Trade Marks – Powerful drivers in the FMCG purchases.

BACKGROUND

In the fast moving consumer goods (FMCG) market, buyers are confronted with what appears to be an endless array of choices, brands and varieties of products all trying to appeal to them. In this article I will look at the use of trade marks in enticing instinct purchases several categories of FMCG and the efforts companies take to try to protect these powerful assets.

CHOCOLATE

The chocolate market in Australia is relatively large and a recent market analysis by Superbrands reported that Australians annually consume 6.7kg of confectionary per person, making it the most popular snack food in Australia.

Chocolate accounts for 77% of all confectionery sales in Australia with a retail value of over $1.3 billion every year. Cadbury is the biggest player in chocolate confectionery, with market leadership across all major product segments, according to Superbrands.

47% of confectionery is purchased on impulse, and almost 50% of all chocolate buyers fall within the 25 - 49 year age group. Women generally buy more chocolate than men, but in most cases they are buying for their families. Men in the 35 - 49 year age group are the highest buyers of chocolate bars and blocks, usually for themselves.¹

Cadburys has endured a recent set back in relation to it’s attempt to gain a monopoly on the colour purple for all related chocolate items, as well it did not manage to prevent rival Darrel Lea chocolates from using the colour purple for its own branded chocolates.

In relation t the trade mark registration attempts by Cadbury, it commenced in 1998 when it applied for trade mark registration to register its purple colour packaging. For its application to be accepted by IP Australia, Cadbury had to show that consumers recognised chocolate in purple packaging as being a Cadbury product and in 2003 that the application was accepted. Darrell Lea then opposed this registration, however the Registrar of Trade Marks decided in 2006 that Cadbury could register a specific shade of purple as a trade mark but only in relation to packaging for ‘block chocolate and boxed chocolate’. Both Cadbury and Darrell Lea have appealed this decision at the Federal Court.

In the meantime Cadbury was concerned about Darrell Lea’s use of the colour purple commenced proceedings in the Federal Court alleging passing off on the part of Darrell Lea as well as false, misleading or deceptive conduct contrary to the Trade Practices Act 1974. In the 2006 judgment it was stated that ‘Cadbury does not own the colour purple and does not have an exclusive reputation in purple in connection with chocolate’ and it was found there had been no passing off or misleading or deceptive conduct on the part of Darrell Lea. This decision was also appealed by Cadbury to the Full Federal Court, where on the 11 April 2008 a similar finding was passed.²

FROZEN FOODS

In the frozen food aisles, trade mark conflicts have arisen from the use of the trade mark ‘STEAM FRESH’. Rival companies, Birdseye and Heinz both wanted to use this trade mark in Australia as well as prevent others from using it, for the obvious reasons of attracting purchasers of frozen food items.

The combination of words ‘Steam’ and ‘Fresh’ appear quite powerful in portraying a healthy message. This not only provides appeal to the product but encourages the consumer to question the status of competing brands and their freshness factor.

After four years of disputes in Australia, Birds Eye were successful in having their mark (Trade Mark No. 987983) accepted on 9 May 2008, whereas Heinz had their STEAM FRESH trade mark (No.968990) withdrawn on 24 April 2008.

CIGARETTES

In an attempt to reduce cigarette sales the anti smoking group, QUIT has initiated a drive to decrease the appeal of the branding on cigarette packaging. Branding, including trade marks logos and images on cigarette packages has become the key decision feature in consumer selection criteria.

The tobacco industry today sees the ‘pack’ as it’s most treasured advertising medium. "They are quite open about it: now that the law prevents them from advertising, the main game is now via the pack. Pack design is now the leading edge of making tobacco products attractive and interesting, particularly to young starters," States Freeman and Chapman who continue to say that "in our opinion, [after taxation] the other two regulatory environment changes that concern the industry the most are homogenous packaging and below-the-counter sales. Both would significantly restrict the industry's ability to promote their products."

So based on their arguments, trade marks, whether words or images, are so powerful, that by removing these identifying and enticing marks, the consumers would in fact reduce their desire to purchase and consume cigarettes. In my view, I find this point strongly contributes to the notion that trade marks and branding play an enormous role enticing and controlling consumers’ purchases.

POWER OF TRADE MARKS ON FMCG’S

Whilst there is scope for debate about the use of certain words as trade marks, the colour rights claimed or the ethics in providing enticing branding on cigarette packaging, it is consistently held that trade marks are powerful drivers of FMCG purchases.

To avoid costly legal disputes concerning trade marks and branding, we recommend undertaking due diligence, including a trade mark search, prior to commencing with commercial activities.

If you would like any further information in relation to this article, please do not hesitate to contact Brian Goldberg