PepsiCo, Inc. (PEP), Kellogg Company (K), Diamond Foods, Inc. (DMND): Millennials Are Flocking to These Companies

Diamond Foods, Inc. (NASDAQ:DMND) has yet to fully recover from the scandal, which makes it an attractive acquisition target for Kellogg Company (NYSE:K); it would bolster the company’s position in the global snacks market.

Even if Kellogg and Diamond Foods, Inc. (NASDAQ:DMND) combine forces, it will be near-impossible to dethrone Frito-Lay as the global leader in snacks. With brands like Lay’s, Doritos, Cheetos, and Ruffles, no other company can match the company’s brand power in the global snacks market. The company’s 40% share of the market ensures its domination for years to come.

Frito-Lay continually innovates to appeal to millennials. Its Doritos brand launched the spicy Dinamita Chile Limon (“Great taste and good fun”) to sit alongside the tried-and-true Cool Ranch, Enchilada Supreme, and other stalwarts of this powerhouse brand.

But even if Frito-Lay has a greater share of the market than Diamond Foods, Inc. (NASDAQ:DMND) and Kellogg Company (NYSE:K), all three companies benefit from millennials’ love of familiar brands. Unlike many other consumer products, private labels have had little success dethroning the low-cost branded snack items that are usually considered higher-quality. Most people drink Coke, PepsiCo, Inc. (NYSE:PEP), or Dr Pepper — not RC Cola. It is the same for snacks, which gives all companies in the branded snacks market an enormous tailwind.

Bottom line
Millennials are the driving force behind the global snacks market — and they’re also a key reason why it is expected to grow by 7% per year through 2015. Companies that cater to this market will have to continually innovate in order to keep these customers interested. Those who do it successfully will reward shareholders for an entire generation. 

The article Millennials Are Flocking to These Companies originally appeared on Fool.com and is written by Ted Cooper.

Ted Cooper has no position in any stocks mentioned. The Motley Fool recommends PepsiCo and Procter & Gamble. The Motley Fool owns shares of PepsiCo.

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