Kraft Sues Cracker Barrel Over Expansion Plans
So, how many of you just figured that there was some connection between the Cracker Barrel cheeses in the dairy section of the supermarket and the Cracker Barrel country stores on the side of America’s highways and byways? There isn’t, and Kraft Foods, which launched the Cracker Barrel brand natural cheese in 1954 is suing the national roadside chain, which was founded in 1969, over its plans to extend its brand into retail products that might further confuse consumers into making just such an assumption.
Lebanon, Tenn.-based Cracker Barrel signed a licensing agreement with John Morrell Food Group, a subsidiary of Smithfield Foods, in November to sell branded food products such as “ham, bacon, assorted lunch meats, glazes, jerky and summer sausage” through grocery, club stores and mass merchandisers, according to a release issued at the time.
But it also has its eyes on shelves in other areas of the supermarket, if applications filed with the U.S. Patent and Trademark Office and cited by The Tennessean’s Duane Marsteller are any indication, including oatmeal, muffin mix and lemonade and fruit tea.
The plans “threaten to destroy the substantial goodwill that Kraft has created in its Cracker Barrel trademark, and to create significant confusion and cannot be permitted,” according to the lawsuit filed in U.S. District Court, Northern District of Illinois, last week.
“Kraft says it never took formal legal action until now because the chain had sold only a very limited number of mixes, candies and sauces through its shops and website,” the AP reports. But it claims the new developments “could harm the reputation of its ‘award-winning’ Cracker Barrel cheese, which has generated sales of more than $100 million a year since 2000,” Candice Choi writes. “In the lawsuit, Kraft notes the hundreds of awards its cheese has won through the decades, including ‘17 gold medals in the New York State Fair from 1959 to 1987.’”
“We have received a copy of a complaint that Kraft Foods filed in federal court,” Cracker Barrel spokeswoman Jeanne Ludington told the Nashville Business Journal in an email late Friday. “We are reviewing and evaluating the materials and may comment in the future as necessary.”
“The case involves two large corporations of unequal size,” Marsteller observes. Kraft is a multinational conglomerate with dozens of brands generating $19 billion in annual revenue while Cracker Barrel operates 621 restaurants within the U.S. with $2.58 billion in revenue last year.
“Cracker Barrel’s situation is unique in that two well-recognized yet unrelated brands have existed without conflict for so long,” writes Food World News. “It does not help that John Morrell Foods is related to Kraft rival Smithfield Foods,” it points out.
Kraft did leave the door open to a negotiated settlement.
“Kraft hopes that this matter can be resolved without having to proceed with the litigation and has invited Cracker Barrel to propose a settlement,” spokeswoman Sydney Lindner tells The Tennessean. “If settlement talks do not go forward, the litigation will.”
The roadside company has been on a roll lately, according to Forbes’ John Dobosz, who observed a couple of weeks ago that its “stock is really cooking, and it’s serving up more than tasty vittles.” Shares have quintupled in four years and revenue, profits and dividends have all been in the upswing.
“Another reason to like Cracker Barrel is the presence of an activist investor helping to keep pressure on the company to improve performance: Sardar Biglari, the 35-year old Iranian-American manager of the Lion Fund and CEO of publicly traded Biglari Holdings,” Dobosz wrote.
If you’re packing the van for a family vacation, by the way, the Cracker Barrels that sell everything from rocking chairs to metal-wrench wind chimes -– with a few gimcracks and corn muffin mixes in between -- has a handy webpage that’s “happy to help you plan a road trip with store hours and directions to any Cracker Barrel in the United States.”
But don’t expect to be served a slice of Cracker Barrel Vermont Sharp White cheddar cheese on a Nabisco Fire Roasted Tomato & Olive Oil Triscuit cracker. Then again, as The Tennessean’s Marsteller suggests, “One potential settlement scenario could involve Kraft licensing or selling the cheese brand to Cracker Barrel.” But you’ll probably have to bring your own Triscuits. Nabisco is now part of the former Kraft Foods’ global snacking and food brands now known as Mondelez International.