The Untold Story of Lay's

 

A Natural-Born Salesman

Herman Lay was born in 1909 in Charlotte, North Carolina, to a middle-class family. His father was a bookkeeper and his mother was a stay-at-home wife. When he was only 11, he started selling Pepsi-Cola from a homemade stand in his family’s front yard. Herman charged only 5 cents while the baseball park across the street cost 10 cents for a Pepsi. His stand was so successful that he managed to hire other kids to work for him. We can see as a young boy he excelled in sales.

After graduating from high school, Herman attended Furman University on an athletic scholarship but Lay was restless during college he was more interested in the art of business than studying, and keen to get involved with the world he dropped out and decided to work instead.

Herman Lay's Struggles During the Great Depression

First, Herman and a friend invested 100 dollars each to sell ice cream along a parade route. Unfortunately, the route changed at the last minute, and two were left with nothing but melted ice cream. Afterward, Herman worked a number of odd jobs before snagging a salesman position for the Sunshine Biscuit Co. At the time, Sunshine Biscuit was one of the biggest cookie makers in the U.S., and already known for inventing a precursor to Oreos. Herman was sure to make money. But his time at Sunshine Biscuit was cut Short. When the Great Depression hit, Herman was laid off. This taught him to diversify his income and build something that would provide him with more independence.

After being laid off from his job at Sunshine Biscuits, Herman Lay was desperate to find a new job. He searched through newspaper ads and wrote to hundreds of companies, but he was unsuccessful. Finally, after his 200th letter, he received an offer from the Barrett Snack Food Company.

From Traveling Salesman to his own distribution company

Barrett was a small company that manufactured potato chips and other salty snacks. 

Lay was now in Nashville Tennesse in the heart of the American South. Lay worked hard as a salesman for Barrett. He traveled all over the Southeast, selling potato chips to grocery stores, road stands, and gas stations. As a traveling salesman, he quickly earned a reputation for stacking chips in the back of his Ford Model A.

Later that year, Herman borrowed $100 to start his own distribution company and take over a small warehouse. This was his first step up in the business. He also continued to work with Barrett and was given his own territory. He didn't know it at the time, but this would later lead to a once-in-a-lifetime opportunity.

With his own company, Herman would spend all day selling potato chips, sleeping in whatever town he ended up in, and then starting over again the next morning. His new sense of freedom motivated him to work hard. By the end of the year, his company had expanded its territory and increased profits. And just three years later, it was able to hire 30 employees and produce its own snack foods.

Herman Lay Takes a Risk to Buy Barrett Food Company 

Herman's hard work had already paid off, but his business was about to take off even more. In 1939, the founder of Barrett Ford passed away and his family decided to sell the company. In search of a suitable owner, the family looked to their business associates and reached out to Herman. The asking price was $60,000, which was 12 times Herman's life savings. He wanted to buy the company, but he didn't have the money.

Herman asked dozens of people for help, but no one was willing to lend him the money. He was about to give up when he decided to take a risk. He took out a $30,000 bank loan and convinced the Barrett family to accept it as a down payment. The rest of the money would be paid in installments.

The Barrett family agreed to Herman's proposal, and he became the owner of the company. He renamed the company H.W. Lay. To pay off his debt, Herman decided to try and sell potato chips across the country. This had not yet been done by any company because it was difficult to preserve and ship potato chips. At the time, potato chips were simply dipped out of a barrel, placed in paper bags, and sealed with paperclips. This made them prone to become soggy, stale, or spoiled.

Herman Lay's Innovations in Potato Chip Preservation and Packaging

Fortunately, Herman soon discovered advanced solutions to preserve and ship potato chips. First, he used technology used to preserve photographs and stamps to create a special bag and seal called glassine. Glassine is not only resistant to moisture, dust, and grease, but it also helps keep the potato chips fresh longer. Later, Herman developed a machine to automate the process of packaging multiple potato chip bags at once. Another key innovation was the crinkle-cut ruffled chips. These chips were less likely to break inside the package, and the crinkle-cut shape also made them more flavorful and appealing to consumers.

