News item from February 2014: Investor Nelson Peltz revives his proposal to split PepsiCo in two and merge the snacks business with Mondelez.
After two years of stewardship by Nelson Peltz, the new FritoMondeLayzCo seems to have all the pieces in place. The new corporate headquarters, global manufacturing network and new product pipeline all were discussed by Chairman/CEO/President/Executive VP Peltz today at the company’s annual meeting, which was attended – by Internet hookup only – by nearly all 12 of the company’s institutional shareholders.
“Sorry I can’t be with you in person,” Peltz said from his office in Aruba. “But if we were at the new global headquarters in Plano, you would be impressed by the changes that have taken place in that old farmhouse.”
Indeed, the move of headquarters from Plano, Texas, to Plano, Ill., a farm community strategically located near Interstates 55, 80 and 88, went smoothly. The farmhouse and land sold for less than $100,000, and the former owners left much of the furniture. “And we didn’t have to buy all new business cards and stationery, although our purchases of White Out are skyrocketing – a problem that will be under control before the end of this quarter,” Peltz promised.
Despite shrinking sales, the new emphasis on economy is paying off, he said. With U.S. employment still low but employment skyrocketing in developing nations, “We are finally delivering on our goal of ‘unhealthy snacks for and by the real New Generation – the developing nations of this world.’ ”
On the subject of new products, Peltz revealed “an exciting but measured new product pipeline.” A New Original Flavor Lay’s potato chip is launching this month in markets around the world – “a true breakthrough in plain flavor,” Peltz remarked. “And we have high hopes for a third-quarter relaunch of barbecue flavor chips in the U.S. – apparently barbecue means something different to our product development team in Thailand than it does here in the States.”
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However, market research indicates Kettle Brand is now leading in all national chip categories, and former regional players such as Snyder’s-Lance and Herr’s smell blood and are going national. PepsiCo Beverage LLC, the company spun off by Peltz in 2014, has launched an aggressive and hugely successful co-marketing campaign with all those regional chip companies to “wash those chips down with a cold, refreshing Pepsi.”
Peltz said he hoped to combat the newly emboldened competition with “exciting, new products,” particularly new flavors in both potato and tortilla chips. But he was hesitant about globally launching Chicken Masala, Aloo Tikka, Paneer Pakora and Lamb Vindaloo as new Doritos varieties. “Perhaps we should reconsider the move of that R&D center to Bangalore – although the food scientists there, many with Ph.D.s, earn about a tenth of what the slackers in the U.S. made.”
Peltz spoke only curtly about the Casa Grande, Ariz., plant “going guerilla.” “The former PepsiCo should never have built that plant with the ability to go ‘off the grid,’ another grievous error of the former management of this great company.” Despite corporate efforts to turn off all its utilities, the plant continues to turn out unlicensed products in traditional flavors – Original, Barbecue and Sour Cream – that have been discontinued by Peltz’s company. “That plant must be stopped,” he railed.
Near his conclusion, the chairman/CEO/president/executive VP addressed the subject of corporate responsibility. “I’m proud to report we just wrote a check for nearly $500 to the Dallas-Fort Worth Food Depository. And we’ve also sent a truckload of Doritos to Feeding America – they say the 2014 sell-by date will not be a problem. Don’t worry, I’ve asked them for a receipt.
“And with no plants left in the U.S. – except that pesky Casa Grande one – we can honestly say we have reached zero environmental impact in what on paper is our home country. We expect an EPA award any day now.”
During the Q&A, he was asked about potential adoption of Six Sigma or Kaizen principles for plant efficiencies. “I’m a black belt in shareholder return – that’s all you need to know,” he glared.
Despite FritoMondeLayzCo’s financial success, rumors persist that Peltz is restructuring the company for a split. Insiders say the working names for the two new companies are General Foods and Nabisco. “Either way, it’s gonna make me a big pile of money,” Peltz concluded.
