NEW PRODUCT FEAST READIED BY FRITO-LAY

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Frito-Lay's $50 million ad push for Baked Lay's is just the start of a 1996 new-product juggernaut of at least four salty snack introductions.

And that's in addition to its testing of no-fat, olestra-based snacks in the second half of the year.

Baked Lay's is such a smash hit that it's causing product shortages nationwide. But Frito-Lay is nonetheless going full-speed to get other chips off the block, including a Reduced Fat Doritos; new flavors of Fritos and Rold Gold pretzels; and tubular-shape Dor-itos 3-Ds.

Since Frito-Lay typically spends at least $20 million on a major launch, the products potentially could pump up the marketer's snack advertising budget by $80 million.

The Baked Lay's shortage, coming only three months after national rollout, appears to have surprised even the marketer.

"We can't make them fast enough," said Lynn Markley, director-public relations, adding that the problem will be rectified by next month.

"I haven't seen any of the product [Baked Lay's] in the past few weeks," said John Catsimatidis, chairman-CEO of the Red Apple supermarket chain.

Frito-Lay executives told analysts last week they expect Baked Lay's to eventually become a $250 million brand.

Caroline Levy, a Lehman Bros. analyst, said that "70% of Frito's growth is coming from better-for-you products," adding that these types of products are luring new consumers to the salty snack category.

According to Information Resources Inc., Baked Lay's chalked up a 0.6% share of the $2.2 billion potato chip segment in food, drug and mass merchandisers for the 52 weeks ended Dec. 3-while the product was still in test.

Reduced Fat Doritos will roll out within six months, said an executive familiar with Frito-Lay's plan. The other three entries-including Doritos 3-Ds, which is now in a U.S. test market, reportedly in Eau Claire, Wis.-are under consideration for national status by the end of the year.

Fritos and Rold Gold are handled by DDB Needham Worldwide, New York, while Doritos' agency is BBDO Worldwide.

Ms. Markley wouldn't discuss Frito-Lay's new products or its plans for the no-fat snacks containing olestra, now branded Olean. But the company signaled its aggressive new-products program with the purchase last week of four of the five plants Anheuser-Busch sold as a consequence of folding its Eagle snack brand.

The plant purchases come on top of a $255 million investment last year for low-fat snack production.

The Olean-based entries will go up against a test product from Olean producer Procter & Gamble Co., likely under its Pringles brand name.

A P&G spokeswoman said its test also will begin in the second half of this year.

PaineWebber analyst Manny Goldman called Olean "a watershed event for Frito-Lay." The marketer has told analysts it won't be ready for rollouts of Olean-based products until 1997.

Baked Lay's has added substantial marketing clout to the entire "healthy" snack segment. SnackWell's marketer Nabisco Biscuit Co. estimates that segment is growing at a 19% clip, far outpacing overall category growth of 2%.

Nabisco is testing SnackWell's potato chips, tortilla chips and pretzels in Denver, western New York and Jacksonville, Fla.

The renewed interest in low-fat salty snacks is evidenced by P&G's Pringles Right Choice, a reduced-fat chip that, though introduced in 1981, posted a 20% volume gain last year, P&G says.

The "healthy" leader, of course, is Frito-Lay, with $207 million in sales for Reduced Fat Ruffles, Baked Lay's and Baked Tostitos in '95, IRI reported.

Pat Sloan contributed to this story.

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