Introduction

The company POM Wonderful, LLC has become renowned for

its hour-glass shaped bottles of pomegranate juice. Founded in
2002, the mission of POM Wonderful “is to introduce and supply
consumers with the highest quality and best-tasting
pomegranates and pomegranate food products.” The
pomegranate has become particularly popular for its exotic
sensory appeal and high content of antioxidants.

The company was founded by billionaire industrial agriculture

couple Stewart and Lynda Rae Resnick. Shortly after it was
founded, the company’s pomegranate products took off with
revenues for the company growing from $12 million to $91
million. POM Wonderful has largely based its success on
marketing claims concerning its healthy attributes and its
ability to help reduce chances for disease. However, in the past
few years it has been challenged by the government regarding
the truthfulness of its advertising claims. The Federal Trade
Commission (FTC) determined that POM Wonderful had made
unsubstantiated claims about its products. Although an appeals
court supported the FTC’s findings, it did strike down one
aspect of the FTC’s ruling, providing a partial victory to POM
Wonderful and other companies that make health claims about
their products.

This case begins by giving some background information on

POM Wonderful and the global market of functional food and
drinks. This market has shown significant growth during the
past decade, as superfruit (exotic fruit) as an ingredient has
grown in popularity due to its value of combining health
benefits with a good taste profile. We examine POM Wonderful’s
brand positioning in the market. Next, this case describes some
of POM Wonderful’s advertising claims and why they were
challenged by the FTC. It concludes with a discussion of the
implications this ruling will have on the advertising claims of
POM Wonderful and similar companies

Background
 POM Wonderful, headquartered in Los Angeles, California,
produces a line of pomegranate juice and other blended juice
beverages, including pomegranate juice mixed with blueberry
or cherry, as well as tea of various flavors and 4.3-ounce
containers of fresh pomegranate arils (the seed pods of the
pomegranate). The pomegranates are grown in the central and
southern San Joaquin Valley of Central California, both in the
company’s own orchards as well as orchards in the surrounding
area. The juice is extracted mechanically from the fruit to create
its famous lines of juices.

POM Wonderful currently has three main product categories:

 Juices: Pomegranate, POM Blueberry, and POM Cherry.

 Fresh Fruit: 4.3-ounce containers of fresh pomegranate arils. POM
Wonderful is the largest grower of the Wonderful Variety of
pomegranates in the country, owning 18,000 acres of orchard
and supplying nearly 90 percent of fresh pomegranate fruit in
the United States.
 POM Tea, including Pomegranate Peach Passion White,
Pomegranate Lemonade, Pomegranate Sweet, and Pomegranate
Honey Green.
Many have attributed the success of the growth of the exotic
fruit segment on rising consumer interest in the health benefits
of these fruits, which is partly due to the well-marketed medical
evidence of relevant products. POM Wonderful’s advertising
campaign is a good example of an organization that uses health
food claims to significantly promote its products. As a result, it
is able to position its juices as a premium product and price it
higher.

The Market for Pomegranates

Due to the importance of a healthy diet, the global market of
food and drink products that promote health benefits has been
expanding. The rising awareness of health food and drinks has
driven relevant products with considerable growth. Because
consumers are showing more interest in their health in both the
short and long term, healthier foods such as exotic fruits are
becoming more popular. A healthier diet can reduce the risk of
diseases and obesity.
Today’s global functional food and drinks market is led by the
United States and Japan. It is estimated that functional food and
beverages make up 5 percent of the overall food market.
Emerging markets including China and India are also embracing
western lifestyles and attitudes toward health. The aging of the
population is also playing its role in encouraging people to pay
more attention to their health from a younger age. The rising
attention to fruit and vegetable intake has fueled the growth of
juice drinks, especially premium fruit juices.

The pomegranate has taken off in the American market in

recent years, even though it has been used as food, medicine,
and a cultural icon for thousands of years in other parts of the
world. The popularity of the fruit has exploded in the United
States due to its high content of natural polyphenols, noted to be
a powerful antioxidant. The medical acclaim it has obtained has
been regarded as the biggest drive behind its success. Previous
research indicates that polyphenols are powerful antioxidants
that are useful in a variety of health problems, including
premature aging, cardiovascular conditions, and certain types of
cancer.

Pom Wonderful versus Coca-

Cola
POM Wonderful has secured a strong share of the market in the
pomegranate beverage area. With the success of any product
comes rival brands that attempt to steal market share. As a
result, market leaders tend to be aggressive in protecting their
market share and ensuring that competing brands are not
competing unfairly. This resulted in POM Wonderful challenging
promotional claims made by Coca-Cola’s rival product, Minute
Maid Pomegranate Blueberry Flavored Blend.

In 2007 Coca-Cola introduced its pomegranate–blueberry juice

blend sold through its Minute Maid division. However, despite
its promotion of blueberry and pomegranate, 99.4 percent of
the beverage consisted of apple and grape juices. POM
Wonderful believed this was deceptive advertising and filed a
lawsuit against Coca-Cola. The company claimed Coca-Cola’s
promotional claims violated the Lanham Act as the name, label,
marketing, and advertising of Coca-Cola’s juice blend misled
consumers as to its actual content, thereby causing POM to lose
sales. The case was dismissed by the Ninth U.S. Circuit Court of
Appeals, claiming that these allegations were the domain of the
Food and Drug Administration (FDA) and that competing firms
are not authorized to sue one another for false labeling or
advertising.

POM Wonderful appealed, and the case went all the way to the
Supreme Court. In 2014 the Supreme Court reversed the
decision and decided that competitors can file Lanham Act
claims dealing with false promotion on food or beverage labels.
Despite this initial victory, a California jury later sided with
Coca-Cola. It believed that POM had not proven that Coca-Cola’s
claims were misleading. In addition to its failed lawsuit against
Coca-Cola, POM Wonderful suffered another blow when it was
accused of false advertising by the FTC.

