Post Consumer Brands is suing General Mills for patent infringement of its bagged cereal displays, pitting two Twin Cities breakfast giants against one another.
Lakeville-based Post Consumer Brands claims Golden Valley-based General Mills is trying to piggyback off its design success by not only introducing bagged cereals but also how it arranges those bags on grocery-store shelves.
"[General Mills] has now sought to capitalize on Post's bagged cereal success by rushing to enter the bag cereal market with a copycat merchandising system that imitates Post's innovative divider and merchandising system for bagged cereals," the suit states.
The lawsuit was filed Tuesday in federal court in the Eastern District of Missouri where Post Holdings, the parent company of Post Consumer Brands, is based.
In 2015, Post Holdings bought MOM Brands, known for its Malt-O-Meal hot wheat cereal and bagged cold cereals, which are knockoff versions of major brands. Malt-O-Meal's Marshmallow Mateys, for instance, looks nearly identical to Mills' Lucky Charms.
Post Holdings combined its Post cereals with its MOM cereals under Post Consumer Brands. Last year, the company introduced new plastic dividers at retailers across the country as a way to more neatly display its Malt-O-Meal bagged cereal in vertical columns.
General Mills this year started using a similar plastic, vertical merchandise display system for it recently launched bagged cereal products at some U.S. retail outlets.
"From the time Malt-O-Meal bagged cereals were first launched in the 1970s, competitors in the industry — including [General Mills] — criticized Malt-O-Meal bagged cereals as inferior quality products and as being too big for store shelves," the suit says. "However, as boxed cereal sales have declined recently, Malt-O-Meal bagged cereal sales have continued to grow."
General Mills, maker of Wheaties, Cheerios and Cinnamon Toast Crunch, is the nation's largest seller of ready-to-eat cereal with market share of just over 30 percent, IRI, a Chicago-based market researcher, reported for the year ended Sept. 10. Kellogg Co. was next at 29 percent and Post was third at 19 percent.
Linda Fisher, director of corporate communications for Post Consumer Brands, said it tried to resolve its concerns outside of court, but to no avail.
"We welcome competition — it really does make us better and benefits customers and consumers — but it has to be competition where everyone plays by the rules," Fisher added. "We've spent millions of dollars creating our merchandising system for the Malt-O-Meal cereal brand. We work hard to protect those investments in the marketplace and we're going to work just as hard to protect it in the courts."
She said the company believes its new display system is a big reason why its sales of bagged cereal have risen 6 percent over the last year. U.S. retail sales of General Mills' cereal fell 3 percent in its last fiscal year, which ended in May.
A Mills spokesman said, "The lawsuit was just filed and we are looking into it."
According to Post, General Mills sells its bagged cereals at Walmart stores nationally and Hy-Vee stores in the Midwest.
Post is seeking a jury trial, financial damages and all of General Mills' profits gained from the alleged patent infringement.
The company is also asking the court to demand General Mills stop using the vertical display system for its bagged cereals.