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  • Bega Cheese and Fonterra have started court trial proceedings this week in Melbourne
  • The trial stems from a 2002 licence branding deal that recently spurred issues after Bega bought a number of Kraft products in 2017
  • Fonterra has the rights to Bega Cheese — Bega alleges that Fonterra has breached a number of agreements and failed to meet standards in promotion
  • The trial is slated to run for five weeks, with a further two weeks of hearings expected to follow
  • Shares in Bega Cheese are trading 0.9 per cent higher today for $3.94 each
  • Shares in Fonterra are trading down today, by 2.93 per cent at $3.65 per share

Australian household favourite Bega Cheese has kicked off the first of five weeks in court trials over a branding dispute with New Zealand brand, Fonterra.

Showcased in a Melbourne courtroom, the dispute stems from a 2002 branding deal that boiled over in 2017. The original deal saw Fonterra become the licensee of Bega Cheese that would carry into 2026.

Problems arose when Bega bought a number of popular Kraft products, including Australian-staple Vegemite, from a $460 million deal with American company Mondelez International.

After the deal, a number of Kraft names replaced the Bega name on products such as spreads and cheeses. Fonterra saw the issue, however, when it alleged Bega continued to use a similar branding style that it had licensed to Fonterra.

Fonterra first raised the issue by contacting Bega in 2017, requesting that “Bega will not begin using any of the Bega trademarks or any similar trademark, including the word Bega, to market products in Australia without Fonterra’s consent.”

Bega responded firmly by saying it “expressly rejects any wide-reaching, unqualified and without legal precedent claims by Fonterra that suggest Bega should not use Bega trademarks or any similar trademark in Australia without Fonterra’s consent.”

Against Bega’s beliefs, Fonterra continues to believe that the branding commotion diluted the commercial value of its purchases made.

After Fonterra made the first legal move, Bega filed a counterclaim in March this year.

Bega claimed Fonterra breached foundations of the original licencing agreement, alleging Fonterra had agreed to “promote and develop sales” of Bega products.

Bega also highlighted that Fonterra had significantly lowered its spendings on promoting Bega products — a decrease of $645,000 between 2011 and 2017.

Court proceedings are slated for a five week duration, with an additional two weeks of hearings to follow in February next year.

Shares in Bega Cheese are trading 0.9 per cent higher today for $3.94 each.

Shares in Fonterra are trading down today, by 2.93 per cent at $3.65 per share.

BGA by the numbers
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