Nestlé and Coca-Cola, a high-voltage divorce: these are the implications of the iced tea ‘struggle’ | Business | EUROtoday

If you drink Nestea you’ll be able to breathe straightforward: the well-known ready tea drink is not going to disappear from the Spanish market. The rumor unfold just a few months in the past, when it turned identified that the Swiss multinational Nestlé, proprietor of the well-known model of chilly tea (the results of the mixture between Nestlé and Tea) would break ties with Coca-Cola, its distributor in Spain since 1993. Now Coca-Cola needs to advertise its personal model of brewed and chilly tea, Fuze Tea. In reality, they already promote it in bars, eating places and grocery store cabinets. This infamous divorce raises a curious authorized rigmarole, as a result of the model that everybody is aware of, Nestea, is owned by Nestlé; however the grasp system of the tender drink that has been bought for 30 years beneath this title is Coca-Cola. Dark clouds of battle are approaching.

In 2025, subsequently, each firms, till now pals, turn out to be direct rivals. To silence rumors, on October 8, Nestlé calmed issues down by guaranteeing that it could proceed promoting chilly tea beneath the Nestea title and that buyers “will be able to continue opting for their favorite brand, the market leader, in their favorite flavors as before.” Every week later, Coca-Cola was fast to launch a response assertion, making clear that its new chilly tea drink, Fuze Tea, makes use of “the same old tea drink formula.” The recipe “is and will remain the exclusive property of The Coca-Cola Company,” the well-known multinational beverage firm settled.

Do struggle drums sound? Analysts contemplate that, though the state of affairs could also be troublesome for shoppers to grasp, the coexistence between each manufacturers doesn’t should inevitably result in a authorized dispute. Although the situation is delicate. “Even if the breakup was not friendly, we are faced with two brands that can coexist in the market to distinguish the same type of products given their differences,” assesses Carmen González Candela, director of Strategy and Legal Advice at PONS IP.

One of the potential factors of friction lies in one thing extraordinarily summary: taste. The drawback is that there isn’t any method to report one thing as unstable because the style of a drink. The identical factor occurs with smells. For this cause, firms don’t shield the flavors, however the formulation, or what’s the identical, the chemical path till reaching the ultimate outcome that reaches the buyer.

Can Nestlé promote Nestea if its system is owned by Coca-Cola? The reply is sure. “In theory, if Nestlé could completely independently develop a formula identical to that of Nestea, it could be marketed,” explains Eric Maciá Lang, head of the Business Secrets Area at PONS IP. Trade secrets and techniques, the authorized defend usually used to guard profitable drink recipes, don’t acknowledge an unique proper of use. That is, an organization (on this case Coca-Cola) can not declare a monopoly on a taste. Laura Montoya, associate answerable for the Legal and Litigation division at ABG Intellectual Property, factors out on this sense that “if a third party replicates the formula”, that’s, achieves the same and even an identical taste to Nestea by a method or one other, “the holder of the secret could not prevent it.”

The promoting entrance

A second entrance of battle between Nestlé and Coca-Cola could also be that of promoting. “It is foreseeable that there will also be a certain advertising war,” predicts Montoya. In Spain, legal guidelines don’t prohibit firms from explicitly mentioning rivals of their promoting actions. It is what is named “comparative advertising” and “it is allowed in Spain,” says Montoya. But there are particular strains that shouldn’t be crossed. For instance, Nestlé and Coca-Cola have to be clear that “comparisons between their products must be objective, not misleading and must not disparage competitors” or “distort reality.” For now, Coca-Cola is solely insisting that Fuze Tea, its chilly tea drink, is the “original flavor.”

A 3rd potential area of friction between each firms could happen by way of unfair competitors. For Inmaculada de la Haza, associate at Balder, Nestea and Fuze Tea “are compatible brands”, as a result of “although they cover the same products, tea-based drinks”, in her opinion there are “obvious denominational and phonetic differences”. “It must also be taken into account that Fuze is not a new brand, it was created in 2000 in the United States and acquired by Coca-Cola in 2007 and is present in 90 countries around the world.” However, the lawyer acknowledges that “the bottle is very similar in both cases.” Which will not be trivial, as it may possibly confuse the buyer, simply what the legal guidelines purpose to keep away from in any respect prices.

Candela Sotés, competitors director at Bird & Bird, acknowledges that the long run rivalry between Nestea and Fuze Tea (or quite between Nestlé and Coca-Cola) could result in “aggressive measures” to draw clients. And within the warmth of the industrial battle these can “generate confusion for the consumer by associating one brand with the other,” provides the skilled. The lawyer emphasizes that, in such a situation, the attainable use of “exclusivity or non-competition clauses” must be checked out intently, since for the lawyer there’s a hazard that the corporate with the best market energy will shut the entry to the distribution community of the product to the opposite. Especially within the lodge, restaurant and cafeteria sector, Sotés highlights.

The key concept, the jurists agree, is that Nestlé and Coca-Cola don’t journey themselves up: “They will have to prevent said confusion from being deliberately induced by their advertising campaigns or commercial strategies.” The battle over tea is over (in a really chilly glass).