The Court found California-based Purely Juice was selling products as "100% pure pomegranate juice" when they were in fact primarily "cane sugar and corn sweetener" and contained "little pomegranate solids".
It also found Purely Juice, which has annual revenues of $10m, failed to withdraw the product long after it became aware, via in-house as well as third party testing, that its products were adulterated.
Purely Juice denied it took no action once the adulteration issues came to its knowledge, and says the initial problem was caused by suppliers that handed it Certificates of Authentication (CofA) that falsely guaranteed batch purity.
Purely Juice president Paul Hachigian said his company had worked with its supplier, Perma Pom, to iron out the problem and that retailers had remained onboard since being alerted to the issue by Pom Wonderful, at the beginning of 2007.
"We stopped shipping as soon as we became aware of it and that is why the court decision is so disappointing," he told NutraIngredients-USA.com. "We have since instigated third party testing above and beyond industry standards to guarantee our supply."
Hachigian said his company did not intend taking legal action against Perma Pom, contrary to press reports.
Supply lines
Pom Wonderful spokesperson Rob Six noted booming demand for pomegranate products - typically marketed on their enhanced antioxidant levels - had placed a massive strain on a supply chain that was as a result being compromised.
Pom Wonderful, which notched sales of $165m in 2007, managed to dodge most of these problems because it is the only totally vertically integrated pomegranate juice maker, sourcing all of its product from 18,000 acres of the Pom Wonderful variety it grows in the Californian San Joaquin valley.
"We are in the process of planting more orchards that will come online in the next five years," Six told NutraIngredients.com. "We are confident we will be able to meet demand."
Hachigian agreed product quality was more difficult to guarantee from newer groves in the Middle East and Asia, but noted concerns over the validity of CofAs were not unique to the pomegranate industry.
"This is a common practice that has been going on in orange, apple - all the fruits - for decades," he said. "Companies try to reduce costs by testing randomly but we have learnt that you have to test every batch and that is what we are doing now."
Premium
The supply quality problem was not restricted to Purely Juice as Pom Wonderful warned some ten companies that their juice was adulterated.
Six said the companies it warned took action to remedy the situation except Purely Juice, and it was only after repeated warnings, that it pursued a court action, an accusation Purely Juice disputes.
He said Pom Wonderful felt it had a right to protect the category from damage caused by players releasing products that fail to meet consumer expectation.
Pom Wonderful continued to test products, Six said, to ensure they met label claims and had accepted a role as industry watchdog.
"We created this category in 2002 and it is a premium category - it is driven by a clinically-backed health benefit," he said.
"Consumers buy the products to gain the health benefit - if that is not present then there are problems for the category. The Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) should be more active in this area but we all know how under resourced they are. We are trying to protect the integrity of the category."
Pom Wonderful typically retails for $4.49-$5.49 per 16-oz bottle, while Purely Juice sells at $3.99.
Pom Wonderful is also present in Canada, entered the UK market in 2007 and was about to launch a major marketing campaign there.
It plans to expand into Australia and other European markets by year's end.