Dive Brief:

• A federal judge in Richmond, Virginia denied Kroger’s request for a preliminary injunction that would have halted the sale of Lidl’s Preferred Selection store brand, according to the Richmond Times-Dispatch. Last month, Kroger filed a lawsuit against Lidl claiming the discounter’s premium brand was too similar in appearance to its Private Selection store brand.
• Lidl CEO Brendan Proctor testified during the Tuesday hearing, as did Gil Phipps, vice president of corporate brands for Kroger. Both sides presented expert witnesses and consumer surveys to support their causes. In justifying his decision, U.S. District Judge John A. Gibney said the retailer’s brand logos only looked “somewhat alike” and noted that the words “private” and “preferred” have different meanings.
• Judge Gibney set a January 11 date for a bench trial on the case.

Dive Insight:

In his testimony on Tuesday, Proctor said that the discounter designed each of its Preferred Selection products to stand out individually. Many items in the line, which comprises 160 out of 3,000 products typically found in a store, sport flags on the logo indicating their country of origin, he noted — a detail that makes them distinct from Kroger’s Private Selection line.

Meanwhile, Supermarket News reported Lidl’s senior brands manager filed a declaration claiming competitors like Aldi and Safeway also use variations of the word “Select” in their branding — and in some cases more closely resemble Kroger’s premium brand than Lidl’s Preferred Selection does.

Ultimately, Gibney found Kroger’s similarity claim unconvincing, and said that healthy competition between two brands like this is in the public interest.

Many industry observers see Kroger's lawsuit primarily as a move to disrupt Lidl at a crucial point in its U.S. store development. With 20 stores now open in the Mid-Atlantic region, Lidl threatens to siphon off customers from area retailers with its promise of quality products and prices 30% lower than the competition.

Industry analysts interviewed by Food Dive say Kroger isn’t as vulnerable to Lidl’s disruption as other retailers, considering its large footprint and effectiveness as an operator. But the Cincinnati-based grocer likely sees a threat to its own store brand development in Lidl’s private-label-heavy selection.

Over the years, Kroger has carefully built a portfolio of high performing private brands that comprise more than $20 billion in yearly sales. These products comprise a large and growing share of Kroger’s sales, and are a key part of the retailer’s strategy as it moves forward in a challenging retail market.