Zacks Rank #2 (Buy).

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