Kraft vs. Bega: $110m brekkie battle
AFTER more than a year's absence, Kraft peanut butter is back on supermarket shelves. Or is it?
That's the question facing shoppers with archrival Bega insisting that only it now owns and produces the "never oily, never dry" spread Australians grew up with. Whatever is in the new - and almost identical - Kraft jars, it's not the real thing, the Aussie firm has said.
It's the latest chapter in an increasingly bitter breakfast time battle between US giant Kraft, now owned by Heinz, and NSW dairy Bega which bought most of Kraft's Australian operations for $460 million last year.
The two are due to face each other in court this week over allegations of trademark infringement.
The victor will likely go on to dominate the $110 million Australian peanut butter spread market.
Jenni Romaniuk, a research professor at Uni SA's Ehrenberg-Bass Institute and author of Building Distinctive Brand Assets told news.com.au the spread stoush was "a bit of a mess" and it could ultimately be "bad news for Bega" if shoppers flocked back to the familiar Kraft name.
The Kraft brand has quietly returned to Australia with its peanut butter jars now appearing at selected IGA stores. Currently, neither Woolworths nor Coles stock the Kraft spread.
The Kraft peanut butter jars, with their yellow lids and peanut shaped logo, are almost indistinguishable from the Bega peanut butter jars which appear next to them on shelves.
That's no accident, because Bega peanut butter was, until recently, Kraft peanut butter. In 2012, the US firm, like a corporate butter-fingers, let its most well-known Australian products slip through its fingers and subsequently into Bega's arms.
That year, Kraft split into two separate companies, leaving custodianship of its Australian spreads with a new company called Mondelez. In 2017, Mondelez sold off the Port Melbourne factory and peanut butter recipes as well as the Vegemite brand to Bega Cheese, based in the NSW town of the same name.
BRUISING COURT BATTLE
In the 18 months since, Bega has been busy replacing the Kraft name with its own on jars while assuring customers it was all the same taste really.
According to researchers Euromonitor, Bega's peanut butter has a 52 per cent market share.
KraftHeinz, however, has always been adamant it wanted to get back into Australia. So now, both Bega and Kraft peanut butters are jostling for shoppers' attention.
Bega markets its spread as "Australia's favourite peanut butter, made with the same recipe in Australia for over 50 years, now Australian owned by Bega".
Its Facebook page features former Kraft employees testifying that the Bega spread is "the same" as it was under the previous owners.
Kraft's new marketing push states "the brand you loved since 1935 is back". But it is silent on the provenance of what is in the jar.
Bega has previously insisted only it has the exclusive use of the "the original, never oily never dry recipe" and Kraft's isn't that.
Citing the current court proceedings, Kraft would not confirm to news.com.au if its original recipe was now in Bega's hands and, assuming that is so, if its peanut butter was indeed a new formulation. Bega, similarly, wouldn't comment.
That acrimonious court battle began in New York earlier this year and is now being heard in Melbourne.
In a Manhattan court in October, Kraft said Bega's jars were a "deliberate effort to trade off the goodwill of the Kraft brand, cause consumer confusion, and irreparably harm the value of Kraft's intellectual property".
It demanded Bega drop the famous yellow lids and packaging. But Bega has always maintained it now owns the brand's intellectual property, bar the Kraft name. Until a decision is made, both brands have the same look.
'BAD NEWS FOR BEGA'
In terms of ingredients, the difference between the two is also negligible. Both contain peanuts, no surprises, vegetable oil, sugar and salt.
There are other differences. Bega's version, depending on the variety, has more Australian nuts than its rival with the company spending $12 million buying a peanut processor so it could up the amount of local ingredients.
Bega chairman Barry Irvine told the ABC the company was increasing the local nuts in its spread and its "long term goal" was to reach 100 per cent.
Kraft's spread is processed in NSW but contains less than 10 per cent Australian ingredients.
Branding expert Professor Jenni Romaniuk, from the University of South Australia, said the decades of familiarity Australians have with Kraft is a threat to Bega.
"A big chunk (of shoppers) will be light peanut buyers who probably didn't even notice Kraft has gone and now it's back will just pick it back up. To them there's no confusion."
She said Bega's Australian ownership and ingredients were laudable traits but that was only a "minor factor" for consumers in the category. And while some "peanut connoisseurs" might notice the Kraft spread now tastes different, many customers "weren't experts" and would brush off any change.
"It's pretty much bad news for Bega," she said. "A bit of a mess."
"I'm actually unclear apart for the factory and recipe what Bega actually bought. They didn't buy the Kraft brand and there seems to be some dispute whether they bought the packaging."
'PAID A LOT OF MONEY'
There was now only a small opportunity left to build the brand, Prof Romaniuk said, before Kraft made it onto the shelves of the big grocers.
"Being distributed in Coles and Woolies is a big asset for Bega (peanut butter). If I was in their shoes, I'd get a brand a strategy and advertise to build that mental structure with the Bega brand because the window they have is rapidly closing."
Bega Cheese chief executive officer Paul van Heerwaarden isn't about to give up on the products his company bought for close to half a billion dollars without a fight.
"I'll let others decide what they think of Kraft's plans, although the Americans are quite within their rights to re-enter the market," he told Fairfax in April.
"But we paid a lot of money for this business nine months ago and we intend to strongly defend what we've got."