Crunch time: Britain’s crisp wars

Smith’s Crisps supplied almost every pub and hotel in Britain in the post-war period, but have since given way to Walkers, which now holds the majority of the market. How did Smith’s lose its position?

Frank Smith
Frank Smith (1875 – 1956) was born in Highgate, London, one of a family of 14. He joined his father’s greengrocers business from the age of ten.

Smith was a manager of a large grocery store by 1896. He then became a manager for Carter’s, a Smithfield wholesale grocery business. Carter’s began to sell potato crisps from 1913.

Frank Smith (1875 – 1956)

Smith recognised the potential for the product, and at his request, was appointed head of the crisp department. He wanted to establish a chain of factories to build scale in the market, however his employer declined to do so.

Establishment of Smith’s Potato Crisps
Smith was a restless and energetic man. He had faith in the potential for crisps. He raised £10,000 with two friends and entered into crisp manufacture for himself from 1919.

A factory was established at a disused garage in Cricklewood with a staff of twelve and five tons of potatoes. Within six months the business produced 500,000 packets of crisps a week.

The enterprise proved successful enough that Smith only had to spend £6,000 of his initial capital: further expansion was funded entirely from profits. Additional factories were established at Portsmouth, Birmingham, Paisley and Stockport in 1921.

Smith added a twist of salt wrapped in blue paper to his bags of crisps from 1925. Pub landlords became increasingly keen to stock his crisps as the salt made the patrons thirsty, which led to higher sales of beer.

Smith’s acquired Carter’s Crisps in 1929.

Smith’s Potato Crisps was registered as a public company in 1929. The business had a workforce of over 1,000 people. 100 million packets of crisps were produced each year from seven factories. All of the early output went to hotels and pubs, and the hospitality trade would remain the largest market for Smith’s until the 1960s.

200 million packets of crisps were sold in Britain in 1934, and 95 percent of them were manufactured by Smith’s.

Smith’s acquired 8,000 acres of farmland in Lincolnshire to provide around ten percent of the company’s potato supply. It was the largest farm under single management in Europe. 1,000 to 1,200 acres were used for potato production at any one time due to crop rotation.

The majority of production went to the military during the Second World War.

Scan 6

Smith’s had eleven factories and twelve depots in Britain by 1949, as well as two factories in Australia. Over 2,000 people were employed. Smith’s supplied the vast majority of pubs and hotels across Britain. This was at a time when the majority of pubs did not serve food, and crisps were often the only bar snack available.

Frank Smith retired as managing director in 1955 and died the following year. He was succeeded as managing director by his son-in-law, Cyril Johnston Scott (1902- 1980). In an unconventional twist of events, Scott divorced his wife in 1960, and married his stepmother-in-law, the widow of Frank Smith.

Smith’s produced over ten million packets of crisps every week by 1956. Net profit after tax exceeded £1 million for the first time in 1960. 800 million bags of crisps were sold in 1960, with the majority of sales taken by the grocery market.

Smith’s acquired its major rival, Tudor Crisps, in 1960. Tudor was in the process of constructing a large new factory at Peterlee, County Durham, and Smith’s was keen to prevent a rival gaining control of the new site.

Smith’s was the only national brand at the time, but Tudor enjoyed distribution in Scotland, the North of England and the Midlands. Founded in Newcastle upon Tyne in the late 1940s, Tudor was the first company in Britain to utilise automated crisp manufacture, and had brand leadership in the North East of England. The Tudor acquisition helped Smith’s achieve a market share of 65 percent in 1961, of which Tudor accounted for three to five percent.

Increased competition
Golden Wonder had been founded by William Alexander, an Edinburgh baker, in 1946. The company was acquired by Imperial Tobacco in 1960. Imperial built three large new factories and promoted the product heavily on television. A cellophane bag was introduced to keep crisps fresher for longer. The brand went nationwide in 1964.

Golden Wonder had overtaken Smith’s in market share by the end of 1965, and the brand had a market share of 45 percent, against Smith’s 34 percent, by 1966.

By appealing to new customers such as teenagers and children, as well as the increasingly important housewife market, Golden Wonder was able to grow the crisp category without poaching sales from Smith’s. As Smith’s did not monitor the progress of its competition, the company did not become aware of a problem until its sales fell slightly in 1966. Meanwhile, the grocery store sector grew as the pub snacks market declined.

In order to lower production costs, Smith’s closed eight factories to concentrate production at seven sites.

A new chairman and managing director were appointed. The chairman admitted that Smith’s had lost market share to Golden Wonder due to complacency, and that the business had “had it too good for too long”.

The Tudor plant in Peterlee was expanded to 150,000 square feet in 1967, and could produce eight million packets of crisps a week. It employed 500 people and was one of the most efficient crisp factories in Europe.

The business extended its interests into other savoury snacks such as roasted peanuts, and changed its name to Smiths Food Group in 1967. Meanwhile the company changed it focus from that of a production-led concern to a marketing business.

The company’s first flavoured crisp, Salt ‘n’ Vinegar, was launched by Tudor in Spring 1967, and the Smith’s branded version was released two months later. It was the first time the now iconic crisp flavour was introduced. However, the flavoured crisp had been pioneered by Tayto of Northern Ireland in the late 1950s.

1967 also saw Smith’s replace translucent paper (glassine) with cellophane film bags which increased shelf life from a few days to over six weeks.

Smith’s had long claimed to manufacture a high quality product, but Golden Wonder achieved higher standards with the continuous batch process. Growing Golden Wonder cost Imperial Tobacco £10 million, mostly in factory costs, and due to a high marketing spend the business ran at a loss until 1965. Smith’s had presumed that the barrier costs of entry were too high for a competitor to match. They were wrong and it cost them. Largely due to these concerns, Smith’s was taken over by General Mills of America in 1967 for £15-16 million.

