The importance of trade secrets in the food and beverage industry

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Sales methods, price agreements, and advertising strategies are also important trade secrets that can help a company differentiate itself from competitors and increase its market share. Distribution methods, contract forms, and business schedules are other examples of trade secrets that can give a company a competitive advantage by ensuring efficient operations and effective management.

In the food and Beverage industry, recipes, machinery, and processes are kept confidential as it serves as a competitive advantage and unique product differentiator. This is true, for example, in Nigeria. Dufil Group, the owners of the Indomie brand, an instant noodle product have a unique boiled chicken flavor that has made it a market leader in the noodle category. In the Bouillon seasoning category, leading brands like Unilever Knorr and Nestle’s Maggi have unique flavor profiles and create a distinct taste for consumers. The quick service restaurants continue to innovate and create new platforms and recipes to ensure a competitive edge over competitors, with, for instance, the fried rice sold at different restaurants; each with different tastes based on the fried note, the vegetables used, rice, and appearance.

Based on the advantages of trade secrets in the food and beverage industry, it is very key to protect recipes, process methods and food-related systems. This is where robust policies and procedures, such as confidentiality agreements, access controls, and security measures are essential to protecting these trade secrets from unauthorized access and ensuring a company’s continued success irrespective of the sector.

4. Besides customer loyalty and brand recognition, what are the impacts of trade secrets that may be less obvious?

While the impact of trade secrets on innovation and competitive advantage is well-known, there are also less obvious impacts that can have significant economic and national security implications.

An economic impact of trade secrets is that they can create barriers to entry in markets. When a company possesses a unique trade secret, it can be difficult for a new competitor to enter and compete effectively. This can lead to decreased competition, higher prices, and reduced innovation. For example, if a company has a secret formula for a product that cannot be easily reverse-engineered, as long as the trade secret remains a secret, the company can maintain a monopoly on that product, driving up prices for consumers. This may slow technological advancements as it discourages collaboration between companies.

Interestingly the US, Japan, and EU have recently made some updates to their trade secret policies of the last 5 years to, for example, expand protections and include civil and criminal remedies for trade secret theft. When you consider that theft of trade secrets accounts for about 3% of GDP in the global north, it is understandable why updates are being made.

Trade secrets can also have significant national security implications, when related to military technology, weapons systems, etc and are critical to national defence, or are critical infrastructure such as energy systems or telecommunications networks. If these trade secrets are compromised, it could lead to serious disruptions and potentially even pose a threat to public safety. It is thus important to strike a balance between protecting trade secrets and ensuring that information sharing and collaboration can continue to drive progress and innovation in critical industries.

5. What are some examples of companies that have managed trade secrets well?

The most widely known example is probably Coca-Cola, as it has successfully guarded its formula for over 130 years. A less spoken about, but also popular brand is the soy sauce manufacturer Kikkoman which has held its trade secrets for about 300 years. There’s also Lindt, the Swiss chocolatier which has been in operation since 1845, is present in over 100 countries and has managed to keep their recipes secret – they report keeping one or more of their recipes in a vault in Switzerland.

6. What does intellectual property mean to Freddy Hirsch Nigeria and what role has trade secrets played in its success?

Freddy Hirsch Nigeria is a flavor and seasoning manufacturer in Nigeria supplying FMCG. Freddy Hirsch works with multiple customers to deliver a unique and innovative flavor to them. Our propriety and confidential information are key assets This includes our flavor formulas and application technologies. As a flavor supplier to many customers, we make sure that each customer’s trade secret, manufacturing process, information, and sources of raw materials are not disclosed to any third party or customer competitors.

For a company like Freddy Hirsch Nigeria, intellectual property is critical to its success so we hold various patents, which give us a competitive advantage in the market. We also have trademarks on the brand name and logo, which helps to distinguish our products from those of our competitors.

By keeping these trade secrets secret, we can prevent their competitors from replicating our products or processes, which helps us to maintain a dominant market position.

7. How does Freddy Hirsch Nigeria ensure that its trade secrets are protected?

We have a code of Conduct, the values of which protect our intellectual property including our trade secrets.

Freddy Hirsch values and protects its confidential information, and we also respect other companies’ confidential information. Our client’s information is not shared with any of its competitors or other customers. We also ensure that any other information collected is done in an ethical and legal manner. Our employees sign non-disclosure agreements subject to Labour law that stipulates that any technologies developed and created while in the employment of the company is property of Freddy Hirsch Nigeria. It is our responsibility to ensure the proper handling of confidential information. We facilitate IP and trade secret courses during new employee inductions and have periodic reviews to reinforce and update new employees on trade secrets protection. We also have a trade secret policy that advises employees on how to identify and manage and protect trade secrets. Employees are advised not to leave confidential information computers, tablets, flash drives or mobile phones unattended. In addition, access to software, confidential information is restricted and controlled.