Bega Cheese (BGA) comes out the winner in a four-year legal battle against Fonterra — a dispute that began over peanut butter branding.
Fonterra paid for a licencing agreement with Bega in 2001, aiming to put the Bega name on its own cheese and butter products.
In 2017, Bega paid $460 million to sell Kraft Australia products such as Vegemite and peanut butter with its name attached.
By having the Bega name now associated with products such as Vegemite and peanut butter, Fonterra felt cheated out of its investment for exclusivity.
Fonterra argued that Bega’s expansion of business was a breach of the 2001 deal, eventually taking the dispute to the Victorian Supreme Court.
However, Bega won the battle on Thursday due to a small but significant technicality. Fonterra’s deal with Bega was to trademark ranges of cheese — therefore not including Vegemite or peanut butter.
“In its judgment delivered today, the Supreme Court of Victoria has held that Bega Cheese is entitled to use the Bega trademark on products outside of the scope of the Fonterra licence without Fonterra’s consent,” a Bega statement read.
“Bega Cheese is pleased that its right to use its brand on [Kraft] products has been confirmed by the court”.
Although Bega Executive Chairman, Barry Irvin, expressed dismay necessitating a legal battle, the relationship between the two companies will continue as amicable.
“We would have preferred to come to some sort of agreement rather than be in court,” he said.
Fonterra Australia Managing Director, René Dedoncker, also weighed in after the ruling.
“Although we’re disappointed with the decision on the trademark claim, we are confident that we can work together with Bega Cheese to continue to grow the value of the brand,” he said.
Shares in Bega Cheese opened 3.06 per cent down to $6.01 at 10:33 am AEDT.
