For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

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Wednesday, 27 February 2013

Can it really be? Consumers sue for trade mark dilution

"If it's clear, it must be water, vodka
or gin", muses Miffy. "... Oh,
my goodness -- it's actually beer!"
Most successful brand owners listen carefully for the reactions of their faithful customers when testing out new versions of existing products.  Generally accepted wisdom suggests that the best time to do it is before a change is made, or even contemplated.  If consultation is late, is ineffective or non-existent, consumer response can be an embarrassment. The Coca-Cola Company knows this to its cost, having both fouled up big-time in its launch of its New Coke and later, in the United Kingdom, with the farcical revelation that its expensively and inappropriately marketed DASANI water was, locally at least, nothing more than tap-water from Sidcup.

Another maker of sparkling beverages, Anheuser-Busch InBev, may be learning much the same lesson right now, if today's BBC report from the United States can be believed.   It tells, in relevant part, the following tale:
"Drinkers sue Anheuser-Busch for 'watering down' beer
Beer drinkers in the US have filed a $5m (£3.3m) lawsuit accusing Anheuser-Busch of watering down its beer. The lawsuits, filed in Pennsylvania, California and other states, claim consumers have been cheated out of the alcohol content stated on beer labels. The suit involves 10 Anheuser-Busch beers including Budweiser and Michelob.

Anheuser-Busch InBev have called the claims "completely false", and said in a statement "our beers are in full compliance with labelling laws". The lawsuits are based on information from former employees at breweries owned by the multinational.
"Our information comes from former employees at Anheuser-Busch, who have informed us that, as a matter of corporate practice, all of their products mentioned [in the lawsuit] are watered down," 
lead lawyer Josh Boxer said. The complaint claimed that 
"Anheuser-Busch employs some of most sophisticated process control technology in the world to precisely monitor the alcohol content at the final stages of production, and then adds additional water to produce beers with significantly lower alcohol contents than is represented on the the labels".
... Peter Kraemer, vice president of brewing and supply at Anheuser-Busch said in a statement, "We proudly adhere to the highest standards in brewing our beer.""
This Kat doesn't know whether American beer-drinkers are qualitatively different from their European counterparts, but he suspects that they are unlikely to be enthused at the thought that their favourite beer ["Particularly one as weak and gassy as B ......", the strong ale-swilling Merpel tries to say while the Kat seeks to suppress her with a diplomatic paw ...] has been diluted. It is well  known in Europe at least that beer drinkers, given the choice between beer and water, will generally opt for the former because it's more fun to drink and they don't mind paying more for it if they have to -- but few would want to pay for water dressed up as beer, or to be teased by their friends for doing so.  It's a bit like buying horse meat dressed up as beef burgers.

Part of the problem here is that changes in production techniques can be viewed as changes in the product itself. The IPKat thinks it's probably prudent for consumer brand owners to nip even the prospect of such rumours in the Bud (sic) by proactively furnishing as much information as can be safely done without disclosure of technical know-how and commercially sensitive information.

Merpel notes that product shrinkages in the chocolate industry attracted widespread press coverage at the time but didn't seem to damage the brand image of CADBURY and other brands (see here and here). This is not quite the same as watery beer, though.  A smaller piece of chocolate is still the same product, with the brand guaranteeing the same buzz.  Watery beer is a different product, a horse of another colour.

One final point -- and it's a legal one.  To this Kat's knowledge there have yet to be any class actions brought in Europe by consumers against brand owners in similar situations.  He imagines that, while in theory class actions are encouraged in some EU countries and the Commission has taken an interest in them, it would be very difficult for such an action to be put together in Europe, let alone succeed.  He invites readers to share their thoughts on this issue.

5 comments:

Fred Logue said...

Interesting point on the US/EU divide.

It's not as if we lack opportunities in which consumers would like to take action against the food industry. In fact we are in the middle of it right now with the horse meat scandal.

The lack of class action procedures in Europe is a big barrier to enforcement of consumer law forcing us to rely on the state to vindicate consumer rights. Obviously this encourages vigorous lobby by the industry to prevent the state taking action, dilute consumer laws and impede the introduction of class action procedures.

It would be interesting to have some data concerning the deterrent effect of class action on the behaviours that are coming to light in the horse meat affair.

Anonymous said...

Funny how the revelation came to light--by an ex-employee, and not by consumers noticing the difference!

Michael Factor said...

Tap Water from Sidcup?

Not Peckham Spring???

Nathan said...

I am not at all surprised that consumers did not notice the difference. I have a hard time noticing the difference between Budweiser and tap water. Totally with Merpel on this one.

Roufousse T. Fairfly said...

US beer, watery?!? What a revelation! But sit down, kid, I'm afraid I have some other disappointments for you: wrestling matches are staged, and the tooth fairy doesn't exist... (There is also no ammonia in Windex "Ammonia-D" glass cleaner, but that's another story).

I went looking in patents for a smoking (water) pistol, but couldn't find anything under the accused name's. I did come up with a few documents describing methods of adulterating the sacred liquid.

CA1243970: The high extract-to-alcohol beer produced by way of this process may be, inter alia, an alcohol-reduced beer in its own right, or may be readily converted into an alcohol-reduced beer by the simple expedient of diluting with water.

US4788066: After fermentation the all-malt beer is supplemented with a low dextrose equivalent (D.E.) starch hydrolyzate, filtered and treated with post-fermentive hopping and malt coloring, if desired. Finally, the brew is diluted with acidified deaerated water so as to contain not more than about 0.5% alcohol by volume.

GB816251: A beer is brewed having higher alcoholic strength and solids content and greater bitterness than is usual and is diluted, preferably at the moment of consumption, with water charged with carbon dioxide. According to an example, for a small beer a concentrate of 10 per cent alcoholic strength is obtained and subsequently diluted with 5 volumes of carbonated water.

Beer does start as a mixture of grain and water. I don't find it a huge scandal that water could be added after fermentation to adjust some variable, and it is apparently an accepted method for producing lighter beer.

I am very curious to see what evidence the plaintiffs have to show. All media seem to reproduce more or less the same basic news report. One source states that there is 3 to 8% less alcohol than indicated on the container. That doesn't sound like much of a difference, and you'd still be able to pickle your liver if you drink enough of the stuff. What method of measurement was used? How accurate is it? A wine densitometer would be fooled by the dissolved CO2 (I think the alcohol content would be underreported). Was a standardised test method employed? A patent for a measurement apparatus explains:
To determine the corresponding product-specific quality parameters, for instance of beer, of the prior art, complicated specimen preparations are necessary, such as removing CO2 or filtration or tempering, so that certain cross-sensitivities are avoided. However, this specimen preparation often causes mistakes, such as alcohol losses in the CO2 removal. Although the possibility would exist of automating the specimen preparation steps, nevertheless this would be complicated and hardly supportable in terms of cost.


If the plaintiffs'allegations were to be proven, then I would believe that the biggest beneficiary of the practice would have been the revenue officer rather than the brewer.

There is however evidence against the accused, who obtained patents on a composition they call "beer". ;-) Let's hope they didn't use any funny chemistry.

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