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As food manufacturers look for opportunities to combat the rise of private-label products, more CPG manufacturers are expected to sue retailers they claim are making copycat products.
Earlier this month, JM Smucker sued Trader Joe’s, claiming the grocery chain’s crustless version of the PB&J sandwich was an “obvious imitation” of the Uncrustables frozen sandwich. The lawsuit comes five months after Mondelēz International sued Aldi, alleging that the grocery store’s snack products replicated the packaging of Oreos, Chips Ahoy! And 5 other brands.
“What national brands are doing is just throwing up a challenge and saying, ‘Hey, you can’t just copy our product and get away with it,’” said Neil Saunders, managing director at Global Data. “As the market becomes more competitive, there will be more conflicts.”
Once considered inferior imitations of branded products, private label products have now evolved into powerful competitors that can be purchased at both small business stores and giant retailers such as Walmart and Costco. Today, shoppers can find these products in almost every aisle of the store, from canned vegetables and ice cream to meat and yogurt.
Private brands are expected to account for more than a fifth of food and grocery sales by 2025, according to information from GlobalData. This is an increase from 12% 20 years ago. Circana said sales will soar to a record $271 billion in 2024 alone, up 3.9% year-on-year, while domestic brands will see a 1% increase.
The growth of this segment is a result of retailers spending more to increase the quality, taste and value of their products. Recent inflation has led consumers to spend less, making private label products a more attractive cost-saving option.
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Christopher Doering/Food Dive
‘A game of cat and mouse’
For discount chains that typically shy away from selling name-brand items, the ability to leverage product attributes associated with popular items like Oreo cookies or Uncrustables sandwiches can prove invaluable in enticing consumers to buy the store’s offerings instead.
When private labels get too close to branded products, food manufacturers fighting to maintain or increase market share have proven more willing to fight back.
“It’s been kind of a cat-and-mouse game with (some private label retailers) trying to get as close as possible,” said Mark Simpson, a partner at Saul Ewing who has worked in intellectual property for nearly 40 years.
what Smucker and Mondelez What the lawsuits have in common is that they are suing retailers that primarily sell private label products. Food manufacturers rely much more on large retailers such as Walmart, Kroger and Albertsons for sales. There is less incentive to sue them for fear that long-term relationships will be damaged and the possibility that retailers will pull their products from their shelves in retaliation.
while aldi Trader Joe’s is one of the fastest-growing retailers, but it’s not a major source of revenue for major food manufacturers.
“The lesson is that these kinds of business models are more vulnerable to lawsuits, even if the basis for the lawsuit is questionable,” said Robert Brauneis, professor and co-director of the intellectual property program at George Washington University Law School.
“What national brands are doing is just throwing up the gauntlet and saying, ‘Hey, you can’t just copy our product and get away with it.’”
Neil Saunders
Global Data Executive Director
In their respective lawsuits, Smucker and Mondelēz reiterated similar messages. In other words, private label products confuse consumers and trick them into thinking they are brand names.
The companies argued that Trader Joe’s and Aldi unfairly benefited from the goodwill and investments the food manufacturer made over years to build its brands. Without legal action, food giants claim that imitation products could cause irreparable damage to their brands and businesses.
Legal experts said that in cases like this, courts will focus on whether the private label product in question causes confusion among consumers who think they are purchasing items associated with the brand name.
A risky lawsuit
Brauneis believes it is unlikely that the Smucker case will be dismissed early. But the longer it goes on, the more pressure there may be on Trader Joe’s to settle.
“Smucker may cause Trader Joe’s some pain and litigation costs, and that may be factored into the calculations. There’s no 100 percent chance of winning,” he said. “How much is it really worth to you to sell a product similar to yours?”
Smucker said in the lawsuit that he “does not take issue” with other companies selling pre-packaged, frozen-thawed-and-eat crustless sandwiches, but Trader Joe’s Crustless Peanut Butter Strawberry Jam Sandwiches use a similar blue color on their packaging and have sides. They said they copied Uncrustable by using the round, corrugated sandwich design.
A Smucker spokeswoman said in an email that the company is “actively monitoring the marketplace” to protect its brand. The company is “focused on protecting the unique trademark designs that represent the high quality associated with the Uncrustables brand and preventing consumer confusion due to imitation.”
Meanwhile, Germany-based Aldi was no stranger to lawsuits related to products sold in its stores, even before its scuffle with Mondelēz.
Marks & Spencer sued Aldi in 2021 over concerns the British retailer had copied its popular bug-shaped cakes. The two companies reached an agreement a year later and the cake’s appearance changed. Last year, an Australian court found Aldi liable for copyright infringement on packaging for children’s snacks that used a rival brand as the basis for the design.
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Christopher Doering/Food Dive
Trader Joe’s and Aldi did not respond to requests for comment.
Brauneis and Saunders noted the inherent risk to big food brands if the lawsuit fails. Court rulings in favor of retailers may encourage retailers to copy more branded products.
“If they lose the legal case, it would be a disaster, because it would be an opportunity for everyone else to start doing their own thing,” Saunders said. “There are actually a lot of risks involved.”
Still, he noted, food manufacturers have little choice but to act now to protect their brands. Failure to fight back could be damaging, especially if other stores choose to launch their own copycat products, Saunders said.
“When someone bigger does something like that, they can point back and say, ‘Well, Trader Joe’s has been doing that for years and you haven’t done anything about it,’” he said. “It weakens their case. If you don’t challenge issues as they arise, it becomes much more difficult to enforce your intellectual property rights.”
