PepsiCo was still licking its wounds this time last year, after £30m was wiped off the value of its flagship snack brand, thanks to increased scrutiny of the whole category in the wake of the obesity debate. The story this year couldn't be more ­different.

Walkers crisps is back in growth, with sales up 3.7% in the latest year and, although the brand hasn't returned to the value of 2004, it is clearly in rude health.

Much of this turnaround can be attributed to the high-profile relaunch of Walkers at the start of 2006. PepsiCo switched the recipe to Sunseed oil, slashing the saturated fat content by 70% and reducing salt by 25%, in an attempt to send strong messages to consumers that Walkers was leading the way in healthy reformulation and to try and rebuild trust in the brand as a child-friendly snack.

The move was so successful its five snack brands - Quavers, Monster Munch, French Fries, Squares and Wotsits - were given the Sunseed oil treatment last month in phase two of Walkers' health drive.

The reformulation was backed once again by a £5m advertising campaign featuring frontman, Gary Lineker. PepsiCo expects it to have the same effect as it did in crisps, and turn a 1% decline in the traditional bagged snacks category into growth.

"When you look at retail sales, snacks is worth £700m," says vice president of marketing Jon ­Goldstone.

However, sales of traditional bagged snacks such as Quavers are not growing as well as other snack sub-sectors. Nuts are performing well and tortillas are also in growth. Standard bagged snacks is the only part of the market in decline.

Goldstone puts the decline down to fewer consumption occasions. In short, parents are buying fewer snacks for their children because of concerns about their salt and saturated fat content. But he believes the new recipe will challenge these.

"The amount of saturated fat the nation is eating has declined dramatically as a result of the changes we have made in Walkers and we want this to continue. Quavers, for example, now contains 80% less ­saturated fat.

"Before the change Quavers contributed 11% of the GDA saturated fat, but it now accounts for just 2%. The change is really significant and it will definitely get our snacks brands and the category in general back into growth."

Walkers has outlined a three-pronged approach for its business, and health is the cornerstone. "We have firmed up our strategy as a snacks business and have three commitments," says Goldstone.

"The first of those is to make all our existing products as healthy as we can without compromising on taste. The second is to significantly build our portfolio of what we call better or good-for-you products."

The third stage is still being developed, but Goldstone says it will involve Walkers getting into the debate about children's exercise.

"It is still pretty embryonic at the moment but we've got some ideas about how we can get children to be more active. The approach will be similar to what Tesco and Sainsbury's have been doing with their activity campaigns."

As part of PepsiCo's first commitment, Doritos and Sensations are next on the Sunseed oil list, with a recipe change due to be announced in the next couple of weeks.

Goldstone admits the switch won't be as straightforward as with its other brands, however. "A huge issue is that with more treat indulgence brands available, people just want taste and we can't afford to make changes they won't like."

However, he is hoping the switch will result in a boost in performance of the brands. While Doritos had a good year, Sensations dropped 8.8% in value.

In terms of further NPD, Goldstone is less forthcoming with the details but says the company will follow a similar approach to previous years and concentrate on two or three major launches.

"In 2006 there was a good amount of focus on core business and some innovation, and you'll see a similar thing in the next couple of years."

In short, this year promises to be another successful one for the Walkers brand. "I'm incredibly excited about the future of our category, I really believe there are few snacks out there that can offer what our category offers," says Goldstone.

"People aren't going to stop snacking but they will change their choices to products that marry indulgence with positive nutrition. Our category has more potential to deliver on this than any other ­category." n