Aldi may have lost latest battle of brands, but it's winning war for customers
Aldi's brand battles are adding up as its customer base continues to grow.
The German discount supermarket has been in a long-running dispute with Marks & Spencer over light-up gin bottles, which is just the latest in a series of court cases Aldi has faced against its brand rivals.
Aldi recently lost its appeal against a High Court ruling that found it had copied the design of Marks & Spencer's light-up Christmas gin bottles. This came just weeks after the High Court dismissed a trademark infringement claim against Aldi by Thatchers Cider.
In a case that experts believe could be significant for other brands looking to take on Aldi on similar grounds, Thatchers sued Aldi for allegedly infringing its trademark of its cloudy lemon cider. Thatchers claimed that Aldi's Taurus brand "copycatted" its product. However, Thatchers lost the case.
While Aldi admitted it used the Thatchers product as a "benchmark", Judge Melissa Clarke decided there was a "low degree of similarity" between the rival products and importantly, "no likelihood of confusion" for shoppers.
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This verdict was a tough pill to swallow for Thatchers, who argued that they spent nearly £3 million on marketing and had sold £20.7 million worth of the cloudy lemon cider drink as of September 2022. Despite this, Aldi went on to achieve "extraordinarily high" sales of its Taurus product without any significant development investment or marketing spend.
The Somerset firm claimed that their success would "only have been achieved by reason of Thatchers' investment in the Thatchers product". When Aldi came out with "Cuthbert," a caterpillar cake they said looked like theirs, M&S made a similar complaint, calling "Cuthbert" a copy of their "Colin the Caterpillar" cake.
At the tine, M&S said: "Like many other UK businesses, large and small, we know the true value and cost of innovation and the enormous time, passion, creativity, energy and attention to detail that goes into designing, developing and bringing a product to market and building its brand over many years.
"So it is understandable that we want to defend our intellectual property and protect our suppliers many of them small businesses that have worked with us for decades."
An undisclosed settlement eventually reached by the two grocers did not deter Aldi from going on to release an ad in which it announced it was “like M&S, only cheaper”, and showing rival caterpillar cakes Cuthbert and Colin breaking into a scuffle at a party.
Mishcon de Reya law firm's Jeremy Hertzog said: "The court's finding that Aldi had not taken unfair advantage of the goodwill and reputation in Thatchers' trade mark is particularly interesting. Here, the court again placed emphasis on its conclusion that Aldi had endeavoured to stay on the right side of the line, that is, it had moved a sufficiently safe distance away, and therefore it did not have an intention to exploit Thatchers’ reputation and goodwill.”
This ruling reminded people of the case when Israeli beauty company Moroccanoil Israel Ltd, known for its hair care products in unique orange and turquoise packaging, took Aldi to court over its Moroccan Argan Oil hair care products in May 2015. Moroccanoil didn't win the case. The Australian courts decided that there was "no real, tangible danger" that shoppers would confuse Aldi's cheaper offerings with Moroccanoil's luxury products based on their brand names.
They also said that while Aldi's hair care line might make customers think of the pricier product, and was meant to do so, shoppers wouldn't believe Aldi's budget products were made by or linked with the luxury brand.
The business model was, as noted in the appeal judgment, "to sell very inexpensive products ... which resemble, but not too much, other more expensive products", walking the "delicate line" between reminding customers of a big brand without tricking them into thinking it is the same product.
Aldi, which now has over 1,000 stores in the UK, is slowly growing its market share. It and fellow discount store Lidl continue to be the fastest growing supermarkets year after year, according to the latest figures from analysts Kantar.
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Jeremy Stern, the boss of PromoVeritas, a company that oversees prize promotions for big brands like Cadbury, Yeo Valley and Kellogg's, said some brands might not want to challenge discount supermarkets like Aldi because they want to keep their products on the shelves.
He also said that Aldi was trying to get a "halo effect" if it looks like a famous brand, people will think it's just as good. Aldi has not only made similar packaging for products that usually come in standard shapes, like cereals and biscuits, but they've also copied the unique packaging of well-known brands like Pringles or Marmite.
Mr Stern said: "Consumers might find this funny, others might think: ‘Great, I’ve got a bargain and my kids won’t know the difference.’ But mimicking a brand and its packaging does set the barrier for the product inside to be higher.
"Consumers will expect that the Aldi product will perform like or taste like the brand. As long as the product is good enough, consumers will feel like they’re winning. And Aldi’s products are good. Just look at their award-winning range of wines and their performance in various brand-versus-own-label taste tests.”
Mr Stern said that for those brands who wished to challenge Aldi and their seemingly copycat products, it would not be easy. “They will either have to prove that consumers would be confused into thinking they were buying the branded product, or that Aldi had breached a trademark, such as the use of a similar design or packaging. But as we have seen with the Aldi vs Thatchers case, this is not always easy to prove.”
An Aldi spokesman said: “We go to great lengths to ensure that all our own exclusive Aldi brand products adhere to strict copyright guidelines. “While the quality of our products matches that of more expensive brands, our prices do not.”
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