Transcript

00:00 After being fired from the biggest food processing company in town one man decided to go into business himself. He never envisioned that it would grow into one of the most dominant food companies in history generating billions of dollars a year. This is the story of Lay's chips it All Began in 1909 when Herman lay was born into a quiet middle class family in Charlotte North Carolina. His father was a bookkeeper and his mother was a stay-at-home wife growing up. There was no clear career path for him but what he did excel at was sales as a young boy. He operated a soda stand for locals which was so successful that he hired employees. This entrepreneurial Instinct would serve him well later in his career but lay was Restless. During college. He was more interested in the art of business than studying Keen to get involved with the world. He dropped out despite being admitted on a fully funded athletic scholarship. He headed to Sunshine biscuits a food company that manufactured cookies crackers and cereal and it looked to be the first stepping stone to a career in business. But the Great Depression struck in 1929 wiping out 24 of the workforce Nationwide and cutting any remaining income in half at the time. Lay was just 20 years old and suddenly found himself out of a job. This taught him to diversify his income and build something that would provide him with more Independence at his next job working for the Bartlett food company.

01:40 He began his side hustle that was destined to transform the U.S Food Market Lei was now in Nashville Tennessee in the heart of the American South and this is where he began to experiment with a product that proved more popular than he imagined. Lay made it his trademark to bring bags of potato chips to his customers as a traveling salesman. He quickly earned a reputation for stocking chips in the back of his Ford Model. A he was benefiting from a recent innovation in the market. Potato. Chips had existed since the 1850s when thinly sliced baked potatoes were discovered to be an altogether different experience than eating larger chunks or french fries which was common at the time. This new kind of potato named the Saratoga chip for where it was conceived had become popular in New York but the nation hadn't shown an appetite for it that was until 1926 when a method was developed for sealing potato chips and wax paper bags to keep the chips fresh. It allowed them to become portable snacks.

02:48 Herman lay latched onto this Innovation and saw the huge potential for potato chips. The Barrett food company allowed lay to sell large chips that would last for days while maintaining the quality you might expect at a restaurant and after seeing the popularity he decided to gamble on himself. He had over a decade in the food industry under his belt and took out a bank loan to purchase a dealership from his former employee. He renamed it HW lay distribution Co and just a few years later he raised forty thousand dollars in stock sale to purchase the entire Barrett food company. One of Lay's biggest investors who owned a shop across the street from the factory was devastated. His family's life savings had been poured into Lay's company and the Takeover seemed like too big of a risk but lay was determined. He was inspired to create an affordable potato chip brand that the average American could enjoy and envision huge growth.

03:46 The first Lays chips were sold for 10 cents a packet. The brand soon became so popular that it was forced to Gear Up mass production to keep up with Demand with plenty of competitors though lays would need to stand out from the rest. This is where Hermann Lay's genius marketing came into Play. Blaze became the first snack food company to advertise on television in 1944. Later they hired the actor who played the Cowardly Lion in The Wizard of Oz to serve as a celebrity spokesperson. A popular TV campaign including the line betcha can eat just one helped to establish lays as the premier potato chip brand in America. Today's potato chips that you can eat one another key ingredient was the innovation of their products. They were first to offer crinkle cut ruffled chips which were less likely to break inside the package and by 1950 lays led the market for potato chips but this year lays made a decision that would future proof it against competitors and prove to be the greatest marketing tool of all. Lays had been quietly pursuing the rights to use a patented cooking technique developed by Joe Spud Murphy.

05:04 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 that would later become some of Lay's most in demand products. Securing the rights for flavored potato chips lays began to release flavors of their own. This Innovation helped catapult the company to a new level where its competitors were left behind. By the early 1960s Herman lay was still the head of HW Layin company which was generating 45 million dollars in annual sales that would be a half a billion dollars in sales in 2023.

05:54 But one huge competitor was standing in the way of total market dominance and that was the Frito company a corn chip company outselling Lays. By 30 percent. Frito had a similar origin story delays when founder C.E 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 Dulin didn't have a shop and was forced to sell them from his Ford car. Luckily they quickly became popular growing into a regional Empire. The two entrepreneurs were operating 900 miles from one another but their interests were about to collide instead of waging a war. Herman lay orchestrated a deal that merged the two companies to make Frito-Lay creating the First National American brand and in a testament to his business genius. He had kept himself in power as CEO of the new company. After the merger. In 1961 Frito-Lay quickly released a range of new Chips including many now iconic Brands like Doritos Funyuns.

07:03 Munchos and Pringles and the stage was set for the Genesis of a second business move that would create one of the biggest food companies of all time. In 1965 Herman lay met with a businessman named Don Kendall about another potential merger. This time it would be with a beverage company. Lay saw that joining the two would consolidate power over the American market and allow for aggressive International expansion after lay wrote The Proposal on the back of a napkin. Don Kendall accepted at the time Kendall was the CEO of Pepsi Cola which had been around since 1868 developed a variety of drinks including Mountain Dew Diet Pepsi and 7UP. Their Chief competition was Coca-Cola and Pepsi was eager to try and build itself.

07:53 An edge Frito-Lay continued to function as a subsidiary of Pepsi but the extra backing gave them more power to expand internationally into the global Behemoth. They are today Frito-Lay now employs 55 000 people producing enough potatoes to reach the moon and back. This has helped to grow pepsico's annual revenue to 85 and a half billion dollars. In 2021 lays accounted for a staggering 41 of the potato chip market and behind them were Ruffles and Pringles which are also owned by Frito-Lay. Frito-Lay.Products occupy as much as 80 percent of shelf space and convenience stores. A large part of their success comes from their ability to innovate new flavors there are country-specific and region-specific flavors that cater to local tastes which is why there are now over 200 varieties of Lay's chips ranging from Nori seaweed to baked scallop. The company even offers up to 1 million dollars for contestants who submit great new ideas and their head flavor researcher is an OP restaurant. Chef laces moved into an International markets where Lays chips were renamed walkers in the United Kingdom smiths in Australia sabritas and Mexico and Gypsy in Egypt Herman lay started Lay's chips after delivering chips to his customers as a traveling salesman. He converted a two thousand dollar loan into a global Empire that twice merged to become a key part of PepsiCo where he sat on the executive Council until his death in 1982. He turned to philanthropy later in life establishing the Lay's scholarship in hopes that he would help another entrepreneurial young mind create. The next sensation lay has been described as a mastermind in the food that built America and his legacy lives on in almost every supermarket and convenience store in the world.