COURT RULING ADDS TO RAGU'S WOES

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It may be time for Unilever's Ragu spaghetti sauces to spice things up.

Though still the No. 1 spaghetti sauce, Ragu has suffered several years of market share losses, and now comes a loss in court.

Campbell Soup Co.'s Prego prevailed last week in an ad-related lawsuit brought against it by Unilever.

Unilever had contended a 1988 Prego ad comparing the thickness of Ragu Old World Style and Prego intentionally misled consumers.

Prego wasted no time responding to the March 21 decision in U.S. District Court in New York. On that same day, it broke a new spot crowing over the decision. FCB/Leber Katz Partners created that commercial, as well as the '88 ad that landed Prego in court.

Ragu, marketed by Unilever unit Van den Bergh Foods Co., has seen its share flag since 1988, when it commanded half the market. As of last January, Ragu had a 34.2% share of the $1.2 billion category, while Prego had 26.9%, up from an estimated 20% seven years ago. There may be some hope, however. According to Information Resources Inc., for the 52 weeks ended Jan. 1, Ragu was flat while Prego was down from 27.7%.

Still, market perception remains on the side of Prego.

"Prego is one of the few brands started from scratch and is doing well," said William Leach, an analyst at Donaldson, Lufkin & Jenrette.

"They're steadily taking away [Ragu's] share," said Terry Bivens, an analyst with Argus Research. "Ragu has always traditionally been strong in the Northeast, and we tend to overestimate it in the rest of the country. Ragu has more of a bona fide veneer in the Northeast. Unilever has become more aggressive of late and will go after its business harder."

Unilever wouldn't comment on the court decision. Ragu breaks a new brand campaign in April via J. Walter Thompson USA.

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