Wednesday, August 19, 2009

Business & Marketing: Lay's Potato Chips Introduces 99cent Recession Busters

While Lays potato chips might rank as some as the best quality produced in the United States, many retailers are reporting sales declines of snack foods this year compared to last due largely to the recession . In fact, snack food sales might have declined as much as nearly 40% this year compared to last according to some retailer's reports. All of this has inspired Frito Lay to respond with some new creative packaging with new smaller 99cent versions of many of their popular snacks.

Another problem for the snack food industry in general is that some persons might be cutting back on snack foods for health or weight control reasons. The slightly smaller sized 99cent chips might be a reasonable compromise for some persons to still enjoy their favorite snacks, but to consume less at a time. The smaller size portions might just be wise marketing for a number of good reasons, both economic and health oriented.
One other future potential problem that the snack industry might be facing are new tax schemes to pay for health insurance coverage by taxing certain products. There is currently one proposal to tax sodas by 10cents to pay for the federal health insurance reform proposal. However, a 10 cent tax on sodas would nearly equal half of the wholesale price of some economy priced sodas. Some economy priced sodas wholesale close to just 22-25cents.
The snack food industry is under siege on many fronts right now. However, creative marketing as well as lobby efforts to control excessive new taxes on the industry might be able to fight off some real threats to the industry. However, potato chips aren't likely to disappear any time soon. They might come in slightly smaller portions. But they'll still be around, and they'll still taste just as good.


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