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Kraft Foods sues Cracker Barrel over plans to sell in grocery stores

11:39 AM, Feb 1, 2013   |    comments
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By Lance Williams / The Tennessean 

Kraft Foods has filed a lawsuit in federal court against Lebanon-based Cracker Barrel because of its plan to sell its own brand of meat products in grocery stores.

According to the lawsuit, Kraft (NASDAQ: KRFT) has sold a brand of cheese called "Cracker Barrel" in grocery stores since 1954, and that the restaurant chain's move into grocery stores would violate the food giant's trademark. Kraft said it has sold about $100 million worth of Cracker Barrel cheese each year since 2000.

"(The chain's) actions threaten to destroy the substantial goodwill that Kraft has created in its Cracker Barrel trademark, and to create significant confusion and cannot be permitted," Kraft argued in the lawsuit.

Kraft is asking the court to rule that Cracker's decision to sell in grocery stores would violate Kraft's trademark and "constitute unfair competition" and "unlawful and deceptive trade practices," according to the lawsuit.

Cracker Barrel (NASDAQ: CBRL) already sells various food products, such as pancake and corn muffin mixes, cobbler filling and syrup, under its name. But those items are available only at Cracker Barrel stores and through its website. According to the lawsuit, sales of food products in Cracker Barrel retail stores represent about 4 percent of the company's annual revenue of around $2.5 billion.

That would change under a recent multiyear licensing agreement announced in November with John Morrell Food Group, a Smithfield Foods subsidiary. It will make various food products - such as ham, bacon, lunch meats, glazes, jerky and summer sausage - under the Cracker Barrel name and sell them through grocers, mass merchandisers and other retail outlets.

Cracker Barrel, which was founded in 1969, has not said when the new products will hit store shelves.

A spokesman for Cracker Barrel was not immediately available for comment.

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