Britannia's Tiger row may end soon

Royalty terms with Danone for brand on the cards.

Indian foods major Britannia Industries and French dairy giant Groupe Danone are close to working out a country-specific royalty agreement to settle the intellectual property rights dispute over the use of Britannia's Tiger brand.

"We are reasonably close to a settlement on the Tiger IPR issue," confirmed a top Britannia executive on condition of anonymity.

He told Business Standard that the two companies were working out an agreement for royalty payment that would be 3-5 per cent on country-specific sales of the Tiger brand.

"The norms of royalty paid on brand use differ from country to country. Hence the royalty percentage needs to be viable for the brand to be profitable in those countries," the executive added.

The final decision on the matter will be taken by the high-profile IPR committee appointed by Britannia Industries in May 2006. Industry experts point out that the norm for royalty use in India is 5 per cent of sales.

For instance, if a foreign multinational permits its Indian operation to sell international brands in the local market, the Indian operation pays the brand-owner a percentage of sales as royalty for brand usage.

However, royalty percentage norms could differ in countries where the Tiger brand is sold, and hence having a uniform norm across countries might not be viable, the executive said.

In case of Britannia's Tiger, Danone currently uses the brand in five countries""Indonesia, Malaysia, Singapore, Pakistan and Egypt. The brand is reportedly the market leader for biscuits in Asia.

In 1997, Danone registered the Tiger trademark on its own in 70 countries and received approvals in 35. But the board of Britannia Industries was reportedly unaware of the move till recently.

When Britannia started exploring international business opportunities, it reportedly found that the brand had been appropriated by its indirect promoter, Groupe Danone, in several markets.

Danone had earlier confirmed to this newspaper that it had agreed in principle to return the Tiger brand to Britannia and take negotiations further.

Danone has registered the brand in markets in which Britannia is not present, thereby checking its abuse by others, with the full knowledge of the management and the board, a Groupe Danone executive had said.

Danone had also offered ¤1 million to Britannia, which was rejected by India's largest biscuit company.

In May 2006, a high-level committee was set up by the board of Britannia Industries to iron out the Tiger brand right issue. The committee members included investment banker Nimesh Kampani, former Hindustan Lever Chairman Keki Dadiseth and former finance secretary Vijay Kelkar.

The IPR issue is also a bone of contention between the Mumbai-based Wadia group and Danone, equal partners in the holding company, Associated Biscuit Holdings International (ABIH) that controls Britannia.

Tiger was launched in 1997 and went on to become Britannia's biggest brand.