Sep 14, 2023 - Economy

Nestlé USA in legal battle over staple Latino products sold in the U.S.

Abuelita hot chocolate, a Nestle product made in Mexico, sits on a shelf at an Albuquerque, New Mexico, Latino grocery store. Photo: Russell Contreras/Axios

A trademark dispute between Nestlé USA and two Mexican distributors could affect the types of staple products found in many Latino pantries.

Why it matters: The fight, headed to trial in federal court this November, comes as all kinds of companies try to tap into the growing, multi-trillion-dollar U.S. Latino market.

Details: In 2020, Nestlé USA filed a complaint in U.S. District Court in Western Texas against Ultra Distribuciones Internacionales and Ultra Distribuciones Mundiales for importing and selling Nestlé Mexico products.

  • Nestlé USA claims those Mexican products — Nescafe, Abuelita, Nido, Media Crema, Carnation and La Lechera — were meant to be sold only in Mexico and are different from products it approved for U.S. consumers.
  • The "parallel imports" are confusing consumers and have harmed Nestle USA's business, the complaint said.

The other side: Lawyers for Ultra Distribuciones Internacionales say the company has openly exported Nestle Mexico products into the U.S. for years.

  • The distributors say Nestlé headquarters in Switzerland and Nestlé USA have always known of their sales and that the Mexican products have FDA and USDA approval.
La Lachera, a Nestle product made in Mexico, sits on a shelf at an Albuquerque, New Mexico, Latino grocery store.
La Lachera, a Nestle product made in Mexico, sits on a shelf at an Albuquerque, New Mexico, Latino grocery store. Photo: Russell Contreras/Axios

The intrigue: Although they share the same name and similar packaging, the Mexican products have slightly more sugar and different colors on labels.

  • Products like Abuelita hot chocolate have long been popular among Mexican American families in the American Southwest.
  • Before its wide availability, families often traveled to border towns in Mexico to buy Abuelita or Mexican Coke, a soft drink with a slightly different formula than the U.S. version.
  • Older generations of Mexican Americans seek out the Mexican-made version of Abuelita and often dismiss the U.S. version as inauthentic.

What they're saying: "This is really an internal money battle between Nestlé USA and Nestlé Mexico, and the American consumer is the one who stands to lose," Daniel Pulecio-Boek, attorney for Ultra Distribuciones Internacionales, said in a statement to Axios.

  • "Consumers know exactly what they are buying — culturally familiar goods that in many cases remind them of home."
  • He said a ruling in Ultra's favor would help ensure people in the U.S. will be able to continue to buy the authentic, Mexican products of the brands they love.
  • If Nestlé USA wins, the Mexico products could be removed from U.S. stores and the more expensive American versions would replace them, he said.

Attorneys at Mayer Brown LLP, the firm that represents Nestlé USA, did not respond to emails from Axios seeking comment.

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