It's not easy being cheesy: Cheetos takes aim at upstart competitor for targeting its mascot
- PepsiCo's Frito-Lay snack division has accused the maker of Peatos, an orange-colored snack made from peas and lentils, of using its marketing to attack the soda maker's Cheetos brand, according to The Wall Street Journal. PepsiCo sent World Peas Brand Peatos a cease-and-desist letter in May about the company's paw print logo and slogan, "tigers live longer than cheetahs," which they believe is targeting Cheetos' Chester Cheetah mascot.
- Nick Desai, CEO of World Peas Brand Peatos' parent company Snack It Forward, claims the brand's marketing was developed to make the better-for-you product approachable for consumers. He told the Journal there's nothing wrong with its Cheeto riff. But PepsiCo's letter argues the Peatos brand name is "confusingly similar to" the Cheetos brand, and its slogan "falsely implies that people who eat Peatos may live longer than Cheetos snackers."
- “Frito-Lay welcomes honest and fair competition. However, we cannot condone the misuse of our trademarks ... and free-riding on our investments in the Cheetos brand to elevate yours,” reads the letter to Peatos signed by PepsiCo’s senior marketing counsel, Jenny Allenbaugh, according to the newspaper. Peatos' board of directors asked Desai to cooperate and change the brand's name, but he plans to fight any litigation from the snack giant instead. Desai told the newspaper that he and his legal team informed board members they aren't violating copyright law and can fight back.
In many ways, the squabble between PepsiCo and Peatos is reflective of broader disruption in the snack space — where upstart brands founded on mission-based claims such as clean label, non-GMO or sustainable practices can quickly poach market share from slow-moving legacy players.
Peatos doesn't appear to be a major threat to the soda giant at present. The upstart brand raked in $5 million since its launch in February, according to statistics referenced in The Wall Street Journal, and the company expects sales to climb to $20 million in 2019. Cheetos rakes in about $1.5 billion in annual sales in the U.S each year, according to IRI. But that doesn't mean the newcomer won't gain steam, especially given its value proposition: taste and marketing similar to Cheetos, but with a healthier profile.
A serving of Peatos boasts fewer calories, less fat and sodium than Cheetos, as well as more fiber and protein. Whether or not these nutritional differences are significant enough to lure customers away from Cheetos is unclear, but Peatos' tactic of taking the guilt out of favorite snacks and desserts is common for new brands.
The snacking category hit $33 billion in the U.S. last year, and products that marketed specific health claims saw the strongest uptick. Non-GMO claims gained an 18.2% sales boost each year from 2012 to 2017, with free-from claims (16.2%) and reduced sugar claims (11.3%) also experiencing growth.
PepsiCo has tried to adapt to these changing consumer demands by introducing its all-natural line of Simply snacks, including Simply Cheetos. In addition to a revamped formula featuring easily understood ingredients, Simply Cheetos also comes in specialized packaging featuring subdued colors and images of large cheese slices. Two leaves sprout from the word "Simply" — no doubt to draw the attention of more health-conscious adults.
Still, growing consumer distrust of Big Food brands could make the lesser-known Peatos more attractive for shoppers looking for a healthy snack. The brand's cheeky tagline, "tigers live longer than cheetahs," could fan the flames of this consumer fear.
Desai told The Wall Street Journal he plans to launch a crowdfunding site that offers supporters discounted cases of Peatos in exchange for donations to fight potential litigation from PepsiCo. Will the company ultimately be successful? That's up to the courts to decide, though it's not unheard of for startups to fight back against corporate giants — and win.
The bigger question is whether or not this product stands a chance against PepsiCo's own cleaned-up version of the snack. Time will tell how its sales perform, and if it does begin to gain on the megabrand, it could mean established players need to innovate beyond cleaner labels to regain consumer trust.
- The Wall Street Journal Cat Fight: Cheetos Maker Pepsi Challenges Orange Snack Rival
Follow Emma Liem on Twitter