It was the Brecon and Radnor by-election in 1985. Some young American woman was helping with the Labour campaign and found her way, with some local Labour activists, into a chip shop in some Welsh village. Seeing a vat of green semi liquid stuff, she immediately assumed it was guacamole and asked for some of the said substance with her chips. Apaprently they don't (or didn't) have mushy peas in the US.
The story quickly made its way around the Labour Party and reached the ear of then leader Neil Kinnock. Shortly after, Peter Mandelson was appointed the party's director of communications and when he left that job in 1990, at his leaving party Kinnock told the guacamole story, but replaced the American with Mandelson as its star (Mandelson had been involved in the campaign). As the story seemed to fit perfectly the idea of Mandelson being completely unfamiliar with proletarian culture, it has stuck to him ever since.
And that's how it happened....