Taco Bell Makes a Run for Grocery Stores : Food: The company will team up with fellow Pepsico subsidiary Frito-Lay for test-marketing in May.
Taco Bell and Frito-Lay will venture into the nation’s supermarket aisles this spring with a line of products designed to capture part of the rapidly growing Mexican-style foods market.
The two companies in May will begin test-marketing a line of Taco Bell brands at grocery stores in Ohio and Georgia. Taco Bell and Frito-Lay might eventually expand the line for sale at convenience and warehouse stores.
Pepsico, the parent company of Taco Bell and Frito-Lay, is betting that Taco Bell’s image as a seller of low-cost but tasty fast food will carry over into strong supermarket sales. It is also betting that Frito-Lay has the marketing and distribution muscle necessary to expand beyond its conventional line of snack foods, including Lay’s potato chips and Doritos corn chips.
Taco Bell, based in Irvine, and Frito-Lay, based in Plano, Tex., are entering one of the nation’s fastest-growing food segments, according to Packaged Facts in New York. Grocery store sales of Mexican-style foods will double to $4 billion for 1997, up from $2.2 billion for 1992, the market research concern predicts.
The expansion from fast-food restaurants to supermarket shelves “seems like a smart move,” said Don Beaver, president of the California Grocers Assn. in Sacramento. “Taco Bell and Frito-Lay have tremendous name identification, and if they handle it right it could be really effective.”
The two Pepsico subsidiaries face stiff competition for shelf space, for supermarkets are being swamped with new items. Nearly 62,000 products were introduced between 1987 and 1991, according to the Food Marketing Institute in Washington.
The two may have a competitive edge, however, because “companies like Taco Bell have established substantial brand franchises,” said Willard Bishop, a supermarket consultant based in Chicago. While name recognition will help, Bishop said, Taco Bell and Frito-Lay must “prove they can deliver good-tasting food at a competitive price.”
