When importers bite off more than they can chew

Mon 9 Feb 2015
Posted by: International Trade News

In a move which is sure to leave a bitter taste in the mouths of many US based chocolate lovers, confectioner giant Hershey has reached an agreement with American importer, Let’s Buy British Imports (LBB) preventing the company from importing any British Cadbury’s chocolate and Nestlé’s British made KitKats, Toffee Crisps, Yorkies and Maltesers into America.

Hershey’s had threatened legal action amidst claims that the importing of these products infringed on their trademark and trade licences, because the products were produced for the UK market and were never intended for sale in the US.  Furthermore they contended that the UK chocolate bars were packaged in a manner which was too similar to the products that Hersey’s manufactured under licence from Cadbury’s, and that this similarity caused confusion for their customers.

Whilst the threat of legal action has centred on the packaging of the products, many feel that the true point of contention actually lies in the taste of the products.

Differences between the food rules in the UK and the US mean that the American version of the chocolate bars follows a different recipe. To be classed as chocolate in Britain there must be a minimum of 20% cocoa solids, but in the US it only has to be 10%, which many feel is to the detriment of the taste.

The US is the world’s largest importer of chocolate. Globally, chocolate sales are estimated to reach $98.3 billion by 2016 and competition is fierce.

This case reinforces the need for all UK firms exporting to the US, regardless of product, to ensure that they understand the market and comply fully with all of the US customs guidelines.  It also clearly demonstrates how the failure to do so can leave firms open to the real and costly threat of legal sanctions.

The Hershey Company claim that it has acted in response to a trademark infringement, but others question if this case has simply been a vehicle for disguised protectionism. Rather than assuming the legal high ground, Hershey’s may find that they have instead reflected the attention of the world’s press on to what many within the US feel are sub-standard product offerings.

Whether this ultimately has a negative effect on Hershey’s domestic sales remains to be seen.  But if it does, then the disgruntled Cadbury’s fans may not be the only ones left with a bitter taste in their mouth.

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