Frito Lay plans 3-fold increase in number of contract farmers

Frito Lay, the snack food arm of Pepsico India, is planning to bring a significant portion of its potato procurement under its control by expanding contract farming operations.

Though the company currently has contract farmers in its fold, the number is lower than that of other farmers selling their harvest to the company.

“We have about 15,000 farmers under a contract with us. We are working on a plan to increase this number to 60,000 in the next 3-4 years. The number farmers selling their harvest to us but not under contract farming is about 40,000. This mix will change once we move towards contract farming,” said Ruchira Jaitly, executive vice-president of Frito Lay India.

The company currently procures potatos for its chips brand Lays from farmers in Punjab, West Bengal and Maharashtra. As part of efforts to increase procurement to meet the growing demand, the company is focusing on southern states including Karnataka and Andhra Pradesh.

“In addition to having a personal relationship with the farmers under contract farming, we will provide them with farming techniques developed by our global teams. The contract farming will also help us in maintaining the quality of potatoes,” Jaitly said.

As part of PepsiCo’s global decision to reduce the content of sugar in its beverage products and salt in snacks, Frito Lay is working on using technology and alternate products.

“We have decided to reduce the content of sugar and salt by 25% each in our beverage and snack products. We are currently working on that and the global teams too are focusing on using technology and alternate products to meet these targets. We have already moved to new methods for making snack products to cut down on fat. Particularly, the India team has used rice bran oil for making the snack products,” T S R Murali, executive director, R&D - foods and beverages, said.

Frito Lay on Wednesday launched four new flavours of its potato chips. The new flavours —- cheesy Mexicana, Tangy Twist, Mastana Mango and Hip Hop Honey & Chilly —- were selected through a competition inviting new flavour ideas from consumers.

Of about 13.5 lakh flavour ideas, the company picked four flavours and has paid Rs 5 lakh to each of these winners. With this, the company has increased the total number of potato chip flavours sold under Lay’s brand in India to 10.

The salted snacks market in India is estimated to be worth Rs 2,500 crore and the potato chips segment accounts for about half of this.