Walkers Snack Foods Ltd. History

Address:

1600 Arlington Business Park
Theale, Reading
Berkshire RG7 4SA
United Kingdom

Telephone: (43) 0 118 930 6666
Fax: (43) 0 118 930 3152

Wholly Owned Subsidiary of PepsiCo, Inc.
Incorporated: 1948
Employees: 4,000
Sales: £600 million (2005 est.)
NAIC: 31191 Snack Food Manufacturing; 311919 Other Snack Food Manufacturing

Company Perspectives:

The UK's largest food brand, we're also the fourth largest business within the jaw-droppingly dynamic PepsiCo group. Already some 11 million Walkers packets are hungrily opened every day but the fact is, we've hardly scratched the surface of what's possible. There's massive potential to develop both the market, and our already huge share of it, still further.

Key Dates:

1948:: Walkers begins frying potato chips.
1954:: Best-selling cheese and onion flavor crisps are introduced.
1989:: PepsiCo acquires Walkers.
1993:: PepsiCo merges Walkers and Smiths.
1994:: Doritos are successfully introduced in the United Kingdom.
2002:: Sensations sub-brand is launched.

Company History:

Walkers Snack Foods Ltd., a unit of PepsiCo, Inc., is the United Kingdom's leading manufacturer of crisps, or potato chips. Every day about 11 million people bite into one of the company's products, which are manufactured at 15 sites around the country. Walkers grew from a regional Midlands brand to one of the biggest in the United Kingdom after being acquired by Pepsi in 1989. Other key brands of the company include Quavers, Monster Munch, Dippas, and Sensations.

Origins

The Walkers story begins with Mr. Henry Walker, a successful butcher from Mansfield, England, who relocated in the 1880s to run a shop in Leicester. Walker's operation eventually began making meat pies. It was moved to Cheapside in 1912.

Walker started a new sideline when postwar rationing made meat scarce. Under the guidance of managing director R.E. Gerrard, in 1948 the firm began frying potato slices in a fish fryer. When meat rationing ended in 1954, the company continued making its popular crisps, introducing its best-selling cheese and onion-flavored variety the same year.

PepsiCo Buys Walkers in 1989

By the end of the 1980s, snacks were a £1 billion industry in the United Kingdom. By this time, Walkers was owned by Nabsico, which also held the Smiths, Tudor, and Planters brands. Walkers was still then primarily a regional brand in the Midlands, while Smiths crisps had national distribution. Each had a share of about 19 percent of the United Kingdom's salty snack market, though Smiths' emphasis was on low prices.

The French group acquired Walkers when it bought all of RJR Nabisco's European biscuit (cookie and cracker) and snack interests (five companies in all) for $2.5 billion in June 1989. (RJR had been acquired by buyout firm Kohlberg Kravis Roberts & Co.)

A month later, PepsiCo, Inc. acquired Walkers Crisps and Smith Foods from BSN (later Danone) for $1.35 billion (£900 million). Walkers and Smiths, which had a combined turnover of about £290 million ($460 million), were merged in March 1993. The combined entity was called Walkers Smiths Snack Foods until January 1994, when it was renamed Walkers Snack Foods.

A 1992 Euromonitor survey pegged Walkers with a 33.5 percent share of the £835 million British crisp market. According to the Wall Street Journal, the United Kingdom's snack food market was second only to that of the United States. There seemed to be room for innovation, as the idea of large multi-serving bags had not yet caught on in the United Kingdom, noted an analyst quoted in USA Today. The United Kingdom was also more or less free of corn snacks such as Frito's and Doritos. Americans ate twice as much snack food as Brits, according to Marketing Week, and corn products accounted for the difference.

Doritos Launched in 1994

PepsiCo had attempted to introduce the Cheetos brand in the United Kingdom through an unsuccessful $8 million launch in 1990. Two years later, the company ended up renaming them Chester Snacks and halving the price. Ruffles, a PepsiCo brand of ridged potato chip, also faltered in its attempt to cross the pond, so PepsiCo replaced it with the new Walkers Crinkles brand.

The acquisition of Walkers and Smiths made PepsiCo Europe's largest snack producer and allowed it to position its Frito-Lay brands for entry into the Common Market after 1992. As PepsiCo's snack company in the United Kingdom, Walkers launched the Doritos brand in that country in 1994. PepsiCo spent $18 million on a new crisps plant in Coventry (the largest in the world) to support the Doritos rollout and another $9 million on marketing, noted Snack World. The company gave away seven million bags of chips as part of the promotional campaign.