To succeed in selling potato chips across the country, Herman and his team traveled to different regions and observed dozens of convenience stores, grocery stores, and supermarkets. They wanted to come up with a strategy to win over half of their customers within a week. By the end of the year, the company was selling its potato chips in 10 states, from Florida to Wisconsin. Their aggressive business approach paid off. However, Herman would soon learn that there are some things you can't plan for.

The Unlikely Alliance That Changed the Snack Food Industry

When the US entered World War II, Lay's was forced to shut down because the government banned the production of non-essential items. Herman Lay believed potato chips were essential because they were resistant to spoilage and didn't require refrigeration or cooking. He urged Congress to reclassify potato chips as essential, and it worked. Lay's became the second-largest food company in the US by the end of the war. Meanwhile, Frito held the number one spot. Frito had a similar origin story to Lay's, as its founder, Charles Doolin, bought the recipe for corn chips from a small cafe in San Antonio and baked the chips from his mother's kitchen. Just like Herman Lay, Charles didn't have a shop and was forced to sell them f

rom his Ford car. However, Frito's chips quickly became popular and grew into a regional empire.

Frito company first took off after Charles invented a machine with a hammer to mass-produce corn chips. He then differentiated his product from competitors by growing his own special corn. Frito's success grew even more when it used leftover powdered cheese from the war to make tasty, puffed corn chips: Cheetos.

For years, Frito and Lays had been growing their markets at a distance, one in the east and one in the west. When Charles wanted to open a Frito factory in Herman's territory, Herman could have blocked him. But instead, Herman invited Charles to work together. They agreed that Lay's would become the exclusive manufacturer and distributor of Frito products in the East, and both companies could sell their products in the same stores. This agreement helped both companies grow rapidly.

Lay's Innovation in Flavored Potato Chips

As the years went by, Herman found that there was little room left to grow his business since his agreement with Charles forbade him from expanding into the southwest. He decided to introduce a new product to increase sales while respecting the agreement.

At the time, America was in an economic boom, and people had money to spend. This led them to want to buy more varied products, especially since they had been limited during the war. Many companies jumped on the demand by introducing new products with different flavors, colors, and textures.

Lay's made a decision that would future-proof it against competitors and prove to be the greatest marketing tool of all. The company had been quietly pursuing the right to use a patented cooking technique developed by Joe Spud Murphy, the owner of the Irish potato chip manufacturer Tato. Murphy had discovered a way to add seasoning during the cooking process and retain flavor on a scale of mass production.

The first two flavors released were cheese and onion and salt and vinegar flavors, which would later become some of Lay's most in-demand products. After securing the rights for flavored potato chips, Lay's began to release their own flavors. This innovation helped boost the company to a new level, where its competitors were left behind.

The Rise of Frito-Lay

However, it soon faced a tragedy that all the money in the world couldn’t save. Charles Doolin suddenly passed away from a stroke and heart attack at age 56. By this time, Frito and Lay had a very close relationship. When Doolin died suddenly, Lay suggested that their two companies merge. The Frito executives agreed, and the new company was renamed Frito-Lay. Lay was appointed CEO.

Herman's first order of business was to finally sell Lay's chips nationwide. At the time, television was the latest technology. He decided to use this to his advantage, rather than relying on traditional advertising methods. More than half of U.S. households had a TV, and there were only a few networks available. This meant that many Americans were paying attention to the same things. Additionally, no other snack company had yet advertised on TV. Herman saw this as an opportunity and released ads with Lay's new slogan, "You Can't Eat Just One." The ads featured a comedian who played the Cowardly Lion in The Wizard of Oz and would always try to eat just one chip, but he would always fail. Within the same year, Frito-Lay's sales exceeded $180 million. 

How Herman Lay Merged Frito-Lay and Pepsi-Cola

Lay's potato chips became a popular brand, but the company struggled to keep up with demand. Instead of building new factories, Herman Lay reached out to Pepsi-Cola, one of the most well-known beverage companies in the country. Lay saw that merging the two companies would give them a strong presence in the American market and allow them to expand internationally.

Lay wrote the proposal for the merger on the back of a napkin. Don Kendall, the CEO of Pepsi-Cola, accepted the proposal. Pepsi-Cola has been around since 1868 and has a variety of drinks, including Mountain Dew, Diet Pepsi, and 7UP.