Pom Wonderful versus the FTC

On February 23, 2010, the FDA sent POM Wonderful a warning
letter claiming that the firm was promoting its juice products in
ways similar to drug promotion. For instance, between 2003
and 2010 POM Wonderful claimed that its pomegranate
ingredients could help combat erectile dysfunction, prostate
cancer, LDL cholesterol, and length and severity of colds, as well
as promote a healthy heart and prostate. The FDA determined
that to make such claims, POM Wonderful must prove with the
scientific rigor of the drug-approval process that POM
Wonderful juice could aid in the curing, mitigation, treatment,
or prevention of disease.

In addition, the FTC ruled that POM Wonderful used deceptive

advertising because these claims were not substantiated.
According to the FTC, POM Wonderful based these claims on
evidence that the company distorted and which were eventually
refuted. Nevertheless, POM Wonderful had maintained that
pomegranate juice lowers the risks of heart disease, erectile
dysfunction, and prostate cancer. Its advertisements included
phrases such as “Amaze Your Cardiologist” and “Drink to
Prostate Health” and were placed in Parade, Fitness, and The
New York Times. They were also placed on price tags and
websites including pomwonderful.com, pompills.com,
and pomegranatetruth.com.

The FTC found POM Wonderful guilty of violating the Federal

Trade Commission Act (FTCA) by making deceptive claims in 36
advertisements and promotions. The FTC also accused the firm
of making unsubstantiated efficacy claims—or suggesting that
the product works as advertised—as well as establishment
claims—claims that a product’s benefits and superiority have
been scientifically established. The FTC forbade the company
from making any claims that its products were “effective in the
diagnosis, cure, mitigation, treatment, or prevention of any
disease” unless substantiated by two randomized and
controlled human clinical trials. The goal of the FTC is to crack
down on food and dietary supplement manufacturers that make
misleading claims upon which consumers depend. The FTC
desires to adopt the more stringent standards of the FDA in
approving new drug products to hold food and dietary
supplement makers more accountable for the protection of
consumers.

POM Wonderful appealed the ruling, and the case was taken to
the U.S. Court of Appeals for the D.C. Circuit. One of POM
Wonderful’s claims is that it would be too burdensome to
conduct clinical trials. After examining the case, the court
upheld most of the FTC’s ruling. It claimed that POM Wonderful
must have substantiation before making its disease-prevention
claims.

However, POM Wonderful did achieve one partial victory. The

court determined that the FTC’s requirement of two
randomized and controlled human clinical trials was excessive
and that one clinical trial was enough because it could provide
valuable health information. The court based its decision on
the Central Hudson Scrutiny test, which requires “the
government, when attempting to restrict commercial speech, to
prove that the interest it asserts in regulating the commercial
speech is substantial, that the means the government uses to
regulate speech directly advance the governmental interest
asserted, and that those means are no more extensive than
necessary to serve the interest.” The court also ruled that these
trials do not necessarily have to meet the same rigorous
standards as randomized and controlled human clinical trials
and suggested that these stringent criteria might violate POM
Wonderful’s First Amendment rights.

Although it is important that companies maintain truthful and

transparent communication, some believe the lawsuit against
POM Wonderful was excessive. Research suggests that
pomegranates are healthy, full of antioxidants, vitamin K, and
potassium. Unlike drugs, which could have a harmful impact
and should be studied with multiple human clinical trials, there
is no evidence that pomegranate juice is potentially harmful.
Therefore, critics say that the standard of going through human
clinical trials should not apply to companies like POM
Wonderful. There is also some evidence that pomegranates can
help prevent heart disease. Nevertheless, the FTC believes it
necessary to ensure that consumers are getting truthful
information regarding the health claims of the products they
consume.

The decision has important implications for consumers and

marketers. For marketers the POM Wonderful decision
highlights the type of evidence the FTC will accept in order to
make health and nutrition claims on its packaging. It might also
impact consumer class-action lawsuits, which can allege that a
product’s health claims are misleading if not supported by
substantiated studies.

Conclusion
A healthy diet is becoming increasingly important for
consumers, especially women aged 25–35. As a result, they are
taking active steps to ensure they are eating healthy but are also
looking for other traits, including convenience, natural
ingredients, and sensory appeals in order to achieve their
nutritional targets. This has created a market opportunity for
POM Wonderful to sell an exotic product at a premium price
filled with antioxidants, potassium, and other healthy
ingredients. Of course, the market success of any product
attracts more competitors to the market segment, either with
products made with active ingredients or products with added
nutrients to help improve consumer health. POM Wonderful has
proactively guarded its market share. Its lawsuit against Coca-
Cola’s Minute Maid product also shows it is not willing to cede
market share without a fight, particularly if POM Wonderful
believes the rival product is making misleading claims about its
ingredients.

On the other hand, the FTC ruled that POM Wonderful was
guilty of false advertising with its health-related claims. Because
it did not conduct human trials, the claims that pomegranate
juice can help fight prostate cancer and prevent heart disease
cannot be substantiated, according to the FTC. POM Wonderful
tried to appeal to the U.S. Supreme Court, but the Supreme
Court refused to hear the case. This ruling will have a broad
impact on the food industry, and food companies will need to be
more careful with their product labeling. It remains to be seen
how it will affect POM Wonderful now that it cannot make these
advertising claims without human trials. However, if the
interest in pomegranates continues to remain high, then POM
Wonderful is likely to get past these challenges and persist in its
market success.