Diageo says it will take legal action against Sainsbury over the latter’s new Pitchers drink, which it thinks is a rip-off of its big-selling Pimm’s. Sainsbury apparently plans to ‘vigorously defend’ the suggestion that there's been some kind of copyright infringement – so it looks like the issue will be settled in court. It’s a surprising move, given that Sainsbury’s is one of Diageo’s biggest customers; the drinks company insists this won’t affect their overall relationship, but that’ll be easier than done if they get into a protracted legal battle…
Although Sainsbury’s insists the allegations are baseless, it’s not exactly difficult to see why Diageo is miffed. Pitchers, released in April this year, has almost identical packaging to Pimm’s – similar bottle, similar label, and a similar red logo. It has also been marketed as a summer drink to be mixed with lemonade and fruit, like Pimm’s, and even specifically mentioned the fact that it was cheaper and tastier than Pimm’s in its publicity material. So it’s clearly trying to appeal to Pimm’s customers, and Diageo will presumably argue that it's flown a bit too close to the wind on this occasion.
However, Sainsbury reckons that there’s no chance of customers getting confused because the two drinks are called different things – ‘the clue is in the name’, a spokesman helpfully told the press. We’re no experts on copyright law, so we have no idea how strong Diageo’s case is – but we suspect Sainsbury might need a better legal argument than that…
Either way, this episode highlight a serious tension between supermarkets and their suppliers: the former’s own-brand products are clearly aimed at taking sales away from the latter, who have often spent a fortune promoting the product in the first place. And these tensions are presumably heightened at the moment: retailers have been squeezing their suppliers on price in the last year to try and boost their margins, and it wouldn’t be a surprise if some goodwill has been lost as a result. We've often seen this kind of thing happen to smaller suppliers who come up with a great new product - the difference here is that Sainsbury's has chosen to take on one of their biggest suppliers, who has the resources to fight back.
One thing’s for sure: it’s a hassle that Sainsbury’s can do without at the moment. It’s had a pretty good recession so far, enjoying some encouraging sales growth – but like the other big supermarkets, it might be feeling a little nervous about Tesco’s recent decision to double the number of points offered by its Clubcard loyalty scheme. A limited roll-out has proved very successful in encouraging new sign-ups, and Tesco clearly hopes this will wrest some of the initiative away from faster-growing rivals – which currently includes Sainsbury’s.
Then again, if the weather carries on like this, neither Sainsbury's Pitchers nor Diageo's Pimms will exactly be flying off the shelves this summer...
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