Aldi has hit back at the recent claims from Woolworths that its private label products infringe on the intellectual property rights of existing brands and misleading shoppers, claiming it is merely taking marketing cues from existing categories.
The German discount supermarket says “there is no possibility of confusion at Aldi” between its own-label ranges and branded goods.
In a statement to AdNews, an Aldi spokesperson said: “The reality is that consumers know the high quality and low cost of our everyday range of products. Aldi has a unique business model that creates brands in partnership with our suppliers.
“We ensure we carry out due diligence when developing the style guide and packaging of all of our products and labels. All suppliers have the benefit of existing intellectual property laws in relation to their brands and these rights should be sufficient.”
In an interview with the Australian Financial Review earlier this week, Woolworths managing director of supermarkets Tjeerd Jegen suggested shoppers could mistakenly think the own-label lines were branded and highlighted the similarities between Aldi's products and brands including Procter & Gamble's Pantene, General Mills' Old El Paso and Kellogg's Special K.
The majority of Aldi's stock is own label produce but the major players have raised concerns over copycat packaging that mimics established brands and makes the private label ranges look similar to brands. In some cases it has been claimed that the own-label is indistinguishable from the brand.
While supermarkets feel Aldi is overstepping the mark, the argument that it is following the rules of the category has legs. For instance, Aldi cites the examples that most margarine packaging is yellow, and most instant decaf coffee labels are red and so by following this private labels are giving shoppers a “clear guide”.
Matt Newall, strategy director at retail agency The General Store, said in the short term at least "copy-catting" was an “effective strategy” because challengers can't tap into the symbols and graphic cues of existing brands and benefit from it, although they didn't create it. While Aldi's brands are “trading off the heritage” of brands, Newall doesn't believe that when consumers are buying Aldi products they think they are picking up the brand.
He said: “There is brand equity and associations that brands like Heinz have created that brands like Aldi can tap into, as long as they're not ripping it off. But, it becomes a moral question because in the long term customers could feel deceived. The best brands are those that are authentic and earn their respect. Brands that are misleading their customers will damage their future reputation and consumers won't shop with them.”
In the UK, where own-label is more established, there have been legal battles over copycat own-labels and in some cases the supermarkets have been forced to change the packaging, and even the name, or products. It's likely to occur more frequently here too.
There is a certain level of irony here that can't be ignored, that it is Woolworths and Coles who are lashing out at Aldi about the similarity of its own-label products to branded goods, when both supermarkets are also plotting to ramp up their own presence in own label in coming year. Can we infer that when Coles and Woolworths launch new own-label products into categories with established brands theirs will bear no similarity?
The argument comes back to the voluntary grocery code which Coles and Woolworths agreed to sign up to last month, but that Aldi has yet to.
Aldi says it supports the principle of a code, but that because its model is different to that of Coles and Woolworths, and it has not been involved in drafting the code, it will await feedback on the consultation in the New Year before making a decision.
Under the agreement, set out by the Australian Food and Grocery Council (AFGC), Coles and Woolworths have a agreed to a number of practices deigned to create a level playing field – one of which relates to respecting the IP rights of suppliers.
A spokesperson firm the AFGC says that “respect for IP is a crucial principle” for the industry, although declined to comment specifically on the spat between Woolworths and Aldi.
While Aldi has yet to sign up to the code the AFGC said “the more the merrier” adding it would be a welcome addition. The UK arm of the Aldi business however has signed up to the equivalent code in the UK.
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