China hotel chain drops Penfolds

8th August, 2014 by Rupert Millar

InterContinental Hotels in China has dropped Australian brand Penfolds from its wine lists over fears of being embroiled in a trademark battle.

Penfolds GrangeThe Australian Financial Review reported that the chain has unlisted the famous label from all 214 of its hotels across China amid fears it could be dragged into a legal dispute between Treasury and a “notorious” Chinese trademark squatter called Li Daozhi, who has already successfully sued French company Castel.

Treasury Wine Estates has moved quickly to defuse the more sensational implications of the news.

In a statement to the drinks business, Treasury announced: “The media report in the Australian Financial Review (6 August) on this case does not contain all the relevant facts and is based on internal customer information leaked to the media.

“TWE continues to work closely with our customers and business partners in China to address any trademark concerns they may have, and we do not intend to provide commentary on these confidential commercial discussions.

“TWE remains totally committed to protecting the integrity of our flagship Penfolds brand, so that our customers in China can continue to buy and stock Penfolds wines with absolute confidence”.

Li has apparently trademarked the Chinese names of a wide variety of brands and companies in China that the respective companies have neglected to do.

Castel suffered a stinging courtroom defeat last year and were forced to pay 33.7 million yuan (€5m) to Li.

Penfolds has been in a legal battle with the same person since 2011 and has apparently won an initial case which is now being appealed.

InterContinental’s contract is estimated to be 5,000 cases a year or some 5% of Penfolds’ China shipments.

So far three Chinese names for Penfolds, which roughly translates to “chasing prosperity” apparently, have been listed in China the most recent in 2013 – two years after the legal battle began.

In an email sent to hotel managers in late July, InterContinental’s food and beverage manager Tim Stanhope, wrote:  “In order to play it safe, it’s better that hotels stop selling the wine until there is a court ­judgement announced.”

Although the Financial Review suggested that other on- and off-trade chains may follow suit, Treasury stressed that this was not the case.

No other businesses have so far followed InterContinental’s example or show any signs of doing so.

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