US snack companies Evercrisp and Proctor & Gamble (P&G) have gone to the courts in an effort to resolve their war to control Chile's chip market.

P&G defends its right to call its Pringles brand a 'potato chip' while Evercrisp begs to differ. Evercrisp, a subsidiary of food and drink giant PepsiCo, said the Pringles label deceives customers because Pringles are not exactly potato chips, but a mixture of flour and dehydrated potato. Incorrect information on food labels, Evercrisp insisted, could be a health risk. "It is wrong for labels and publicity to mislead consumers or create erroneous impressions," the company said.

P&G called the accusation "an attack on free market competition which impedes on the free commercialization of our product." The two companies have engaged in similar conflicts in Argentina, Venezuela and Mexico.

P&G and Evercrisp began competing for Chile's US$100m potato chip market when P&G introduced Pringles in 1999. Over the last two years Pringles has captured about 6% of Chile's snack market. Before Pringles appeared Evercrisp controlled more than 90% with its Lays, Ruffles, Barcel and Evercrisp brands.

A few months ago Evercrisp introduced the product Lays Stax, which is strikingly similar to Pringles' distinctive container.

Evercrisp won a legal victory in January, 2000 when the Santiago Metropolitan Environmental Health Service (Sesma) prohibited P&G from using the name 'papas fritas' (fried potatoes) on its Pringles containers because it did not conform with the Food and Sanitation Act. Food labels must accurately describe the product's name and ingredients.

To conform with Sesma's ruling P&G replaced the words 'potato chip' on the Pringles label with 'potato crackers,' but called the resolution arbitrary, illegal and discriminatory. "Evercrisp wants to keep P&G from selling Pringles in Chile because the product competes with Evercrisp's brands and puts its dominant market position at risk," the company said.

Sesma later declared that 'potato crackers' was still misleading, but this March Health Undersecretary Ernesto Behnke repealed the ruling saying the new label conforms to food regulations. Pringles labels specify that the product is a potato-based food, he said, which means the government cannot legally impede its importation, distribution and sales.

This about-face led Evercrisp to take legal action against Behnke, who the company said exceeded his authority by interfering in a case where Sesma has jurisdiction.

The case continues.

By Steve Anderson, correspondent

To view related research reports, please follow the links below:-

The 2000-2005 World Outlook for Potato Chips and Snacks

Growth Strategies in Snacks