Buffalo Wild Wings Teams Up With PepsiCo on Beverages, Snacks

Published in CSP Daily News

Does deal mean more products like Taco Bell Doritos Locos Tacos to follow?

MINNEAPOLIS & PURCHASE, N.Y. -- Buffalo Wild Wings Inc. has announced that PepsiCo Inc. will become the restaurant's primary soft drink and noncarbonated beverage provider beginning in 2014. The two companies will also explore menu offerings with PepsiCo snack brands such as Doritos, Fritos, Tostitos and Ruffles.

The agreement will span multiple brands including Tropicana juices and lemonade, as well as Lipton teas. In addition, Buffalo Wild Wings and PepsiCo plan to combine the power of their respective brands through joint marketing initiatives tied to sports and entertainment, opening the door to a variety of opportunities.

The relationship will include corporate-owned and franchise restaurants, totaling more than 975 locations in the United States. Financial terms of the agreement were not disclosed.

"What attracted us to PepsiCo is their extensive beverage and food portfolio. We see this as a very powerful partnership in several ways. For starters, we'll be bringing dynamic beverage brands to our restaurants, including options that our guests have been asking for, like Mountain Dew," said Sally Smith, CEO of Buffalo Wild Wings, Minneapolis. "We were also drawn to the marketing and promotional strength a partnership with PepsiCo creates. … Their NFL sponsorship and relationships with additional sports, entertainment and pop culture icons will enhance our guest experience."

"This partnership between PepsiCo and Buffalo Wild Wings is a natural fit. We see tremendous opportunities to leverage PepsiCo's diverse food and beverage portfolio in ways that benefit both companies through exciting new innovations, unique consumer engagement programs and powerful brand activations tied to sports and entertainment," said Indra Nooyi, chairman and CEO of PepsiCo.

Buffalo Wild Wings will begin its conversion to PepsiCo products early in 2014 and expects to complete it systemwide by spring.

PepsiCo Inc. found success last year after teaming up with Taco Bell to create Dorito-flavored taco shells.

In an interview with the Associated Press, Buffalo Wild Wings CEO Sally Smith that she visited PepsiCo's food innovation lab in New York to see several dishes the chain might put on its menu. Ideas included Doritos as a crunchy topping for wings or tenders, or even just offering potato chips as a side dish. She said PepsiCo showed her salad dressings and sandwich and chicken wing sauces that incorporate PepsiCo's sodas, including Mountain Dew.

"I don't think it will be in the next 12 months, but we'll possibly start testing after a year or 18 months," she said, noting that considerable planning would be needed to bring the offerings to the company's locations.

PepsiCo clearly sees the idea of incorporating its snacks into menus as a major opportunity. At an analyst conference in Boca Raton, Fla., earlier this year, for example, the company sponsored a lunch featuring recipes using its Naked Juices, Frito chips and other products, said AP.

A representative for Pizza Hut also told the AP the chain has looked at ways to use Frito-Lay snacks in its menu. Pizza Hut is owned by Yum Brands, which owns Taco Bell and KFC. The restaurant chains were owned by PepsiCo until it spun them off in 1997.

Over at Taco Bell, Doritos Locos Tacos continue to be a considerable sales driver. Taco Bell CEO Greg Creed has noted that a major advantage of the tacos is that competitors can't replicate them--their success is largely tied to the popularity of the Doritos brand.

The latest partnership with Buffalo Wild Wings is just the latest sign that PepsiCo is trying to use the strength of its Frito-Lay business to bolster its beverage unit, which has long trailed Coca-Cola. It also comes as PepsiCo fights off calls to split its drinks and snacks units, said the report.

Purchase, N.Y.-based PepsiCo is a global food and beverage leader with net revenues of more than $65 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in annual retail sales. Its main businesses are Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola.