company see fritos and lay s. frito lay inc. type wholly owned subsidiary industry food products predecessor the frito company h.w. lay & company founded 1961 ; 55 years ago 1961 headquarters plano texas united states area served united states key people tom greco president products lay s doritos ruffles cheetos marke es delende chipps sun chips tostitos rold gold funyuns master sun parent pepsico website fritolay.com frito lay inc. stylized as fritolay is an american subsidiary of pepsico that manufactures markets and sells corn chips potato chips and other snack foods . the primary snack food brands produced under the frito lay name include fritos corn chips cheetos cheese flavored snacks doritos and tostitos tortilla chips lay s and ruffles potato chips rold gold pretzels and walkers potato crisps in the uk and ireland each of which generated annual worldwide sales over 1 billion in 2009 . 1 frito lay began in the early 1930s as two separate companies the frito company and h.w. lay & company both of which merged in 1961 to form frito lay inc. four years later in 1965 frito lay inc. merged with the pepsi cola company resulting in the formation of pepsico . since that time frito lay has operated as a wholly owned subsidiary of pepsico . through frito lay pepsico is the largest globally distributed snack food company in the world with sales of its products in 2009 comprising 40 percent of all savory snacks sold in the united states and 30 percent of the non u.s. market . frito lay north america accounts for 31 percent of pepsico s annual sales . contents 1 history 1.1 the frito company 1.2 h.w. lay & company 1.3 merger forms frito lay inc. 1.4 division of pepsico inc. 1.4.1 1965 1980 1.4.2 1980 2000 1.4.3 recent history 2000 present 2 controversies and health concerns 2.1 stereotyping in 1960s commercials 2.2 genetically modified ingredients 2.3 trans fats 3 operations 3.1 north america 3.2 central and south america 3.3 europe 3.4 asia middle east & africa 4 products 5 references 6 external links history edit the frito company edit frito kid at disneyland s casa de fritos currently rancho del zocalo in 1932 kansas city kansas born charles elmer doolin 1903 1959 2 manager of the highland park confectionery in san antonio texas purchased a corn chip recipe a handheld potato ricer and 19 retail accounts from a corn chip manufacturer for 100 which he borrowed from his mother . doolin established a new corn chip business the frito company in his mother s kitchen . doolin and his mother and brother produced the corn chips named fritos and had a production capacity of approximately 10 pounds per day and roughly 30 cents per product . doolin distributed the fritos in 5 bags . daily sales totaled 8 to 10 and profits averaged about 2 per day . 3 in 1933 the production of fritos increased from 10 pounds to nearly 100 pounds due to the development of a hammer press ; by the end of the year production lines were operating in houston and dallas . the frito company headquarters also moved to dallas to capitalize on the city s central location and better availability of raw materials . in 1937 the frito company opened its research and development lab and introduced new products including fritos peanut butter sandwiches and fritos peanuts to supplement fritos and fritatos potato chips which had been introduced in 1935 . 4 in 1939 the company purchased fluffs pork skins and incorporated the dallas business . frito relocated the operation from haskell avenue to a new facility at 2005 wall street . alice rupe who was one of fluffs original six all woman crew was placed in charge of operations . in 1940 she was named assistant treasurer and manager ; in 1949 she was promoted to treasurer . 5 in 1941 the company opened its western division in los angeles with two sales routes which would become the prototype for the frito company s distribution system . in 1945 the frito sales company was established to separate sales from production activities . expansion continued with the issue of six franchises through the frito national company in the same year . in 1950 fritos were sold in all 48 states . 6 the frito company issued its first public stock offering in 1954 . at the time of doolin s death in 1959 the frito company produced over forty products had plants in eighteen cities employed over 3 000 people and had sales in 1958 in excess of 50 million . by 1962 fritos would be sold in 48 countries . 7 h.w. lay & company edit in 1931 charlotte north carolina born salesman herman lay 1909 1982 sold potato chips in the southern united states out of his car . in 1932 he began a potato chip business in nashville tennessee . lay was hired as a salesman for the barrett food products company an atlanta georgia manufacturer of gardner s potato chips and eventually took over barrett s nashville warehouse as a distributor . lay hired his first salesman in 1934 and three years later had 25 employees and a larger manufacturing facility where he produced popcorn and peanut butter sandwich crackers . 8 a representative of the barrett food company contacted lay in 1938 offering to sell barrett s plants in atlanta and memphis to lay for 60 000 . lay borrowed 30 000 from a bank and persuaded the barrett company to take the difference in preferred stock . lay moved his headquarters to atlanta and formed h.w. lay & company in 1939 . he later purchased the barrett manufacturing plant in jacksonville florida along with additional plants in jackson mississippi louisville kentucky and greensboro north carolina . lay retained the gardner trademark of barrett food products until 1944 when the product name was changed to lay s potato chips . 