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Billionaires behind Pom Wonderful push back against FTC ruling

A Beverly Hills couple have launched a public relations campaign to save the pomegranate juice brand while appealing the ruling that they misled consumers about Pom's ability to fight disease.

June 20, 2012|By Stuart Pfeifer, Los Angeles Times

Stewart and Lynda Resnick have spent decades building one successful brand after another: Fiji Water, Teleflora, the Franklin Mint.

Now the Beverly Hills billionaires have launched a public relations campaign to save one — their popular pomegranate juice brand, Pom Wonderful.

The Resnicks are appealing a government ruling that they misled consumers about Pom's ability to fight disease. They had spent years touting pomegranate juice's benefits in treating prostate cancer, erectile dysfunction and heart disease.

The Federal Trade Commission ruling was a significant setback for the Resnicks. And they've fought back with full-page newspaper ads and a website that even promotes some favorable language from the judge's order.

After the judge's May 24 ruling, Stewart Resnick vowed to appeal and said the company will "continue to share the valuable health information of our products with consumers." The Resnicks declined to be interviewed for this story.

Pom Wonderful made pomegranate juice popular by selling it in unique, curvaceous bottles and marketing its ability to fight disease and even, as one advertisement said, "cheat death."

After a lengthy legal battle, FTC administrative law judge D. Michael Chappell held that Pom Wonderful lacked reliable scientific evidence for some of its claims. He ordered the company to stop promoting the juice as effective in the "cure, mitigation, treatment or prevention of any disease" without adequate scientific evidence. The company was still permitted to say that the product had health benefits.

On their website, http://www.pomtruth.com, the Resnicks note that "out of 600 print and outdoor ads, the judge found less than 2% misleading." They invited consumers to view "some of the other 98%."

The website included links to Pom Wonderful advertisements, including some that promoted the juice as "Death Defying," "Health's Angel" and a "Life Preserver." Those claims are based on the idea that pomegranate juice contains health-promoting antioxidants.

Pom's website contains flattering comments from Chappell's ruling, including his finding that "pomegranate juice is a natural fruit product with health-promoting characteristics. The safety of pomegranate juice is not in doubt."

The website says Chappell rejected the FTC's efforts to require Pom to receive Food and Drug Administration approval before promoting health benefits of its products. He also declined to require the company to pay for double-blind, placebo-controlled studies before making health claims.

Kit Yarrow, a professor at Golden Gate University in San Francisco who specializes in consumer psychology, said Pom's response is "a really sophisticated P.R. campaign and a sign of our times."

"To me, the idea that a company is taking their message to consumers directly like this is completely fresh," Yarrow said. "It's a really new way of approaching this kind of problem."

She said she thought it would be effective.

"We've reached a point where consumers distrust the government enough, they're willing to believe the business over the very agency that's designed to protect them," she said. "They're getting more free mileage by fighting this than they ever could possibly spend in advertising. Did you ever think about Pom before? Well, now you are."

August Hovarth, an attorney who specializes in advertising law at Kelley, Drye & Warren in New York, said he thought the Resnicks' response was counterproductive. The appeal will eventually be heard by five FTC commissioners who may be put off by the public relations blitz, he said.

"What they're doing is something that a lot of companies that are not happy about an FTC order would like to do, but someone sensible talks them out of it," Hovarth said. "Pom is really in their face with it."

Whether the FTC ruling has affected Pom Wonderful sales is unclear.

"As a private company we don't speak about sales results," Corey Martin, a spokesman for Pom, said in an email.

But there are some indications that sales might be slowing, at least at some specialty health food shops.

At Erewhon Natural Food Market on Beverly Boulevard in Los Angeles' Fairfax neighborhood, sales of Pom Wonderful's pomegranate juice has decreased significantly in recent weeks, said the store's owner, Tony Antoci.

"There's definitely a decline," Antoci said. "I'm not sure it has anything to do with the FTC. But customers who shop at my store, health is a primary concern. They would be more aware of what's going on than someone shopping at Ralphs."

Pom Wonderful is one of several successful brands that the Resnicks control through their company, Roll Global. Among them: Fiji Water, florist network Teleflora and Paramount Citrus, which produces Cuties, the popular Clementine oranges. They are also one of the world's largest growers of almonds and pistachios.

Forbes magazine estimated the Resnicks' net worth at $2 billion. The Resnicks have used their wealth to make a $45-million contribution to the Los Angeles County Museum of Art, which opened the Lynda and Stewart Resnick Exhibition Pavilion.

In a 2010 interview with The Times, Lynda Resnick said she thought Marie Antoinette could have avoided the guillotine if she had better managed public relations.

"A great deal of her bad press was manufactured by her enemies," she said. "She needed a better publicist."

stuart.pfeifer@latimes.com

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