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PepsiCo's New Doritos Chips

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PepsiCo, Inc’s (PEP) American snack division, Frito-Lay, recently announced the launch of new tortilla chips under its Doritos brand.

The new Doritos Locos Tacos (:DLT) Tortilla Chips will bring together a combination of PepsiCo’s billion dollar brand, Doritos tortilla chips and Taco Bell's, Doritos Locos Tacos (:DLT) in a chip bag. The Doritos Locos Tacos (:DLT) Tortilla Chips is the latest addition to the Frito-Lay and Taco Bell partnership. Taco Bell is a subsidiary of Yum! Brands, Inc., (YUM).

Last week, Frito-Lay announced the launch of 2 new Tapatio-flavored Frito-Lay snacks, Lay's Tapatio Limon flavored potato chips and Cheetos Tapatio flavored snacks.

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 (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 2 separate companies, Mondelez and Kraft Foods Group (KRFT).

PepsiCo carries a Zacks Rank #3 (Hold).

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