Hydrox vs. Oreo

Hydrox producer seeks $800m from Mondelēz for damaging its cookie sales

By Douglas Yu contact

- Last updated on GMT

Pic: Leaf Brands
Pic: Leaf Brands
Hydrox cookies maker Leaf Brands is seeking $800m in damages, alleging Mondelēz sabotaged its sales by using a direct store delivery (DSD) model.

According to a recently filed US Federal Trade Commission complaint, a buyer from one of the largest US retail chains informed Leaf Brands’ CEO, Ellia Kassoff, that, through its DSD system, Mondelēz is able to use either its own or sub-contractor’s trucks and employees to restock supermarket shelves with Oreo cookies several times a week.

Leaf Brands, however, ships its Hydrox cookies to supermarket warehouses, where they are restocked by supermarket employees at night.

Financial losses

Kassoff alleged Mondelēz has the opportunity to “hide”​ Hydrox cookies during its store visits, “ensuring that Hydrox will be hard to find and sales will slow so that retailers will eventually discontinue selling the product.”

He purported that Mondelēz wants to “monopolize the sandwich cookie market.”

Earlier this month, Leaf Brands posted photographs on Facebook showing Hyrdrox cookies buried behind Oreos. Some of the biscuits were blocked by hanging tags, while others were pushed to the very back or to the top of the shelf.

Kassoff also alleged Leaf Brands’ distributors have felt additional financial pressures over slotting fees that have to be paid to retailers to regain shelf space that had been taken over by Mondelēz.

‘The accusation has no merit…’

Laura Flynn, Mondelēz’s spokesperson, told BakeryandSnacks the company had not been contacted by Leaf Brands about its allegations.

However, she said: “We are confident that this accusation has no merit.

“The Oreo brand is an iconic one, with a proud and rich history of delivering great tasting products and exciting innovations to our consumers for more than a century.”

Regarding its shelf positioning, spokesperson Kimberly Fontes, said: “Much of our shelf placement is due to the fact that Oreo is the number one cookie in the US, and retailers typically align premium placement to the fastest selling products based on consumer demand.”

Hydrox vs. Oreo

Hydrox claimed to be the original chocolate sandwich cookie, introduced by Sunshine Biscuits in 1908.

However, Oreo, which started in 1912, surpassed Hydrox in popularity. Hydrox was discontinued in 1999 after Sunshine was acquired by Keebler, which was later purchased by Kellogg.

In 2014, Leaf Brands registered the Hydrox trademark and resumed producing the product. Recently, the company removed all artificial flavors and obtained non-GMO certification for its biscuits.

According to IRI multi-outlet data the 52 weeks leading up to January 22, 2017, Hydrox posted over $492k in sales, growing a whopping 2,406% year-over-year. Although Oreo’s sales declined by 10% compared to a year ago, the popular biscuit remained the market leader, posting $220m in retail value.

Related topics: Kraft Foods, Snacks, Manufacturers, Markets

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