Australians are backing Bega cheese over Kraft but are they the good guys in this battle?

WHEN news of a peanut butter war erupted last week, Australians got on the bandwagon. But you’ve been missing a critical element.

OPINION

IMAGINE this: You lease your house to someone for five years. You draw up an agreement on the condition the person gives it back to you by the end of that time frame.

But as the end of the contract approaches, the person refuses to give your home back, despite a legally binding contract that states they must.

How would you feel? Pretty annoyed, right?

Now imagine a big American company barging into our market after taking over an Australian company. Sort of like the David vs. Goliath battle with Ugg boots Australia vs. California-based Deckers Outdoor Corporation.

But what happens when an Australian business does the dirty? Should we support them, no matter what?

In the case of Kraft vs. Bega, it seems us Aussies might be the villain. You just don’t know it.

When news.com.au uncovered the bitter court case between American condiment king Kraft and Australian rival Bega over who owns the rights to peanut butter, the story took an unexpected turn.

It’s a complicated case, thanks to the nature of the sales and the deal struck by numerous parties earlier this year, but unfortunately, Kraft seem to have ended up on the wrong end when it comes to public debate.

It’s no thanks to misinformation put out into the public sphere which makes Kraft look like the bad guy, when in fact they’ve done nothing wrong. Bad business? Definitely. Poor planning. Absolutely. But bad guys? Definitely not.

Let me explain in the briefest way possible.

In 2012, Kraft split into two companies and — somewhat carelessly — managed to lose control of its Australian peanut butter business which came under the ownership of a new firm called Mondelez. This company didn’t care all that much for peanut butter (or Vegemite for that matter), so it sold the recipe and factories to Bega in January this year.

But there was a catch: while the recipe and factories were now Bega’s, on December 31, 2017, “the Kraft trademark and the Peanut Butter Trade Dress will revert to Kraft,” according to court documents.

Eager to meet the December deadline, Bega has been busy rebranding the classic Aussie favourite under its own name. But Bega has decided it’s not ready to let go of some of the other hallmarks of the brand such as the distinctive jar, label design and yellow lid. It wants to keep using them after the licensing agreement expires which will mean that only eagle-eyed customers will spot it’s Bega branded, not Kraft branded, peanut butter. Even if the spread inside is the same one we all grew up with.

And that’s pretty cheeky in my opinion. A deal is a deal — and Bega are breaking it.

Bega: Look familiar?

Kraft: Wait a second ...

I must hand it to Bega, they’ve handled all this publicity very well. They’ve portrayed Kraft as the big bad wolf and used the prospect of Australian owned, Australian made, to fool the public into believing their brand is best.

What Bega fails to mention is the “blatant violation of Kraft’s intellectual property rights” and the company’s “flagrant violation of the most fundamental tenet of contract law,” which Kraft alleges in its court dispute.

Meanwhile Australia is besotted with Bega, believing they’re the ones that have been hard done by.

“You must be quite shocked by the fact that Kraft now want to re-enter the market here in Australia, that’s not good for you guys,” radio host Jackie O last week asked general manager of Bega Foods at Bega Cheese Limited, Adam McNamara, last week.

“I’d be pissed off if I was Bega about this.”

Meanwhile the comments from readers seem to read similarly.

“People will probably buy the Kraft stuff thinking it’s the original and that Bega have made their own version, when in fact it’s the opposite. I hope people keep supporting Bega,” said one commenter.

“Gee Americans are very poor losers,” said another.

“They sold product and recipes — now want to stop an Australian company to go bust. Well done Bega. Hoping you are successful in court action. Similar to them trying to take over ‘Ugg boots’ brand. Bullies ... all of them.”

Hang on a second.

Even in January this year, Bega claimed “the Kraft licence will be royalty free until December 2017 as part of transitional arrangements,” according to Business Insider.

So what changed in one year?

Bega executive chairman Barry Irvin said at the time that bringing the iconic brands into the company would “enable Bega Cheese to become a great consumer goods business.”

I’m all for Australian manufacturing and Australian jobs but I can’t help but wonder just who is the bad guy here? Kraft had an agreement with Bega that legally, contractually, ends on December 31, 2017.

Just because Bega has changed its mind and doesn’t want to give it back, does that make it right? Should Australia support that? I don’t believe we should.

Bear in mind, Kraft has also announced its new peanut product, to be released early next year, will also be manufactured locally, so there should be no argument over Australian made in any case.

When Kraft approached Bega with the issue, Bega “informed Kraft that it believes it is not obligated to comply with the dispute resolution provisions of the license agreement,” according to court documents.

I don’t like oil in my peanut butter, and I don’t like oily business, either. While I credit Bega for their brilliance in execution, and their ability to outwit and outsmart Kraft, this is all too slippery for my liking.

In a statement to news.com.au last week, Bega said: “We cannot speculate on what Kraft has planned. However, Australian-owned Bega Cheese Limited purchased the original never oily, never dry recipe, as well as the Victorian factory where the former Kraft Peanut Butter was made for 55 years.

Meanwhile, in a statement to news.com.au, Kraft said: “The future of the Kraft brand has never been in doubt. A series of historical corporate decisions saw the brand licensed to an external company for a limited period of time under strict conditions. It has always been our intention to continue with Kraft products in Australia. Kraft Singles will appear on supermarket shelves shortly and Kraft Peanut Butter in the New Year; both of which will be manufactured locally.”

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