City & Business: Copycat complaints are likely to backfire

THE ugly dispute between branded grocery manufacturers and supermarket groups over 'copycat' own-label products gets louder by the day. Sir Michael Perry, chairman of Unilever, has joined the fray, accusing stores of misleading shoppers with their 'parasitic' products. 'I have no objection to sitting at the same table as my competitors,' he said last week, 'but I do object to them eating off my plate.'

Coca-Cola is livid with J Sainsbury, whose newly launched Classic cola looks very similar to the 'real thing'. Sainsbury has compounded the offence by heavily promoting Classic in its stores and relegating Coke to the outer darkness of the bottom shelf.

Now Procter & Gamble, Unilever, Mars, Nestle and others, under the auspices of the British Producers and Brand Owners Group, are threatening to cut future investment in Britain, following the Government's refusal to toughen up trademarks legislation. It warns of a 'bloody battle ahead' with copycat producers dragged through the courts.

Supermarkets have seen the last of the fat years. Margins are falling and even the mighty Sainsbury is likely to reveal a small decline in pre-tax profits (to about pounds 715m) when it announces its annual results this week. So they are all the more determined to exploit own- label products, which yield much wider margins than outside brands.

It's easy to see why the manufacturers are annoyed. They spend millions developing a brand and millions more drumming it into the consciousness of the public through prime-time TV advertising. It's galling for them to see supermarkets piggybacking on this work.

But the truth is that shoppers are rarely actually misled. According to the National Consumer Council, customers are certainly not being duped. If they were, the manufacturer would have a very strong case, either under existing trademark statutes or by using the common law to prove 'passing off'. Jif lemon juice was able to see off a rival in just this way.

There's more than a whiff of hypocrisy about the whole business. Most of our biggest branded manufacturers secretly manufacture own-label versions for supermarkets. They include United Biscuits, Allied Lyons, Nestle, Rank Hovis McDougall and even Sir Michael's Unilever.

By protesting about copycats, brand manufacturers are moving into dangerous territory. The more they complain, the more they suggest in the minds of consumers that it is only their packaging that differentiates them from the competition. From there it is a perilously close step to admitting, say, that Coke tastes no better than Classic, that Head & Shoulders is no better than Sainsbury's anti-dandruff shampoo - a particular bugbear of Procter & Gamble, that one.

Brand manufacturers would do better to invest their energies creating genuinely new products rather than defending old ones. Politically, they can't win this battle - not while own-brands are 25 per cent cheaper. They'd be wiser to remember what imitation is the sincerest form of, then grit their teeth and shut up.