Lewis Rd drops Fonterra legal action

Lewis Road Creamery milk stands next to Fonterra's Kapiti Milk. Lewis Road are taking legal action of the branding.

Lewis Road Creamery will not pursue part of its legal action against Fonterra because it says a deal between the dairy giant and supermarkets does not include premium brands.

Lewis Road Creamery founder Peter Cullinane earlier this month accused Fonterra of negotiating a "greedy" deal with supermarkets which would limit the ability of smaller dairy brands to get space in the chiller.

At the time a representative for the Countdown supermarket chain said it was not involved in any deal with Fonterra, while Foodstuffs said agreements were confidential.

Cullinane today said lawyers for both sides had found a resolution and had confirmed the deal excluded premium milk products. That means smaller competitors such as Lewis Road would be afforded a reasonable amount of chiller space, allowing them to remain competitive with the milk giant, he believed.

"It's a fantastic result before Christmas, to have cleared this up," Cullinane said. "We are delighted."

Leon Clement, managing director of Fonterra brands, said he welcomed Lewis Road's decision not to proceed with the legal action.

"Right from the start, we reached out to Lewis Road Creamery to let them know they had the wrong end of the stick, so it's pleasing that we've been able to talk through the matter," Clement said.

"Our relationship with retailers has not changed. We welcome competition, respect fair play, and look forward to growing this exciting segment of the dairy market."

However, Lewis Road Creamery is taking action against Fonterra over branding issues. Proceedings have been filed with the courts, Cullinane said.

Cullinane raised concerns this month about packaging similarities between Lewis Road Creamery products and new Fonterra brand products "which is likely to confuse shoppers".

Cullinane is a former advertising industry executive and a director on the board of NZME, which owns the New Zealand Herald.