Why Hershey’s treatment of Cadbury doesn’t look so sweet.

 How strongly should companies protect themselves from competition?

Can they over-step the mark at the cost of their profile and good public relations?

Does the behaviour of a giant like Hershey’s damage its own brand equity, despite being legally justifiable?

This week, BlackLab’s blog is going to get passionate. That’s because I’m talking about chocolate. Aside from my wife and my dog, the black lab himself, there’s nothing else I love more. I’m also a proud British ex-pat, and this is about British brands. So don’t expect my usual even-handedness. This post is biased. I make no apologies for it.

Over the last few days, news has emerged from the USA that confectionery giant Hershey’s has struck a legal settlement with Let’s Buy British Exports (LBB) to stop importing all Cadbury’s chocolate made overseas. It has also agreed to stop importing some UK Nestlé brands such as KitKat bars, Yorkie bars, Toffee Crisp, and also Maltesers, manufactured by Mars confectionery.

This has caused outrage amongst ex-pat Brits who will miss their favourite treats. Some of you might consider this to be nothing more than a storm in a Creme Egg-cup, but it has made enough waves to reach TimeMagazine. Furthermore, it speaks volumes about Hershey’s, and in my opinion, this could be a gaffe that the company might live to regret, when considered in PR and branding terms.

Uncle Sam and John Bull are slugging it out over . . . chocolate . . . kind of . . .

The case for the defence

I’ll keep this brief, because frankly, I’m not impressed by it.

According to the NewYork Times, a Hershey’s representative explained that these products had been imported when they were not intended for sale in the USA, and that this was infringing on its trademark and trade licencing. Hershey’s does indeed have a licencing agreement to make Cadbury’s chocolate in the USA, with similar packaging but with a different recipe. Plus, as the NYT notes, the ban on Toffee Crisps is owing to its packaging, which too closely resembles Reese’s Peanut Butter Cups, and Yorkie bars infringe on the York peppermint patty, apparently.

So, Hershey’s is protecting the brands for which it is responsible in its market, from products that seem identical but aren’t. The NYT quoted Jeff Beckman of Hershey’s, who wrote in an email:

“It is important for Hershey to protect its trademark rights and to prevent consumers from being confused or misled when they see a product name or product package that is confusingly similar to a Hershey name or trade dress.”

Why Hershey’s recipe for brand-protection leaves a sour taste?

Thanks so much for that clarification, Mr. Beckman. Now let’s examine it.

As regards the licencing, strictly speaking and from a legal standpoint, Hershey’s is correct. It would be foolish to argue with it.

However, this seems to me to be one hell of a heavy-handed, some would say bullying move on Hershey’s part to . . . wait for it . . . stop the import of products that consumers like more.

Yes, the recipe for the licenced US Cadbury products has more sugar, less milk and different emulsifiers than the UK originals, giving it a different taste, texture and a longer shelf-life. Did I say different taste? Sorry, I meant a WORSE taste.

There, I’ve said it, and lovers of the real stuff feel the same way, judging by the media reports. So what we have here is a corporate giant stamping its heavy boots on the importing of a relatively small number of rival products, which are, frankly, better than its own, in my humble opinion.

British chocolate. Yum! Delicious, according to discerning ex-pat Brits

To put it in non-technical terms, the recipe of American chocolate is crap. Some years ago, I was lucky enough to watch the food scientists and sensory analysts at work in one of Nestlé’s European confectionery R&D centres. What I learned from my visit was that chocolate can be given a kind of geographical profile, depending on its flavour and viscosity.

These factors are based on the recipe. So a darker, purer, more bitter chocolate, with a higher proportion of cocoa solid and lower milk and sugar, levels, is more suited to the continental European market. Europeans have a very sophisticated palate when it comes to chocolate. A more milky, sugary variety is preferred by the Brits, but compared to American chocolate, it’s nearly as pure as the driven snow, because their stuff is packed to the brim with crappy sugars and ingredients that give it a sickly sweetness. It’s literally kids’ stuff compared to the others, designed for an infantile and unsophisticated palate.

 

American chocolate. Yeuch! Rubbish, according to those same discerning consumers

Doubtless Hershey’s knows this, and I suspect it feels that increasingly, US consumers know this too. And they want something different . . . better. So it saw a threat to its core product range, the traditional American favourites like Hershey’s Kisses and Reese’s Pieces. But rather than improve their recipes, which, Heaven forbid, would involve the risk of expensive time, effort and investment, the company unleashed its legal eagles and let them crap their litigious guano all over consumers’ choice.

Do I sound mad about this? Good. Because I am. There’s a number of things wrong with this decision on a variety of levels. Here’s the list:

1.     It’s a disproportionate response that makes Hershey’s look like a bully, in my opinion.

2.   It will be perceived by some to be a blunt and brutal restriction of trade, ironically in the country that is the cradle of the free market. Whether this is a fair and accurate reading of the situation is irrelevant. That’s how it looks, and in PR and branding terms, perception is everything.

3.   It’s driven by the lawyers and the corporate “suits”, with little thought to the impact on brand reputation.

4.     It ‘s poorly thought-through, with little consideration for how consumers feel. That’s always a bad idea.

5.  It actually sheds light on what else is available and why it’s better than Hershey’s own products. Ooops! Surely the company really didn’t want to publicise that?

6.  It patronises consumers, the very people who buy these products. Just take a look at Mr.Beckman’s comment, above. Apparently the good people at Hershey’s are deeply concerned that poor Joe and Joanne Public won’t be able to distinguish one product from another when they look similar. Really? I imagine that the vast majority of these consumers can read and think, all without help from the paternalistic people at Hershey. I’m sure their heads won’t burst into flames. Leave them to make their own decisions. After all, using this rationale, Skodas shouldn’t be sold in the same markets as VWs because they come from the same ‘stable’ and it could confuse people. Oh no. That doesn’t happen, does it?

In short, give it up, Hershey’s

By applying the letter of contract, trademark and licencing law, Hershey’s has violated the sanctity of consumer choice, has patronised customers, bullied competitors, and implied that the quality of its own products could be called into question. Well done Hershey’s. What a potentially massive own-goal. This is a blunder that you may well rue. I will watch with interest.