As PepsiCo deepens its global presence in snacking, a major part of that strategy is centered around thinking locally.
The food and beverage giant, with $91 billion in global sales during 2023, is spending millions of dollars annually to better understand local food cultures so it can more effectively tailor Cheetos, Lay’s, Doritos, Quaker and its roughly 20 other global snacking brands to consumers in specific areas. PepsiCo’s products are available in more than 200 countries and territories around the world.
“Immersing ourselves in local food culture is absolutely critical to our food business. It’s one of the biggest priorities,” Mustafa Shamseldin, PepsiCo’s category growth officer and chief marketing officer for international foods, said in an interview. “We want to double down further.”
In the company’s biggest regions, convenient foods are often responsible for more sales than PepsiCo’s beverages, according to a regulatory filing. In Latin America, these items make up 90% of sales; Africa, Middle East and South Asia, 70%; and Europe, 50%.
Brittany Quatrochi, an analyst at Edward Jones, said PepsiCo has done a good job understanding the nuances of consumers in different areas in which they operate — a process that not all companies have been able to successfully master.
With emerging countries tending to grow faster than already established ones, a deeper presence can be lucrative for PepsiCo whose Frito-Lay division gets about 40% of its sales outside North America, she said.
PepsiCo’s Frito-Lay has ”done a good job with [localizing a brand] and they’ll continue to do more of that over time,” Quatrochi said. “International is definitely a big piece of the growth story.”
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PepsiCo’s move to take a brand and give it local flavor is a strategy other snacking companies also have capitalized on.
Kellanova, for example, said while sales for its Pringles chip brand are typically anchored around flavors like its original salted and sour cream and onion, its ancillary flavors tend to differ by region and by market.
Pringles, which is available in more than 50 countries, has developed a ketchup flavor in Canada and recently co-created Tangy Tomato Twist in India with a local celebrity chef.
The snack offering already has more than $3 billion in net sales, but David Lawlor, president of Kellanova Europe, told analysts last week that the brand is still in its “early innings” of growth, particularly as it expands its reach in emerging markets.
In some regions such as Latin America and Asia, the increased demand for Pringles is outpacing supply. Kellanova recently started construction on new plans to help meet consumer interest.
“This ability to adapt to local taste is one of the things that makes the brand so much fun and makes future penetration so attractive and so doable,” Lawlor said.
While a product like a chip is popular globally, there are changes companies make to the flavor, texture and even size of the offering that helps it resonate with consumers and give it a more localized appeal.
PepsiCo’s Lays, the best-selling snack brand in the world, according to the company, is available in dozens of flavors, including Falafel with pickled lemon in Egypt, cucumber and seaweed options in China, cheese and onion in the U.K. and Sabritas Adobadas (savory spices like red pepper and paprika with a slight tang of tomato and lime) in Mexico.
Lays has made similar tweaks to its Magic Masala flavoring in Asia. In India. Magic Masala contains dried mango powder, while in Pakistan the product lists tomato powder.
The cheese flavor for Lays can be lighter in certain regions, favor a white instead of yellow cheese in others, or have a slight tanginess in some places. Shamseldin estimated PepsiCo has created dozens of different cheese flavors for Lays, only a small fraction of which are being used today.
He added that more than any other brand in PepsiCo’s snacking portfolio, flavor is “absolutely critical” for Lays to succeed in a certain location.
PepsiCo’s popular Flamin’ Hot flavor, which is incorporated into several brands such as Doritos, Cheetos, Lays and Ruffles, also can have its spiciness level varied to the point where it could be viewed as really hot in one place and sweet and savory in another.
“The idea of having a very spicy flavor was so powerful that we took it and wrote that across the world,” Shamseldin recalled.
For some brands in PepsiCo’s snacking portfolio, the company turns to other attributes to resonate with local shoppers. In Doritos, PepsiCo can adjust the pressure needed to bite into the chip, while in Cheetos it may alter the size of each corn puff.
To help it develop recipes tailored to area food cultures and local flavors, PepsiCo has culinary teams situated in kitchens around the globe. They are responsible for assessing food trends in local regions, including how consumers eat, textures they crave, their emotional connection to food and what is being served at restaurants — all things that could hint at a bigger trend about to break through.
PepsiCo also works closely with its insights team to gather trends and observations of food culture across several markets.
“We are investing in getting closer to the culinary hubs across the world and building capabilities locally to be closer to these markets and to be able to innovate and create content and engage with content at the local level,” Shamseldin said.
