The Story of Lay's Chips

Introduction

• Originated from the personal journey of Herman Lay, who, after being fired, went on to create one of the largest food companies in history.
• Lay's chips today generate billions of dollars annually.

Early Life of Herman Lay

• Born in 1909 in Charlotte, North Carolina.
• Family background: Father was a bookkeeper, and mother was a homemaker.
• Early entrepreneurial spirit: Operated a successful soda stand.

Education and Early Career

• Dropped out of college, despite having an athletic scholarship.
• Started working for Sunshine Biscuits.
• Laid off during the Great Depression in 1929, learned the importance of diversifying income.

The Birth of Lay's Chips

• Worked at Bartlett Food Company in Nashville, TN.
• Began experimenting with potato chips as a traveling salesman.
• Capitalized on the innovation of sealing potato chips in wax paper bags for freshness.

Growth and Popularity

• Launched HW Lay Distribution Co.
• Raised $40,000 to purchase Barrett Food Company.
• Introduced Lay's chips at an affordable price of 10 cents.
• Responded to demand by ramping up production.

Marketing Innovation

• Became the first snack food company to advertise on television in 1944.
• Celebrities were used in marketing campaigns, e.g., Cowardly Lion from The Wizard of Oz.
• Famous slogan: "Betcha can eat just one."

Product Innovations

• Pioneered crinkle cut ruffled chips, reducing breakage during transport.
• Secured rights to a new cooking technique that allowed seasoning during production.
• Released popular flavors, such as cheese and onion, and salt and vinegar.

Mergers and Market Dominance

• By the early 1960s, Lay's was generating $45 million in annual sales.
• Faced competition from Frito Company, which outsold Lay's by 30%.
• Merged with Frito Company to form Frito-Lay, creating a leading U.S. brand.
• Lay remained CEO post-merger.

Expansion and PepsiCo Merger

• In 1965, Lay proposed a merger with Pepsi-Cola on a napkin.
• This merger allowed for aggressive international expansion.
• Frito-Lay became a subsidiary of PepsiCo, greatly enhancing its market power.

Current Status of Frito-Lay

• Employs around 55,000 people.
• Dominates the potato chip market with 41% share, also owns Ruffles and Pringles.
• Engages in constant innovation and adaptation to local tastes with over 200 varieties of Lay’s chips.

Global Presence

• Lay's chips marketed internationally as Walkers (UK), Smiths (Australia), Sabritas (Mexico), Gypsy (Egypt).
• Offers up to $1 million for new flavor ideas, utilizing top chefs.

Legacy of Herman Lay

• From a $2,000 loan to a global empire within PepsiCo.
• Continued influence in the industry until his death in 1982.
• Established the Lay’s scholarship to inspire future entrepreneurs.
• Known as a mastermind of the American food industry.