Arbitration between Freedom Foods Group and Blue Diamond Growers will go ahead in the US after the Full Court of the Federal Court of Australia rejected Freedom Foods Group’s attempt to block the action.
FFG was appealing a trial court decision in March, which ruled the US arbitration go ahead. The Full Court rejected the appeal unanimously, 3-0.
In September 2020, Blue Diamond sued FFG for fraud and breach of the parties’ license and distribution agreement. Blue Diamond contends that it had a contract with FFG to make, sell and promote its products in Australia and New Zealand and that Freedom Foods would not compete with Blue Diamond in those markets.
The companies entered a licence agreement in 2011 in which FFG would exclusively manufacture Blue Diamond almond beverages in Australia and New Zealand. It was amended in 2014, giving FFG permission to manufacture private label brands but using the Blue Diamond almond base. Blue Diamond would provide rebates, which are now at the centre of the court action. It is seeking roughly $26 million.
Blue Diamond alleges FFG breached that agreement by manufacturing and selling its own nut-based beverage products, including MilkLab and Australia’s Own.
In its 1H FY21 results, FFG's plant-based beverages rose 17 per cent to $75.2 million, with MilkLab’s sales increasing 50 per cent.
CEO Michael Perich said: “MilkLab sales increased 50 per cent in the half year, with the brand continuing to build customer loyalty as health-conscious consumers increasingly opt for plant-based milks, particularly in the fast-growing specialty cafe market. MilkLab is now sold in mor than 8000 cafés, with enormous potential for expansion through new milk alternative products such as oat milk, new sales channels such as quick service restaurants and grocery stores, and in international markets such as New Zealand, South East Asia and China.”.
At the time, The Australian Financial Review reported Blue Diamond senior vice-president Raj Joshi was surprised FFG was “publicly touting MilkLAB almond milk as a critical element of its turnaround and recapitalisation strategy in Australia when that brand is at the very centre of our legal proceedings in California”.