Pastry theft could represent millions in foodie espionage

It might seem like a lot of fuss over a small crescent-shaped bun, but the Invercargill croissant conspiracy could represent millions of dollars in foodie espionage.

Those in the industry warn that relatively easy access to electronic information makes companies vulnerable not only to the theft of formulas and recipes, but also to manufacturing and safety methods that could give a competitor the edge.

While Quality Foods Southland showed off its revolutionary new croissant to the trade in Auckland last week, South Island detectives were following the trail of an alleged croissant criminal.

Quality Foods took a year to perfect the Ovenrise croissant which can be baked from frozen in half-an-hour, rather than more than two hours. Bakery suppliers worldwide are working on the same idea, but the Ovenrise is the first to be ready. The formula is potentially worth millions.

Police in Dunedin are analysing the computer files of a former employee suspected of stealing confidential information about the Ovenrise. Detective Don Ward of the Invercargill police says it will be another two weeks before an analysis of the computer files is complete.

Unlike KFC's Colonel Sanders, whose 11 different herbs and spices are still kept locked in a safe in Louisville, Kentucky, most large food and beverage companies' computerised records are vulnerable to thieves. Sophisticated firewalls make it hard for outsiders to break in, but it's not difficult for employees to tap into confidential information before resigning and disappearing. However, intellectual property expert Greg France, a solicitor with Lowndes Jordan, says: "The flip side is that theft of information from a computer may leave a trail that can be followed once an employer becomes aware that information has been stolen."

Food and beverage companies go to great lengths to stop their secrets from disappearing in the first place.

No one making Coca-Cola in New Zealand even knows the recipe. The syrup concentrate is pre-mixed in Ireland and Swaziland and sent to New Zealand, where Coke is made by Coca-Cola Amatil. Meanwhile, the iconic New Zealand soft drink L&P, also made by Coca-Cola Amatil, is a heavily guarded local secret which won't leave these shores. Corporate affairs manager Aimee Driscoll says the formula is guarded by passwords and "multiple levels of security". No one person had the complete knowledge to make the soft drink.

Coca-Cola has good reason for this level of secrecy. The stakes are so high that even its competitors understand. Earlier this month it emerged that PepsiCo Inc had dobbed in a dishonest Coca-Cola Company employee who tried to sell confidential information to it in the United States. The FBI arrested suspects on the same day a US$1.5m (NZ$2.43m) transaction was to occur.

Coke's famous formula is not patented. The soft-drink company decided against it at the end of the 19th century on the grounds that patents and copyrights expire. KFC is equally guarded about the Colonel's secret recipe. Not even the CEO of parent company Restaurant Brands knows it. The coating comes pre-mixed from four different suppliers, and KFC staff simply mix them together. KFC New Zealand's general manager Rod de Vries says the recipe is never talked about. "It is accepted that it is a secret."

Smaller, local food companies are more philosophical about the potential for staff members to disappear with their secrets. Most acknowledge there is not much they can do, and that ingredients and nutritional information have to be listed on packaging by law.

Down on the West Coast, Monteith's brewery manager Barrie Calder says the recipe for Monteith's Original has been passed on for decades by head brewers. "If someone wanted to break into the factory, I suppose they could steal it."

The manufacturing package is kept on computer and staff sign confidentiality agreements, he says. "But anyone could make a copy of our beers. We analyse other beers in the marketplace. It's not that hard."

But, he says the same recipe made in a different plant would produce a different beer.

In the early days of cereal company Hubbard Foods, nothing much was written down, and security meant locking the door at night. Founder and Mayor of Auckland Dick Hubbard visited a staff member in hospital to get a recipe no one else had. "I had to sit there with a pad and pencil and get the exact formula off him so I could carry on production."

CEO Doug Paulin says that while formulas for general products such as rice bubbles are up on noticeboards in the work area, specialty recipes and methods are locked away. Both individual contracts and the collective agreement include confidentiality clauses.

"We are also reasonably careful about who we take through our factory. Just by watching, you can pick up how a cereal is made."

Changes to the Crimes Act three years ago mean anyone convicted of stealing trade secrets faces a prison term of up to five years. Anyone convicted of gaining unauthorised access to a computer system with a dishonest intent faces prison terms of between two and seven years. But solicitor Greg France says employers should have confidentiality agreements and clear systems in place to show when access is unauthorised, as the Crimes Act definition of trade secrets applies only if a reasonable effort has been taken to preserve secrecy.

Meanwhile, Quality Foods general manager Craig Coote says the company is considering regular computer audits to pick up key words in emails to ensure that no confidential information leaves the site.