Marketers put foot down on private-label issue

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After long looking the other way when big retail customers knocked off their brands with remarkably similar-looking private-label versions, major package-goods players are starting to get more assertive about their intellectual property.

Unilever last week filed suit in the Netherlands against Albert Heijn, a unit of global supermarket giant Ahold, alleging trademark and trade dress infringement across a range of its European margarine brands as well as Lipton iced tea and Bertolli olive oil.

"Our first step is always to seek compromise, but where we cannot do so, we will take appropriate steps to protect our intellectual property, including court action," said a U.S. spokeswoman for Unilever. "I wouldn't say we are being more assertive."

Procter & Gamble Co. is paying closer attention to private-label knockoffs, too. In a speech late last year, R. Keith Harrison, global product supply officer, said P&G is starting to take a tougher line with retailers it sees treading on its intellectual property.

While package-goods players long have groused about knockoffs, they've tended to shy away from confronting their trading partners and rarely have sued. P&G, for instance, filed numerous suits against third-party generic manufacturers that knocked off its products in the 1990s but stopped short of suing retailers.

Energizer Holdings, which long has held the Eveready trademark, even turned its head when Wal-Mart Stores in the late 1990s launched the similar sounding EverActive alkaline private-label brand. It helped, of course, that Energizer handled the manufacturing for the brand, which Wal-Mart has since de-emphasized in favor of stronger merchandising behind Eveready and other value-priced zinc batteries.

"I do think there's a trend now [toward manufacturers getting more assertive,]" said Alison Chaltas, a P&G veteran and partner with Interscope, a Westport, Conn., consultancy. "They're getting more protective of their brands," she said, though she said she's not sure whether the number of lawsuits has risen or will rise.

LAST STRAW

In the case of Ahold, the last straw for Unilever appeared to be when the company's Dutch chain launched a line of four private-label margarines that looked similar to Unilever brands.

Officially, at least, Ahold said the dispute won't have any repercussions in the U.S., where Ahold owns such chains as Tops and Bi-Lo, or elsewhere. "We have been working so many years together as a customer and supplier and have a good relationship," said a corporate Ahold spokesman, who said he believes the companies will try to settle the dispute out of court. A hearing is set for April 12.

Despite tougher talk, P&G appears to favor more the carrot than the stick in combating the rise of private label, which made modest gains in dollar share last year in food, drug and mass outlets, according to Information Resources Inc (which doesn't measure Wal-Mart stores). In his speech to the Cincinnati Consulting Consortium, Mr. Harrison said that one reason retailers support private labels is to improve their category margins, "because they don't make any money on Tide, Bounty and Pampers."

Despite historically shunning one-week deals, Wal-Mart's policy of beating competitors' promotional prices means it often loses money on the brands, too, because some competitor has them on sale virtually every week. Wal-Mart has lost as much as $30 million annually on Tide alone, according to industry executives.

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