Monday, May 5, 2014

Mars challenges Hershey’s over the use of the name Malteser in US

In the battle for marketshare in the confectionery sector, it seems that some candy companies are more interested in getting our business by eliminating competition than gaining brand loyalty with exemplary products.

Malted Milk Balls

The latest battle involves old rivals Hershey and Mars, this time over malted milk balls. Mars makes Maltesers and Hershey’s makes Whoppers. But Hershey’s is also trying to assert the exclusive right to also make something called Malteser in the United States.

I don’t have the figures, but I’m going to guess that Hershey’s holds more than 70% of the market in malted milk balls with their Whoppers brand, but not necessarily because they’re the best but because they’re ubiquitous. Though I don’t have current figures, I’d estimate the brand is worth about $40 to $50 million in sales a year.

Mars Maltesers

Here’s a little history. Mars Maltesers were first sold in the United Kingdom in 1937. They were created as a diet candy; a chocolate candy with less chocolate and therefore less fat and calories. They’re also sold in Canada, New Zealand and Australia and exported to many other European countries. They can be purchased in shops that specialize in UK imports. Based on the number of brand extensions I’ve seen for Maltesers on my recent trip to London, I’d say that the candy is a much more important brand to Mars than Whoppers are to Hershey’s. Which may make them appear a threat.

Hershey's Whoppers

In 1939 an American candy company called Overland, introduced a malted milk ball candy sold under the name Giants, as they were larger than earlier versions called Malt-ettes. In 1949, two years after the company was sold to Leaf Inc, they were renamed Whoppers. There were many other companies that came and went that sold malted milk balls, but Whoppers have been made continuously ever since, even if their corporate overlords have changed.

Leaf Inc was once a formidable sugar candy company, the fourth largest in the US. They acquired many favorite American candy brands, including Jolly Rancher, Hollywood Brands (maker of Payday bars), Heath Bar, and Now and Later. Sometime in the 1960s Leaf started making something called Malteser and even registered a trademark for the name in 1962. I doubt they were widely distributed or advertised, as I can’t find any record of them . In 1983 Leaf was bought out by Huhtamäki Oyj, a Finnish company, which maintained the trademark registration. Mars sued Leaf over this trademark in 1993 and later settled out of court (so we don’t know the details) but Leaf retained the trademark.

For reasons I don’t quite understand, Leaf Inc divested and sold off many of its best brands, most to Hershey’s: Whoppers, Payday, Jolly Rancher and Heath Bar.
So, Hershey’s didn’t invent malted milk balls, and as far as I know, never had a national brand of their own until acquiring one.

Hershey Webstore - MalteserFast forward and lately Hershey’s has been releasing a product called Matleser: a malted milk ball that in all ways except packaging is identical to Whoppers. Though it’s a singular in the name, not Maltesers as the Mars product is, it’s also packaged in red.

The way trademarks work, not only do you need to register the trademark in all territories you plan to exercise it, you also need to use it. So if Hershey’s wanted to keep Mars from using Malteser in the US, by claiming it was an abandoned trademark, they had to demonstrate that Hershey’s wasn’t using it. I was able to find Hershey’s Malteser for sale on both the Hershey’s site and Amazon. I bought a box to confirm that they are just Whoppers in a different package. (They are.)

Hershey's Malteser

Mars contends that not only is Hershey’s squatting on the trademark in the United States, but that their packaging is intentionally confusing consumers to think that they’re purchasing the Mars version. I admit, they do look similar and even though I’m the candy blogger, I couldn’t remember of the top of my head if the Mars version was plural or singular until I started this research.

American trademark law is governed for the most part under the Lanham Act which covers trademark infringement and false advertising. The act was also revised in 1999 to encompass cybersquatting, the practice of registering domain names and then sitting on them or directing them to a competitor.

While Hershey’s practices up to the point where they created similar packaging were probably within the letter, though not the spirit of the law, my opinion after looking at the history, reading Mars’ brief on the case leads me to conclude that Hershey’s is just acting scummy. Whoppers are known by 300 million people in this country ... and if it’s not a favorable brand then Hershey’s should improve their quality, price point or packaging to the point where people are loyal to them.

Maltesers & Malteser
(Mars Maltesers on the left and Hershey’s Malteser on the right.)

