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NEW OWNERS HEAT UP THE MEXICAN FOOD AISLE;KRAFT'S TACO BELL DEAL IS LATEST MOVE IN $1.3 BIL CATEGORY

By Published on .

Kraft Foods' acquisition of the Taco Bell-branded Mexican grocery products sets the stage for a marketing shootout in the $1.3 billion category, as all of the major brands are under new owners.

Within the past 18 months Pillsbury bought Pet Inc.'s Old El Paso and Nestle USA purchased Ortega Mexican foods from Nabisco. Kraft bought the Taco Bell Mexican food entries from PepsiCo at the end of July; it had been marketed by Frito-Lay using sister division Taco Bell's name.

Ad spending, which had been taking a siesta, is expected to heat up.

"No doubt things will accelerate," said Chris Policinski, VP-Mexican foods at Pillsbury. "I envision us all spending a lot."

OLD EL PASO'S SPENDING EDGE

Old El Paso received the most support among food lines, according to Competitive Media Reporting. Its $12 million expenditure of last year will increase as Pillsbury builds on its successful "Nacho man" campaign from Leo Burnett USA, Chicago.

Last week, Pillsbury began shipping Old El Paso One Skillet Dinners, a new packaged product offering soft-shell tacos, rice and seasonings prepared by adding chopped meat. It can be cooked in 20 minutes.

A full-scale marketing cam-paign, including TV, is scheduled to break in the fall from Burnett. Mr. Policinski wouldn't discuss creative but hinted that Nacho Man would return.

He said the company's strategy is to boost Mexican food usage in the home, where it is underdeveloped compared to restaurants; recipes will be a tool.

Right now, Old El Paso's closest competitor is Ortega, but the Kraft/Taco Bell combination might come on stronger.

DISTRIBUTION, MARKETING KEY

The Kraft connection gives the Taco Bell grocery line a solid warehouse distribution network and the marketing muscle of the nation's largest food company.

And Kraft sees huge opportunity in the market. Exec VP-General Manager/Meals M. Carl Johnson said the company believes Mexican foods could eventually become as big as pizza-an $18 billion business, including retail and supermarket sales.

Kraft has been waiting to get into Mexican foods.

"We decided there would be a higher degree of success [in acquiring rather than building a Mexican line]," said Mr. Johnson. "We looked at other of the properties available over the years and the value just wasn't there."

ALREADY A BIG SELLER

Mr. Johnson noted that Taco Bell already was a $50 million player even without national distribution and with minimal advertising.

PepsiCo began marketing the products in 1993 and had penetrated about 50% of the country, mainly the Midwest and Southeast. It had the advantage of a halo effect from PepsiCo's $200 million ad budget for its Taco Bell restaurant chain.

Kraft is keeping the Taco Bell grocery line-including dips, salsas, dinner kits and components including shells, spice mixes, beans and taco sauces-with Bozell, the Costa Mesa, Calif., agency that created the "Nothing Ordinary About It" campaign for the Taco Bell fast-food chain.

But Mr. Johnson said Bozell wouldn't become a core Kraft agency.

PACE MOVING UP

Another up-and-coming player in the market is Campbell Soup Co., now seeking ways to move its Pace salsa brand into other segments.

Campbell wouldn't say which categories it was interested in as yet. The company spent $25 million advertising Pace last year via Temerlin McClain, Irving, Texas.

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