Borden expects to complete the sale of the brand in the next two months, and is said to be asking more than twice the $27.6 million in annual sales for the line of single-serve microwaveable meals. Industry executives believe Kraft would be willing to pay a higher-than-normal price based on the potential to extend the technology behind It's Pasta Anytime! to its other meal brands.
The shelf-stable pasta used in the Borden brand is precooked and reheatable in three minutes and it has a nine-month shelf life. The technology behind it can be applied to other carbohydrates, including rice. A Borden spokeswoman said the company is mulling offers from several marketers and doesn't expect an announcement to be made before the end of August. A Kraft spokeswoman declined to comment on the potential acquisition.
"It's Pasta Anytime! is a pretty good product in and of itself, but what's as interesting...is the microwaveable technology behind it that a company like Kraft would be able to leverage quite broadly," said Credit Suisse First Boston analyst David Nelson.
According to a research report Mr. Nelson compiled on Kraft, meal brands including Kraft Macaroni & Cheese, Stove Top Oven Classics and Minute Rice make up 11% of Kraft's cheese, meals and enhancers division, the single-largest unit of the company with 2000 revenue of $10.3 billion. Kraft has stated its intentions to move the division's product portfolio up the convenience pyramid to appeal to consumers' increasing interest in fast, easy-to-prepare dinner options. Easy Mac, the microwaveable version of the standard "blue box" Mac & Cheese that still requires consumers to add water, has proved a hit for the company. The Borden technology could be applied to the $360 million Mac & Cheese franchise, Kraft's $180 million Velveeta Shells & Cheese business and others.
Other potential buyers for the brand included Campbell Soup Co., owner of the Prego pasta sauce brand and Unilever Bestfoods, owner of Ragu. One executive close to Unilever said the company was no longer pursuing the Borden brand. A Campbell spokesperson declined comment.
It's Pasta Anytime! was initially launched nationally in June 2000 under the banner of Classico-a roughly $135 million pasta sauce brand that was sold last month to H.J. Heinz Co., along with Borden's other pasta sauce and bouillon businesses. It could not be determined at press time whether Heinz would license the Classico name to the buyer of It's Pasta Anytime! According to another person close to the situation, though, "The technology is more interesting than the sauce. That's where the innovation is."
Borden spent $14 million in media on It's Pasta Anytime! since its launch, according to Taylor Nelson Sofres' CMR. The advertising for the brand, previously handled by Interpublic Group of Cos.' Campbell Mithun, Minneapolis, will likely shift to Interpublic's Foote, Cone & Belding, Chicago, according to one agency executive. FCB handles the majority of Kraft's meal brands advertising.
Kraft currently markets fresh pasta and sauces under the DiGiorno banner and has recently completed a test of refrigerated meal kits called Kraft Freshmade Creations that feature varieties including lasagna where consumers add meat to noodles, sauce and cheese. Although Mr. Nelson's report said "management believes it has great potential," a Kraft spokeswoman declined to comment on future plans for the brand.