Spanish settlers introduced pomegranates to California in the 18th century, but L.A. billionaires Stewart and Lynda Resnick consider themselves 21st century gatekeepers of the ruby red fruit.
The Resnicks own pomegranate juice manufacturer POM Wonderful LLC, which, as the largest grower of pomegranates in the United States, has become a little empire that distributes pomegranate juice, pomegranate tea, pomegranate pills and, yes, even fresh pomegranates.
The Resnicks have been known to put on the gloves to fight for their pomegranate domain. But lately, they've gone up a couple of classes and have stepped into the ring with heavyweights, picking fights with big companies that make pomegranate juice.
POM filed three federal lawsuits in January against Welch's, Tropicana Products Inc. and Ocean Spray Cranberries Inc. In September, beverage giant Coca-Cola Co., which distributes Minute Maid, and Texas-based food supplier Fresherized Foods Inc. got the POM treatment when the company hit them with federal lawsuits as well.
POM claims in all five suits that its competitors are falsely advertising their products as primarily containing pomegranate juice, however, POM alleges the competitors' products are blended with other fruit juices. POM argues that the companies are confusing consumers into thinking that their products provide the same health benefits as POM's 100 percent pure pomegranate beverage.
By targeting such prominent companies, the Resnicks have raised their sights from previous years when they successfully took on a smaller juice competitor.
Beverage consultants aren't surprised by POM's aggressive tactics. Industry experts said that oftentimes larger companies will copy smaller competitors that have successfully introduced a product.
"Once the little guy proves it's going to work, there is the big guy ready to take advantage," said Celeste Viale, a consultant with Florida-based Beverage Consulting Services Inc.
Spokespeople for POM, Tropicana and Coca-Cola did not respond to the Business Journal's requests for comment. Fresherized Foods and Welch's declined to comment on the pending litigation.
John Isaf, an Ocean Spray spokesman, said the company will continue to label its products as it currently does, and will defend its position in court.
"As far as the litigation, the only thing we have to say is that all of our labeling complies with the requirements of the national juice labeling act," Isaf said.
POM is part of the Resnicks' private holding company, West L.A.-based Roll International Corp., which also owns bottled water company Fiji Water, online flower delivery service Teleflora, almond and pistachio producer Paramount Farming Co. and fresh citrus harvester Paramount Citrus.
Lynda Resnick is often credited by industry experts as the woman who started the pomegranate craze.
"It's definitely their good work, marketing program and excellent product that has created the category," said Darin Ezra, chief executive of L.A. beverage consulting firm Power Brands.
Lynda Resnick, who shares the co-chairman title with husband Stewart, is the force behind POM's marketing and advertising campaign, which some consider innovative but others said can be pugnacious.
For example, on POM's Web site, a comic book-style animated advertisement shouts, "Help, I'm surrounded by fake pomegranate juice," which is followed by a POM Wonderful bottle blasting onto the screen declaring, "Back off, imposter juices."
But much of the marketing is not so aggressive. Billboards and bus stops across Los Angeles County focus on the health benefits that pomegranates, and POM juice, provide.
For example, POM's most recent advertising campaign portrays the curvy POM Wonderful bottle hanging upside down like an I.V. drip. Such imagery reiterates the company's mantra that pomegranates promote heart and prostate health, and that the fruit's antioxidants combat free radicals. POM has spent more than $25 million in medical research to convince consumers that its products have health benefits.
According to court documents, POM argues that consumers are aware of pomegranates' health benefits because of the company's advertising campaigns, and that competitors are merely attempting to cash in on POM's success by labeling their products as pomegranate juice.
The products in dispute include: Welch's white grape pomegranate juice, Tropicana's pure pomegranate blueberry juice, Ocean Spray's cranberry pomegranate juice, Minute Maid's pomegranate blueberry juice and Fresherized Foods' frutmost pure pomegranate and just squeezed 100 percent pomegranate juice.
In court documents, Coca-Cola defends its Minute Maid products, and contends that the court should dismiss POM's suit because Coca-Cola does not violate the Food and Drug Administration's juice labeling rules.
Fresherized Foods is also defending its labeling practices in court documents, denying all of POM's allegations. In December, Fresherized Foods unsuccessfully tried to the move the case from L.A. federal court to federal court in northern Texas.
Welch's, which is owned by the National Grape Cooperative Association, has tangled with POM once before over the company's advertisements.
In 2005, Welch's complained to the Better Business Bureau's national advertising division about POM's ads touting the product's health benefits. The Better Business Bureau investigated the ads in question, which proclaimed "Cheat Death Eight ounces a day is all you need" and featured a noose around a POM Wonderful bottle's neck. The BBB ultimately asked POM to scale back the claims in its ads.
But POM was the aggressor last year when the company successfully litigated a case against Newport Beach juice startup Purely Juice Inc. In July, a federal judge awarded POM $1.5 million in damages for Purely Juice's advertising.
In the lawsuit, POM claimed that Purely Juice advertised its product as 100 percent pomegranate juice, but POM argued that independent lab testing showed Purely Juice's product contained added sugar and other sweeteners.
Since being hit with the judgment, Purely Juice went out of business.
However, legal experts aren't so sure that POM can topple its larger competitors with the recent round of suits. Legal insiders said POM's argument that competitors are falsely advertising the ingredients of their pomegranate juices may not stand up in court because consumers can easily read the full list of a product's ingredients on the nutritional label.
"I think it is likely to come down to a question of whether POM can show that a substantial segment of consumers are being misled, or are likely to be misled, by competitors' claims," said Harry Mittleman, a litigator in the L.A. office of Irell & Manella LLP who is not involved in the case.
POM argues in court documents that its competitors blend their pomegranate juice products with less expensive juice concentrates, including white grape, apple and pear juice, which allows the companies to sell their products at a lower price point and takes profits away from POM.
Indeed, POM's juices and teas retail for significantly higher prices than those of its competitors. A 16-ounce bottle of POM Wonderful retails for about $5, whereas a 64-ounce bottle of Ocean Spray's cranberry pomegranate juice retails for $4.69.
In a down economy, industry experts said POM's steep prices could cut into the company's profits.
"You maintain your market share by offering the consumer value, that's the only place where you will lose market share," said Power Brands' Ezra.
Roll International Corp.
Co-chairpersons: Stewart and Lynda Resnick
Core businesses: Teleflora, an online flower delivery service; POM Wonderful, a maker of pomegranate juice; Fiji Water, a bottled water company; Paramount Farms, a pistachio and almond producer; and Paramount Citrus, an orange harvester
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