Amazon has recently acquired Whole Foods and Frito-Lay is hoping to tap the organic food market using their ‘Simply’ product range. The PepsiCo division currently has 11 chip varieties under this range which have no artificial ingredients. This includes Lay’s, Tostitos, Doritos and Cheetos.
The part of the plan is build Frito-Lay’s reputation as a healthy food brand and to do that natural products are the biggest source of growth in the industry according to McIntyre who is responsible for overlooking research and development for PepsiCo. The opportunity for Frito Lays here is to bring in new customers and charge higher prices by targeting the people who are into organic food.
There is also higher pressure to associate with Whole Foods more than ever now that Amazon has taken over. Amazon is using the food chain to grow its food delivery business and increase market share by selling at discounted prices, online and offline. Whole Foods however will continue to maintain its ‘healthful’ identity.
Frito-Lay Chief Marketing Officer Jennifer Saenz told Denver Post, “The notion of clean and simple is very important to a segment of consumers. They’re searching for that.” It all depends on whether Whole Foods is ready to promote brands products like Doritos as healthy. But now that it is being run by Amazon, it might consider the possibility says Sanford C. Bernstein & Co. analyst Ali Dibadj. This is because small suppliers alone might not be able to meet the giant company demand.
“Amazon’s acquisition makes it much more likely that Whole Foods will carry these better-for-you brands, even if they’re made by large incumbent CPG players,” he said. “The smaller brands just can’t keep up with the spending and velocity required from Amazon anymore. We expect Whole Foods to carry more — and more big brands too.”