Nestea – a drink brand of two halves

The Nestea brand, a combination of Nestlé and Tea, was the result of a joint venture between Nestlé and Coca-Cola. The brand is owned by the Swiss company, Nestlé , while the carbonated soft drink sold under it is owned by The Coca-Cola company. Through a commercial agreement, Coca-Cola had been distributing Nestea on behalf of Nestlé for 30 years in Spain and Andorra and a handful of other countries, including in Canada.

However, the joint venture, that has been winding down since 2018, as well as the distribution arrangement, are now over, which has left Nestlé with the well-known Nestea brand but without the original tea drink product, while Coca-Cola is left with the original tea drink product but without the well-known Nestea brand.

Both Nestlé and Coca-Cola have announced that they will continue to sell a carbonated tea drink. Nestlé will sell drinks under the Nestea brand, and has claimed that the drink remains unchanged, and Coca-Cola for their part has been selling their new Fuze Tea branded drink in bars, restaurants, and supermarkets, which according to their public announcement, uses “the formula of the traditional tea drink” and the recipe “is and will remain the exclusive property of The Coca-Cola Company.”

While both brands can co-exist in the soft drinks market, the two companies will have to tread carefully to avoid consumer confusion for competing tea brands and accusations of trade mark infringement e.g. by not falling foul of the rules on comparative advertising.  This is when a competing business uses a competitor’s brand to make a legitimate comparison with their own brand, in order to promote their own business.  Use of another business’s trade mark which goes beyond legitimate comparative advertising rules could be considered as trade mark infringement, if used for commercial purposes without the trade mark owner’s permission.

Nestea v. fuze tea 

For iced-tea drinkers, the battle of these two competing products may ultimately come down to something more abstract: taste.

It is perfectly feasible that Nestlé could develop a completely independent formula identical to that of the original Nestea drink, and market it as such.

Therefore, even if Coca-Cola’s formula is protected as a trade secret, Coca-Cola cannot prevent Nestlé from using a flavour similar or even identical to the original Nestea recipe, if achieved by Nestlé’s own independent means.

As for the future success of Fuze Tea and Nestea, it will inevitably come down to whether taste of the iced-tea drink will dictate consumer preference or will they be persuaded by brand recognition?

Coca-Cola will be hoping that taste will be the determining factor for consumers irrespective of the relatively new and little-known Fuze Tea brand name, while Nestlé will no doubt hope that their well-known Nestea brand will continue to influence consumer choice regardless of any potential change in taste.

Let the battle of the iced-tea brands begin!