I tried both again, just to check. Neither is great, but the do differ. Both have a mockolate coating, though the Mars version does have some cocoa butter in there. The centers, though both malty, have different textures. The Mars version is more honeycombed and has a easier crunch. The Hershey’s version is more milky tasting with a firm crunch that dissolves nicely. Both are excellent centers ... both have disappointing coatings. I prefer the Mars Maltesers.

Maltesers
(Mars Maltesers package circa 2005 which exhorts it’s “no ordinary chocolate”)

I’m a extremely curious if Mars were to introduced Maltesers in the United States if they would change the coating to real chocolate, as they do not make any mockolate products for the American market. However, Mars does not have a good track record for introducing the European candies to the US when there is another similar candy already on the market. They tried this with the Bounty bars, which are similar to Mounds and Almond Joy and they never took hold. Twix was a European launch that was then introduced in the US, but is a unique candy construction, which is how it established itself in its niche.

This is not an isolated issue in the candy business. Many candy companies go head to head in the courts instead of on the store shelves.

- The UK the courts have been deciding whether Cadbury should have exclusive rights to their shade of purple. Currently, the answer is no.
- The Seven Up Bar, which predates the 7-Up soda, ended up in a battle over the trademark of the name, which likely led to the demise of the bar when they sold the rights to the name, then licensed them back. (And a candy bar and a soda are two different categories.)
- Nestle owns the rights to the name Smarties everywhere in the world except the United States, where the name was already in use by the tangy tablets made by CeDe Candy. CeDe then had to rename their Smarties to Rockets when they introduced them in Canada.
- Nestle is trying to trademark the shape and construction of the KitKat bar in Europe, though it may be too late as there are already several knock off products.

For more reading on the issue, here are some other trade articles on the case:
Candy Industry: Mars Sues Hershey Over Trademark Infringement
Law360: Mars Not Sweet on Hershey’s Fake Maltesers Candy
Confectionery News: Hershey ‘tricking US consumers with fake Maltesers,’ claims Mars
Trademarkia: 1962 US Trademark registration for Malteser
Collecting Candy: The Visual History of Whoppers (via candy wrappers & advertising)

Related Candies

  1. Mars MaltEaster Bunnies
  2. Ovomaltine Chocolate Bar
  3. Hershey’s Whoppers
  4. Target’s Market Pantry Malted Milk Balls
  5. Eat with your Eyes: White Malteasers
  6. Trader Joe’s Milk Chocolate Malted Milk Eggs (Plus a Bonus)
  7. Mighty Malts
  8. Jelly Belly Chocolate Malt Balls
  9. Mars Maltesers

POSTED BY Cybele AT 11:41 am Tracker Pixel for Entry     CandyHershey'sMarsMaltMockolateUnited KingdomUnited StatesHighlightNews

Comments
  1. What an odd development.  What is Hershey’s endgame here?  “Whoppers” is such an ingrained name for malted milk balls in the US, I don’t get the point of this at all.

    Comment by Ruffy on 5/05/14 at 1:11 pm #
  2. There’s also been a dispute over M&M’s and a similar product called “M’s” in Sweden:

    http://www.confectionerynews.com/Manufacturers/Mars-and-Mondelez-wage-M-M-s-trademark-war-in-Sweden

    I reviewed “M’s” here:

    http://kevssnackreviews.blogspot.co.uk/2013/10/kraft-marabou-m-chocolate-coated-peanuts-mars.html

    Comment by Kev on 5/05/14 at 2:53 pm #
  3. I’m an intellectual property lawyer by day and I hadn’t heard about these cases.  What a great analysis and a fascinating post!  Thanks for sharing it.

    Comment by Andy R on 5/05/14 at 7:02 pm #
  4. It’s true that Mars (UK) chocolate isn’t “real” chocolate by any international standard. However, Hershey’s standard chocolate bar is quite the most awful tasting “chocolate” that anyone should have to suffer.

    Comment by Zeddy on 5/06/14 at 2:04 pm #
  5. You’re right, Hershey’s is acting really scummy with this. How much of their profit would they even lose to Malteser? Probably a negligible amount.

    Also, when I was in Dubai, where a lot of European sweets are available, I had several knock-off KitKats that were really very good, and something I would buy in their own right.

    Comment by Fox on 5/10/14 at 8:07 am #

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