It’s an all out trade war

Although a court declared Pabod Breweries’ bottle not to infringe upon the Star bottle design, Star’s parent, Nigerian Breweries (NBL), which is controlled by Heineken, has decided not to let matters rest but to lodge an appeal against the verdict. The court has adjourned the matter until 23 October 2008. The upstart Pabod Breweries whose launch has been held back because of Nigerian Breweries’ actions by more than half a year, has suffered significant losses yet remains upbeat.

Seeking justice is one thing. Obtaining justice quite another. This is certainly true for Nigeria. Surprisingly, justice often prevails in Nigeria – although you may have to wait for it for a very long time.

The court case that NBL launched against Pabod Breweries has dragged on for most of this year with no end in sight. Pabod may have managed to ward off NBL’s allegation that Pabod’s bottle infringes upon Star’s trademark design by way of a court ruling, yet NBL, in which Heineken is the major shareholder, has decided to lodge an appeal against the verdict. This has extended Pabod’s ordeal until 23 October this year.

Never mind that NBL may eventually have to pay Pabod compensation. But what is a compensation payment of EUR 2 million or EUR 3 million if ultimately you achieve your objective - which is to run your competitor into the ground?

Pabod has already run into losses in the order EUR 2.5 million because the court case has prevented Pabod from launching its beer in its own bottle – whose selfsame design NBL has contested. As Pabod cannot use its own bottle and has had to resort to Nigeria’s generic beer bottle, all advertising had to be scrapped too as it had focussed on the new bottle. No marketing, no beer sales, no revenues for new marketing. That’s why Pabod has been trapped in a vicious circle for months now. Add to that the fact that NBL in the meantime is using its muscle to agitate against a helpless Pabod and you will understand that Pabod is falling very short of its own targets.

With the federal Rivers State government being Pabod’s major shareholder, transitional funds to help Pabod along have not been forthcoming. Nigeria is suffering from a drop in crude oil production which has hampered the state’s revenues. All parties interested in keeping Pabod going are currently investigating their options. However, settling with NBL out of court is not one of them.

Hark their words. On Pabod Breweries’ home turf, Port Harcourt, Heineken’s NBL erected this billboard. It should have been a warning to the local upstart Pabod that the market leader would treat the newcomer ruthlessly. Photo: Verstl