Nestlé and Coca-Cola, high-voltage divorce: these are the consequences of the “war” of iced tea | Business

If you drink Nestea, you can breathe easy: the famous ready-to-drink tea drink will not disappear from the Spanish market. The rumor spread a few months ago when it became known that the Swiss multinational Nestlé, which owns the famous iced tea brand (the result of the merger of Nestlé and Tea), would sever ties with Coca-Cola, its distributor in Spain since 1993. Now Coca-Cola wants to promote its own brand of brewed and iced tea, Fuze Tea. In fact, it is already sold in bars, restaurants and on supermarket shelves. This notorious divorce gives rise to an interesting legal snafu, since the well-known Nestea brand is owned by Nestlé; but the basic formula of the soft drink, which has been sold under that name for 30 years, is Coca-Cola. The dark clouds of conflict are approaching.

Thus, in 2025, both companies, until now friends, will become direct competitors. To quell the rumors, Nestlé calmed the situation on October 8 with an assurance that it would continue to sell iced tea under the Nestea brand and that consumers “will be able to continue to choose their favorite market leader brand in their favorite flavors as before.” ” A week later, Coca-Cola was quick to issue a statement in response, making clear that its new iced tea drink, Fuze Tea, uses “the same old tea drink formula.” The recipe “is and will remain the exclusive property of The Coca-Cola Company,” the renowned multinational beverage company said.

Are the war drums sounding? Analysts say that while the situation may be difficult for consumers to understand, the coexistence of both brands does not necessarily have to lead to a legal dispute. Although the script is delicate. “Even if the breakup was not amicable, we are faced with two brands that can coexist in the market to differentiate the same type of product, given their differences,” evaluates Carmen González Candela, Director of Strategy and Legal Advisory at PONS IP.

One potential point of contention lies in something extremely abstract: taste. The problem is that it is impossible to record something as variable as the taste of a drink. The same thing happens with smells. For this reason, companies do not protect the flavors, but the formulas or, what is the same, the chemical path to the final result that reaches the consumer.

Can Nestlé sell Nestea if its formula belongs to Coca-Cola? Answer: yes. “Theoretically, if Nestlé could completely independently develop a formula identical to Nestea’s, it could be brought to market,” explains Eric Macia Lang, head of trade secrets at PONS IP. Trade secrets, a legal defense often used to protect successful beverage recipes, do not recognize the exclusive right of use. That is, a company (in this case Coca-Cola) cannot claim a monopoly on taste. Laura Montoya, partner in charge of the legal and litigation department of ABG Intellectual Property, in this sense notes that “if a third party repeats the formula”, that is, in one way or another achieves a similar or even identical taste with Nestea, “the secret keeper could not interfere.”

Advertising front

The second front of the battle between Nestlé and Coca-Cola may be advertising. “There is also expected to be some advertising war,” Montoya predicts. In Spain, laws do not prohibit companies from explicitly mentioning competitors in their promotions. This is called “comparative advertising,” and “it is allowed in Spain,” says Montoya. But there are certain boundaries that cannot be crossed. For example, Nestlé and Coca-Cola must make clear that “comparisons between their products must be fair, not misleading, and must not disparage competitors” or “distort reality.” For now, Coca-Cola is simply insisting that Fuze Tea, its iced tea drink, is an “original flavor.”

A third potential area of ​​disagreement between the two companies may arise in terms of unfair competition. For Inmaculada de la Haza, Balder’s partner, Nestea and Fuze Tea “are compatible brands” because “although they cover the same products, tea-based drinks,” she believes there are “obvious denominational and phonetic differences.” “We must also take into account that Fuze is not a new brand, it was created in 2000 in the USA, acquired by Coca-Cola in 2007 and is present in 90 countries around the world.” However, the lawyer admits that “the bottles in both cases are very similar.” This is not trivial because it can cause confusion for the consumer, which is something that the laws seek to avoid at all costs.

Candela Sotes, Bird & Bird’s director of competition, admits that future rivalry between Nestea and Fuze Tea (or rather between Nestlé and Coca-Cola) could lead to “aggressive measures” to attract customers. And in the midst of a commercial battle, they can “create consumer confusion by associating one brand with another,” the expert adds. The lawyer emphasizes that in this case, the possible use of “exclusivity or non-competition clauses” will have to be carefully considered, since for the lawyer there is a danger that the company with the greatest market power will close the deal. . access to the product distribution network to another. Sotes pays special attention to the hotel, restaurant and cafeteria sector.

The main idea, according to lawyers, is to prevent Nestlé and Coca-Cola from becoming confused: “They will have to prevent said confusion from being deliberately caused by their advertising campaigns or commercial strategies.” The battle for tea is over (in a very cold glass).