The merger was successful, and Frito-Lay remained independently operated. Herman Lay was appointed chairman of the new company, PepsiCo. With the resources of Pepsi Cola, Lay's was able to keep up with demand and expand globally. Within the first year of the merger, PepsiCo's revenue exceeded $600 million.

The Legacy of Herman Lay

Today, Frito-Lay is one of the largest snack food companies in the world, dominating 65% of the market. Its products occupy as much as 80% of shelf space in convenience stores. A large part of Frito-Lay's success comes from its ability to innovate new flavors. There are country-specific and region-specific flavors that cater to local tastes. This is why there are now 200 varieties of Lay's chips, ranging from Nori seaweed to baked scallops. The company even offers up to $1 million dollars for contestants who submit great new ideas. Frito-Lay has also moved into international markets. Lay's chips are renamed Walkers in the United Kingdom, Smiths in Australia, Sabritas in Mexico, and Gypsy in Egypt. The company is also PepsiCo's most profitable division, helping to grow PepsiCo's annual revenue to $85.5 billion.

Herman Lay started Lay's Chips after delivering chips to his customers as a traveling salesman. He converted a $2,000 investment into a global empire. Lay has been described as a mastermind in the food that built America. His legacy lives on in almost every supermarket and convenience store in the world.

One of the cool things I love about Lay's is its marketing Campaigns

The "Betcha Can't Eat Just One" campaign was first introduced in the 1960s and is still remembered today. The idea behind the campaign was to emphasize the addictive quality of Lay's potato chips. The slogan was very clever and played on the fact that potato chips are often difficult to resist. The campaign was a huge success and helped to make Lay's Chips one of the most popular snacks in the world.

The "Do Us a Flavor" contest was launched in 2012 and invited consumers to submit their ideas for new potato chip flavors. The winning flavors were then produced and sold in stores. This campaign was a great way for Lay's to connect with consumers on a personal level. It also generated a lot of excitement and buzz around the Lay's brand.

The "Happiness is Simple" campaign was launched in 2014 and focused on the simple pleasure of eating Lays potato chips. The ads featured people smiling and enjoying the chips, with the tagline "Happiness is simple. Just eat chips." This campaign was a reminder that sometimes, the simple things in life are the best.

The "Passport to Flavor" campaign was launched in 2016 and featured new international-inspired flavors. The ads featured people traveling to different parts of the world to try the new flavors and were designed to appeal to consumers' sense of adventure. This campaign was a way for Lay's to show consumers that they are always looking for new and exciting flavors.

The "Taste of America" campaign was launched in 2018 and featured new flavors inspired by different regions of the United States. The ads showcased different cultural aspects of each region, tying in the flavors of the chips with the local culture. This campaign was a way for Lay's to celebrate the diversity of American cuisine.

Marketing Campaigns of Lay’s for the Indian Market

        The "No One Can Eat Just One" campaign was launched in the early  2000s and highlighted the irresistible taste of Lays chips. The tagline "No One Can Eat Just One" became synonymous with Lays in India.

The "Yeh Dil Maange More" campaign was launched in 2008 and focused on the emotional connection people have with Lays chips. The tagline "Yeh Dil Maange More" translates to "This Heart Wants More" and was featured by popular Bollywood actor Saif Ali Khan.

The "Game of Clones" campaign was launched in 2016 and was a combination of TV commercials and digital marketing. The campaign encouraged people to create their own flavor of Lays chips and featured popular Indian celebrities like Ranbir Kapoor and Alia Bhatt.

The "Smile Deke Dekho" campaign was launched in 2019 and focused on spreading happiness and positivity. The campaign featured popular Indian comedian and actor Kapil Sharma and encouraged people to share their smiles on social media using the hashtag #SmileDekeDekho.

Lays has never sold potato chips. It has always marketed happiness. From cricket matches to family gatherings, Lays has been there to add a touch of joy to every occasion. By associating its products with happy memories, Lays has created a strong emotional connection with its consumers.

I knew you were craving for Lay's now😀

Herman Lay(Founder of Lay's)