With consumer and regulatory attention increasingly turning to the amount of sugar contained in food and drink, manufacturers are facing new challenges. There is no doubt that this issue will continue to be central to the industry. Recent coverage of Jamie Oliver’s weight loss and calls for a “sugar tax” confirm that the subject is very much in the public eye and will remain so for the foreseeable future especially with on-going news reports about obesity-related diabetes and increasing pressure on the NHS.
This is also reflected in the changing market landscape as the British Soft Drinks Association reports that sales in fruit juice fell 9.5% in 2014*. The same period saw a significant increase in volume sales of water, with water containing healthy ingredients up by a staggering 71%**. Obviously this is great news for brands like Evian and Vita Coco coconut water.
Food and drink producers have a number of options as to how to respond. Some might change the manufacturing process, such as replacing or reducing sugar volume with coconut sugar or sweeteners. Others will introduce new “lite” brands, typically marketed with different colouring and branding. Whatever the change, manufacturers must reconcile consumer demand with the legislative requirements for packaging and labelling. For example changes to branding must not obscure the dietary information. There will also be very real clearance and freedom to operate challenges, not only for new brands but also new recipes, as they navigate third party trade mark registrations and patents.
Whilst there are risks, there are also new opportunities available too. Is brand extension or diversification an option? Are new markets and territories available? For example Coca-Cola has launched their Glacéau smartwater brand and McVities has a wide range of “Light” biscuits. New markets also emerge and expand so Nairn’s Oatcakes Ltd has seen a 45% increase in annual profits in 2014 with sales at £22.1m*** due to consumer demand for oat-based and gluten free food. Recent entrants like Vivid Drinks and Little Miracles offer energising tea-based drinks. Growth potential in a foreign market is a further opportunity with British brands being very popular in China in particular.
Intellectual property is a key part in this process and is likely to be a valuable asset or, indeed, weapon. If the manufacture of a product is altered and either that process (or the product itself) is novel then it may be possible to retain exclusivity over that change by obtaining patent protection. If a company was to develop new and innovative ingredients to add to a food or drink product, such as new sweetener or flavour modification compounds, then these could themselves benefit from patent protection. For example, if a company’s R&D department was to come up with a way to replace sugar then that could form part of an extremely valuable technology that could be monetised such as through patent licensing. Likewise, ensuring that the brand name is protected for the new product means it is possible to prevent competitors adopting a confusingly similar name. As the brand grows, it could add real equity to the business as Coca-Cola has seen with their Coke Zero, Diet Coke, Coca-Cola Vanilla and so on.
Whether a company is a global competitor, serves a single national market or is a new entrant, there are common challenges. Most importantly there must be open and regular dialogue between the marketing team and the legal team as intellectual property rights continue to be created as a result of new products and improvements and modifications to established brands. Some of the key issues are as follows:
Freedom to operate searches are crucial. Is the chosen brand name available to use or is there a third party with a conflicting right? Is the new brand name registrable as a trade mark?
If the shape or pattern of the packaging is an important part of the brand identity then design protection is recommended.
A product or manufacturing process that is novel and inventive could benefit from patent protection.
Adaptations to the manufacturing machinery may also be patentable.
What is the international business strategy? As intellectual property rights are limited by territory it is imperative to ensure freedom to operate in all relevant countries and to identify the most efficient and cost effective way of extending protection.
Police your rights – keep an eye on competitors and take any necessary action to strengthen your position in the market.
We continue to advise leading food manufacturers and smaller companies on changes to product manufacture processes, packaging and branding. We provide creative solutions to ensure that appropriate trade mark, design and patent protection is in place, leaving room for the legislative requirements also to be met. We have advised a leading food manufacturer on obtaining patent protection in Europe for a new natural sweetener composition. We have also provided advice on European patent protection in relation to food technologies such as new sugar-free compounds used to reduce bitterness in a given recipe.