Smith’s introduced Quavers in 1968, and Monster Munch in 1977. These were part of the new “extruded snacks” category, which were made using potato flour. (Golden Wonder launched Wotsits in 1970).

Walkers of Leicester quadrupled its sales between 1962 and 1969. Production amounted to 160 million packets in 1967, and the company held 20 percent of the Midlands market. Sales were extended to East Anglia and Yorkshire in the late 1960s. The business was sold to Standard Brands of the United States in 1971.

In 1972 Golden Wonder had a market share of 39 percent, Smith’s 32 percent and Walkers 12 percent. Still heavily regional, by 1974 Walkers claimed 50 percent of the Midlands crisp market. Walkers was a premium product with a heavy marketing spend that sold mainly to the wholesale trade.

Smith’s became loss-making under General Mills, and the business was sold to Associated Biscuits for £16.4 million in 1978. General Mills admitted defeat, and indicated that a British concern would likely be better tuned in to the needs of the company.

Merger with Walkers
Standard Brands merged with Nabisco of America in 1981. Nabisco acquired Associated Biscuits in 1982, thus bringing Walkers and Smith’s under single control. Walkers was still a regional concern at this time, but a rival executive described the brand as “the Rolls-Royce of the crisp world” in reference to its premium reputation.

Nabisco focused its marketing strength behind Walkers, and developed it into a national brand. Walkers took the lead in the crisp market with a 24 percent share in 1983. Golden Wonder had 22 percent and Smith’s/Tudor had 17 percent, followed by KP with 12 percent. Taken collectively, Nabisco had a 41 percent share of the British crisp market. By this time Tudor was considered a downmarket brand.

Walkers and Smith’s were managed separately: Walkers was a high margin, high quality regional product, but it suffered from a narrow product range, poor trade relations and no innovation. Smith’s focused on low prices, but this merely resulted in smaller profits.

Hanson Trust (who had acquired Imperial Tobacco) sold Golden Wonder to Dalgety for £87 million in 1986. At this time Golden Wonder claimed the number two position in the British and Dutch crisp markets.

Acquisition by PepsiCo
In 1988 Smith’s had sales of £145 million; Walkers had sales of £114 million. Walkers Crisps had a 32 percent market share.

PepsiCo, who produced Doritos and Lay’s crisps in the United States, acquired Walkers and Smith’s for $1.35 billion (around £900 million) in cash in 1989.

In 1991 PepsiCo reduced costs and complexity to fund investment in product quality gains, innovation and advertising, whilst maintaining prices. Walkers and Smith’s were merged. A factory was closed to leave six manufacturing sites; nine distribution centres were reduced to five, and staffing levels were reduced by 17 percent.

Walkers prices were frozen between 1992 and 1995, despite a 22 percent rise in the cost of raw materials. The main site in Leicester was upgraded to become the largest crisp factory in the world. Foil replaced plastic bags to improve freshness. Air in the bags was replaced by nitrogen, to further maintain freshness, from 1996.

Walkers received heavy advertising support, and was distributed through the large national retailers. The Smith’s and Tudor crisp brands were phased out in the mid-1990s.

Walkers held 46 percent of the branded crisps market by 1995. Launched in Scotland in 1994, Walkers had displaced Golden Wonder as the local market leader by 1996.

Walkers acquired the Wotsits brand from the struggling Golden Wonder for £150 million in 2002, following disappointing sales of its own similar Cheetos product. Golden Wonder entered into administration in 2006, a victim of the popularity of Walkers.

The Walkers site in Leicester produced more than eleven million bags of crisps a day in 2011.


10 thoughts on “Crunch time: Britain’s crisp wars”

  1. In 1948 I was 14 years old. My uncle was Mr. Tim Needham,living in Lockerbie Avenue Leicester.
    He was manager of Walkers Butcher shop in Leicester,while visiting him he took me around the crisp factory he was in charge of,which if my memory serves was then very small,only small potato peelers,fryers,packaging machines etc.
    I can’t remember how many people worked there.
    If he were alive today he would be amazed as I was how the place has grown.

  2. A packet of crisps cost three pence (a thrupeny bit-12 sided I think) in 1949. It was sheer luxury. The salt was in a screwed up bit of grease paper which you had to burrow into the pack to find it).

  3. Always preferred Smith’s to Golden Wonder in the 60’s. They were more substantial, like Tyrell’s are today.

    1. In the 70s we had a dog that would only eat Smiths crisps. At our local pub it became a challenge on duping him. We would buy lots of different crisps coat them in all sorts. He would lick off the Goods on everyone ,leave the crisp on everyone except the smiths which he would eat. I always thought at the time that I aught to get in touch with Smiths. Never did though. Have to say recently been able to eat them again. Still the very best ever

  4. I worked at Smiths Crisps in Stockport in 1963 in the office.At that time another factory (I think it was Lincoln) were making cheese and onion crisps. The tales coming back to us was that the workers there were turning yellow from the flavouring that was going into the crisps. Also I do not think that salt & vinegar were being made at that time. christine

  5. I enjoyed reading this. My Dad worked delivering Smiths crisps in bham. Not sure of the date but he was born in 1934 so maybe 1950s. He used to say that the “gaffa” said flavoured crisps would never catch on. lol.

  6. I really enjoyed this piece and the comments, and forgive me for pointing out one tiny inaccuracy: flavoured crisps were in fact invented (and pioneered) by Tayto in Dublin, not Northern Ireland. The Moore Street factory was started by “Spud” Murphy, a true eccentric – his obituary in The Daily Telegraph is well worth a read.

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