Crunch time for Lays

Savvy marketing and a strong presence in the market have been key to the growth of Lays crisps in the UAE and KSA.

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By  Roger Field Published  April 5, 2006

|~||~||~|It is likely that many executives in the UAE’s snack sector were caught off guard by the rapid growth of Lays crisps during the past few years. Back in 2002, Lays was the number-three brand in the UAE, with a market share of 7%, and there was little to indicate this would change. But when Dubai-based National Trading and Developing Est (NTDE) took over distribution of Lays for the UAE in 2002, the brand gained a new impetus. And just four years later, with Lays now the UAE’s market leader with a 24% share of the snack sector, NTDE insists that a simple formula of increasing product availability and a greater investment in marketing has been key to growth. “Since NTDE took over Lays distribution in 2002, heavy investments were made to enhance visibility of the brand and develop the Lay’s retail network, in addition to improvements in marketing and logistics,” Hussain Al Zubaidee, director, snacks division, NTDE, told Retail News Middle East. "We went from 14 trucks over the last two or three years to reaching 30 trucks in distribution," he added. "We are covering the entire market. We reached coverage of about 5000 outlets, so initially it was a focus on distribution. We have treated Lays as a mass distributed product and we now reach every angle of the market." One of the main changes NTDE made to the distribution of Lays was to stock the product to a far greater number and range of outlets, according to Al Zubaidee. “Availability and visibility is the most important element of the business and we invested heavily in that direction,” he said. This move was instrumental in giving Lays an edge over many rival snack brands which were not available in smaller outlets. Indeed, while many manufacturers and distributors have moved away from supplying smaller outlets in recent years in favour of supplying only large groceries, supermarkets and hypermarkets, NTDE decided to stock the product in most grocery outlets, from small family run stores to hypermarkets. “In 2002 and 2003, people stopped distributing to the small groceries due to profitability issues. At that time we decided to go there and invest there, so we had that as a good tool.” “In the beginning, supermarkets were contributing 60% of the total business and down-market was contributing about 40% of total business. Today it is different; the down-market is now about 60% and the supermarkets account for the rest.” Al Zubaidee added that availability of the brand in a wide cross-section of shops has also been instrumental to increasing awareness of the brand among consumers. To achieve this increased level of market coverage, NTDE established a new system of handling its accounts that is far more specific than the previous system. This involved dividing its market management team into two groups, allowing the company to target and monitor its account holders, from hypermarkets to small groceries, far more effectively. “We decided that the top outlets had to be treated in different ways,” Al Zubaidee said. “The turnover or the sales have to be analysed in different ways so we divided our team in two.” Lays has also received significant support from PepsiCo, which invested heavily in pan-Arabian advertising, including television commercials, for the product. “They [PepsiCo] keep investing in above-the-line activities,” Al Zubaidee said. “Lays have also been on TV for the past two years and they keep coming with a different creative promotion for summer and winter.” NTDE has also been involved with promotional campaigns such as school visits and product samplings for children. Brand extension While Lays has a market share of about 50% within the potato chips category, the brand has less of a presence in the extruded snack sector. For this reason, NTDE and Lays are investing heavily in an extruded snack brand, Cheetos. “We have a product called Mini Cheetos. This is an extruded product and is the only product of its kind in the UAE so it has a bit of an edge over the competitors. Now our focus is on our extruded products,” Al Zubeidee said. And with Lays also the number one potato chips brand in Saudi Arabia, combined with clever pan-Arabian marketing campaigns from PepsiCo, Al Zubeidee said Lays have been instrumental in changing the habits of many consumers. “Lays is driving the category now. “They are getting people tuned to having a snack.” ||**||

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