By the end of 1994, Doritos had a 3 percent share of the United Kingdom's £1.8 billion snack market. PepsiCo introduced Doritos to continental Europe, Asia, and Latin America the following year. Walkers introduced salsa dips in the mid-1990s to help spur sales of larger bags of Doritos.

Walkers Smiths, as the merged company was briefly known, was turning around its loss-making private label manufacturing by making these lines more accountable. Private label still accounted for just 3.5 percent of profits in 1994, noted Marketing.

The company introduced some quality-related refinements to its packaging in the mid-1990s. Foil packaging was brought out for Quavers, a brand acquired via Smiths, in 1993. Foil maintained freshness better than plastic. Monster Munch, also from Smiths, switched to foil in 1995. (An unrelated Australian snack food company called Smiths was owned by competitor United Biscuits.) Walkers began using nitrogen-filled bags in 1996, another move aimed at preserving freshness.

Walkers sold off its Planters Nuts business to management in 1996. Its sales had slipped by half to £13 million from its peak since the brand's U.K. introduction in 1977.

Martin Glenn was named president and CEO of Walkers in September 1998. As a marketing executive, he had previously overseen the rollout of Doritos. He replaced Tony Illsley, who was leaving to lead the U.K. cable company Telewest Communications. He had worked for Pedigree Petfoods before joining Walkers in 1992.

Walkers' crisps sales from April 1997 to April 1998 were calculated at £410 million, according to IRI Infoscan. This was down about £20 million.

Walkers updated its crisps packaging in 1998, adding the logo of Frito-Lay, the PepsiCo unit that was Walkers' corporate parent. Package sizes were adjusted at the same time. Walkers also launched a television advertising campaign featuring soccer star Gary Lineker. The ads played off Lineker's mild-mannered image with the theme "No More Mr. Nice Guy."

The company spent £50 million relaunching its namesake brand and making improvements to other lines, Martin Glenn (then marketing vice-president) told Brand Strategy, including £15 million spent on facilities in northern England.

Brand Strategy observed that the only growing product for the once-dominant Smiths brand was Salt 'n Shake crisps, which contained separately packaged salt.

Walkers brought out a new brand of ridged potato chip in 1999. It shared the name "Max" with Pepsi's sugar-free name in the United Kingdom. With flavors like Screaming Salt and Vinegar, Punching Paprika, and Hard Cheese and Onion, Max chips were expected to appeal to teenagers. According to Glenn, 70 percent of the potato chips sold in the United Kingdom were seasoned.

The £10 million Evening Snacking campaign of 1999-2000, centered on Doritos Dippas, sought to win a higher share of that market for Walker's chips and dip. In 2001, Walkers added a pickled onion flavor to its Monster Munch brand geared for children. This variety made consumers' tongues turn blue.

Advertising and a stream of instant-win promotions built awareness of Walkers in the last half of the 1990s. One survey ranked Walkers as the United Kingdom's second best-selling brand after Coca-Cola. The popularity prompted an expansion of facilities such as the former Tudor plant near Durham, in northeast England.

New Flavors in the 2000s

Walkers entered the £120 million Irish snack market in 2000. The company was profitable and had 3,000 employees.

Walkers joined HJ Heinz in developing a co-branded, ketchup-flavored variety of crisps in 2001. Even more exciting developments were around the bend in the form of the new Sensations sub-brand launched in May 2002. These chips featured exotic-sounding flavors such as Thai Lemongrass. An appeal for summertime snacking was built around limited edition Fish & Chips flavor fries. Walkers also unwrapped Great British Takeaways crisps in 2003, which featured Chicken Tikka Masala and Chinese Spare Rib flavors. Walkers unveiled a number of new crisps flavors later in the year: Baked Ham & Mustard, Lamb & Mint Sauce, Roast Beef & Yorkshire Pudding, and, in time for Christmas, Roast Turkey with Paxo Sage & Onion Flavour. Walkers supported Sensations with star power, including appearances by Gary Lineker and socialite Tara Palmer Tomkinson. By the end of 2003, reported Food Manufacture, Sensations alone were a £60 million business.

Packaging and logo were redesigned in early 2004. The company was expanding, adding a £5.5 million warehouse in County Durham. Annual sales were estimated at £600 million.

Principal Competitors: Golden Wonder; KP Foods UK Ltd.; Tayto Ltd.

Walkers Snack Foods Ltd. History

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