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British tastebuds caught in crossfire of chocolate war

Simon Dawson | Bloomberg | Getty Images

Chocolate from the UK has long been a source of comfort for homesick British expatriates in America.

But now Brits living in the US will have to settle for — what some regard as inferior — American versions of chocolate after the confectionery giant Hershey forced two companies to stop importing UK-made versions.

The spat is part of a war of trademark claims that involves products by Cadburyand Nestle, the world's biggest chocolate makers — with British tastebuds caught in the crossfire.

Nicola Edwards runs The Queen's Grocer, a store in Odenton, Maryland, that sells tea, biscuits and Doctor Who memorabilia to the local British population. The expat from Leicester kept her taste for British confectionery when she moved to the US 15 years ago, and says Hershey's Cadbury is barely worth calling "chocolate".

"It's brown, and that's about it," she said. Her petition protesting against Hershey's actions has attracted more than 30,000 signatures online.

Her store's supply of British-made Cadbury, which is owned by Mondelez, formerly called Kraft, and Toffee Crisp, Rolo, Yorkie and Kit Kat — brands owned by Nestlé — is fast running out after Hershey blocked two US companies from importing them, claiming that the products infringed its trademarks.

Although she does not purchase directly from Posh Nosh Imports and LBB Imports, the companies Hershey took to court last year, she says her suppliers do not want to face similar legal action by a "billion-dollar company".

Hershey's claim stemmed from exclusive licensing deals it agreed with Cadbury and Rowntree, which was later purchased by Nestlé, in the 1970s and 1980s. Hershey makes Cadbury's chocolate and Nestle's Kit Kat and Rolo in the US, albeit with a slightly different recipe to cater to American tastes.

"We undeniably own those trademark rights," it said. Although British-made Cadbury products have been imported to the US for years, Hershey took action in 2014 because they were appearing in mainstream retailers, which Hershey declined to name.

The company, which won an injunction last year against Steve Hershey, the US senator, for allegedly imitating its branding on his campaign posters, also argued that Nestlé's Toffee Crisp packaging too closely re­sembled its Reese's Peanut Butter Cups, and that the name Yorkie was too similar to its peppermint patty brand York.

LBB settled out of court and agreed to stop importing the products, while Posh Nosh lost its case in November. John Baumgartner, an analyst at Wells Fargo Securities, said the dispute was an open-and-shut case. "Hershey has the rights to sell Cadbury's chocolate in the US. There's not much leeway on that," he said. Posh Nosh declined to comment and an LBB spokesman was unavailable for comment.

Both Nestlé and Mondelez distanced themselves from the spats, describing them as legal disputes between third parties. However, Nestlé said it did sell directly to Posh Nosh Imports, albeit in "insignificant" amounts when compared with its £400m of annual exports.

Mondelez said ingredients for Hershey's Cadbury chocolate were supplied from its Irish chocolate factory, "to maintain the same taste". Nestlé said that its products were "completely different" in different markets to reflect local tastes and regulations.

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Nestlé said on Thursday that it was investing £5.25m at its Halifax factory to manufacture more than 5,000 tonnes of Butterfinger Peanut Butter Cups. The product is for export to the US to compete with Hershey on its home turf.

Brad Armitage, who runs American Fizz, a candy shop in Bournemouth that caters to American expats, criticised Hershey's actions. He said both Reese's Peanut Butter Cups and Toffee Crisp sat side-by-side on shelves in the UK.

"We're able to decipher which is which. Are they saying American people can't tell?" he said. It was still possible to buy British-made chocolates for delivery in the US on Amazon, he pointed out.

Despite stocking more than 3,000 types of confectionery from the US, Mr Armitage, who is from the UK, admitted that he was not a devoted fan of American candy, particularly Hershey's chocolate.

"It's an acquired taste," he said.

While Hershey has been on the offensive against British-made chocolate, it has been forced to defend its "Malteser" brand, which effectively acts as a block on the sale of Mars's "Maltesers" product in the US. Mars took Hershey to court last April in a case, still running, over Hershey's "Malteser" confectionery, which consists of crunchy chocolate-covered balls in red packaging. Mars declined to comment.

Nathan Dulley, president of LLB, said his company would survive the loss of income from the block on imports. "It is really the small businesses across the country that rely on these products for their livelihoods that are going to be affected," he said.