Intellectual property brings many benefits to its owners, with each type of IP bringing different benefits. For instance, patents protect utility or functional designs as well as offer superior rights when infringement occurs. Trademarks help create brand awareness and demand. Copyrights protect works of authorship, giving authors exclusive rights for a fixed period. Trade secrets protect intangible assets, including any type of design, information, or other knowledge. However, trade secrets do not necessarily afford a company protection via a number of years, like patents. Nor do they offer specific monetary results in the event of an infringement, like copyrights. However, trade secrets can provide some of the biggest value to a company, as long as the trade secrets remain secret!
As already mentioned, each type of IP brings with it benefits and disadvantages when compared with one another. For trade secrets specifically, disadvantages include no federal protection, possible key person discounts, no prevention from someone deriving the same or similar design for an invention, and diligent administration and enforcement of non-compete and non-disclosure agreements, markings of documents, and more. However, trade secrets are easy and low cost to create, can protect more things without the kind of stipulations that copyrights and patents have, and do not require full disclosure like patents do. Therefore, when all of the elements are in place, trade secrets can be the most valuable assets a company owns. This is especially true for food & beverage companies.
The following list includes five of the most famous trade secrets in the food & beverage industry:
1. Coca-Cola: Coca-Cola is one of the most well-known trade secrets around the world. The company’s decision to keep the Coca-Cola recipe a trade secret rather than patent the concoction has positioned the company among the most valuable brands in the world. In fact, Forbes listed Coca-Cola in 2016 as the fourth most valuable brand. At that time, Forbes listed the brand worth at $56 billion. In 2018, the company commanded 43.3% of the soft drink industry.
2. Krispy Kreme: Krispy Kreme sets itself apart from other donut companies with its “fresh” donuts. While the company has kept its donut recipe under wraps for more than 80 years, it is not the actual recipe that makes it stand out, but the process in which it makes its donuts. The process that Krispy Kreme uses to make its donuts helps the company produce donuts on an assembly that allows for quick sale and gives the donuts a fresh taste. With more than 10 billion donuts made annually in the United States, Krispy Kreme accounts for 20 million of them. In 2018, Krispy Kreme donut sales reached $805 million in the United States.
3. KFC: Kentucky Fried Chicken’s 11 herbs and spices recipe has been the envy of restaurants worldwide for nearly 80 years. Until recently only one hard copy of the original recipe existed. Earlier this year, KFC took extra measures to protect its original recipe by storing a triple-encrypted copy in a nuclear bunker underground in Sweden. In 2018, the KFC brand generated $2.64 billion for its parent company, YUM! brands.
4. Twinkies: One theory for keeping a recipe a secret is that consumers may stop eating it if they fear or do not understand the ingredients, even if they are harmless. This is likely the case with Twinkies as some of the ingredients contain chemical names. As such, revealing the actual recipe could cost Hostess, the maker of Twinkies, a fortune. This is because Twinkies are among the company’s largest sellers. In a month’s time, within the United States alone, 31.44 million individual servings of Twinkies are consumed. Twinkies are among the top snack cakes within the United States, coming in fourth place (behind Hostess Cupcakes in second place) with 28.13 million people consuming them in 2018.
5. Thomas’ English Muffins: The English muffin market size reaches at least $500 million annually. Hands down, Thomas’ English Muffins is the most famous brand of muffins within the United States, selling more than one billion annually. What sets the muffins apart from other brands is the nooks and crannies that each muffin offers. The nooks and crannies make it easier for the muffins to soak up butter, jam, and other toppings. For more than 100 years, the brand has protected its secret. Therefore, no matter how many other brands try to emulate the recipe, they just cannot slice it.
As the bullets indicate, trade secrets hold extremely high value for companies when they are protected the right way. In fact, some companies can attribute their entire success to their trade secrets.