9 lay expanded further in the 1950s with the purchase of the richmond potato chip company and the capitol frito corporation . by 1956 with more than 1 000 employees plants in eight cities and branches or warehouses in thirteen others h.w. lay & company was the largest manufacturer of potato chips and snack foods in the united states . 10 merger forms frito lay inc. edit in 1945 the frito company granted the h.w. lay & company an exclusive franchise to manufacture and distribute fritos in the southeast . the two companies worked toward national distribution and developed a close business affiliation . in september 1961 the frito company and h.w. lay & company merged to become frito lay inc. 11 combining their headquarters in dallas texas . at this point the company s annual revenues totaled 127 million largely generated from sales of its four main brands at the time fritos lays cheetos and ruffles . 12 division of pepsico inc. edit in february 1965 the boards of directors for frito lay inc. and pepsi cola announced a plan for the merger of the two companies . on june 8 1965 the merger of frito lay and pepsi cola company was approved by shareholders of both companies and a new company called pepsico inc. was formed . at the time of the merger frito lay owned 46 manufacturing plants nationwide and had more than 150 distribution centers across the united states . 13 the merger was pursued for multiple factors one of which was the potential for frito lay snacks to be distributed outside of its initial markets of the united states and canada via pepsi cola s existing presence and distribution network in 108 countries at the time of the merger . international distribution of frito lay products expanded shortly following the 1965 merger and its u.s. presence grew at the same time resulting in lay s becoming the first potato chip brand to be sold nationwide in all 50 u.s. states in 1965 . 14 also at this time pepsico had envisioned marketing frito lay snacks alongside pepsi cola soft drinks . in an interview with forbes in 1968 pepsico ceo donald kendall summarized this by noting that potato chips make you thirsty ; pepsi satisfies thirst . plans to jointly promote the soft drink and snack products were thwarted later that year when the federal trade commission ruled against it . 9 1965 1980 edit upon the formation of pepsico frito lay soon began efforts to expand with the development of new snack food brands in the 1960s and 1970s including doritos 1966 funyuns 1969 and munchos 1971 . the most popular new frito lay product launched during this era was doritos which initially was positioned as a more flavorful tortilla chip . at first the chip was perceived by consumers as being too bland . in response the company re launched doritos in taco and later nacho cheese flavors . the spicier composition proved successful and doritos quickly became the second most popular frito lay product line second only to lay s potato chips . 6 frito lay faced increased competition in the 1970s from competing potato chip brands such as pringles launched by procter & gamble in competition with lay s. nabisco and standard brands also expanded in the 1970s to produce potato chips cheese curls and pretzels which placed added pressure across frito lay s entire line of snack food brands . 9 1980 2000 edit frito lay acquired grandma s cookies in 1980 which launched nationwide in the united states in 1983 . in january 1978 frito lay s product development group led by jack liczkowski completed development of tostitos a mexican style tortilla chip lineup . tostitos traditional flavor and tostitos nacho cheese flavor went into national distribution in the united states by 1980 and reached the sales of 140 million making it one of the most successful new products introduction in frito lay history . tostitos sales grew quickly and in 1985 it had become frito lay s fifth largest brand generating annual sales of 200 million . ahead of tostitos at the time were doritos lay s fritos and ruffles each recording annual sales between 250 and 500 million . 8 while tostitos became a long term success several other new products launched in the 1980s were discontinued after lackluster results . these short lived frito lay products included stuffers pre filled dip shells and toppels crackers which came pre topped with cheese . 15 in the late 1980s frito lay acquired smartfood 16 a brand of cheese flavored popcorn which it began to distribute across the united states . international sales began to increase significantly at this time as well with annual revenues from sales outside of the u.s. and canada accounting for 500 million in 1989 contributing to total frito lay sales of 3.5 billion in the same year . 9 several new products were developed internally at frito lay and launched in the 1990s the most successful of which was sun chips a multi grain chip first sold in 1991 . sun chips along with new baked instead of fried variants of tostitos and lay s represented frito lay s intent to capitalize on an emerging trend among adults in the u.s. who were displaying a growing preference for healthier snack alternatives . 17 in 1994 frito lay recorded annual retail sales of nearly 5 billion selling 8 billion bags of chips popcorn and pretzels during that year outpacing competitors eagle owned by anheuser busch and wise owned by borden . 18 up until the mid 1990s frito lay was represented in pepsico s organizational structure as frito lay a single division of pepsico . this changed in 1996 when pepsico merged its snack food operations into what was titled the frito lay company made up of two subsequent divisions frito lay north america and frito lay international . 19 in 1997 frito lay acquired the candied popcorn snack