Nestlé Is Sued Over Water -- WSJ
August 19 2017 - 02:03AM
Dow Jones News
By Saabira Chaudhuri
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 19, 2017).
Nestlé SA is facing a lawsuit in the U.S. alleging that its
Poland Spring brand is "common groundwater" rather than spring
water, which the suit claims makes the marketing of Poland Spring
water a "colossal fraud."
The legal challenge comes as Nestlé -- the world's biggest
packaged foods company -- has sharpened its focus on bottled water,
a lucrative business that brought in global sales of 7.9 billion
Swiss francs ($8.2 billion) last year.
The lawsuit, filed this week in a Connecticut district court by
11 consumers who are also seeking class-action status, says that
while Nestlé markets Poland Spring as "100% natural spring water,"
using images of pristine mountain or forest springs that help it
charge a premium, the product doesn't meet the federal definition
of spring water.
The company dismissed the lawsuit as being "without merit and an
obvious attempt to manipulate the legal system for personal
gain."
The suit, against Nestlé's North America water unit, argues that
the company has been "breaching and exploiting its customers' trust
to reap massive undue sales and profits." It says Nestlé's Poland
Spring water doesn't come from a water source that complies with
the U.S. Food and Drug Administration's definition of spring water,
but instead contains groundwater "collected from wells it drilled
in saturated plains or valleys where the water table is within a
few feet of the earth's surface."
The plaintiffs are seeking refunds of the premiums they have
paid, which they describe as unjustified, or minimum statutory
penalties under state false advertising laws.
The FDA defines spring water as "water derived from an
underground formation from which water flows naturally to the
surface of the earth." It also details how this water should be
collected.
"Poland Spring is 100% spring water," said Nestlé in a
statement. "It meets the FDA regulations defining spring water, all
state regulations governing spring classification for standards of
identity, as well as all federal and state regulations governing
spring water collection, good manufacturing practices, product
quality and labeling."
The lawsuit alleges none of Nestlé's eight purported natural
springs, all located in Maine, contains a genuine spring under FDA
rules and accuses the company of building man-made springs on seven
of its sites "to feign compliance with FDA regulations." On the
eighth site, it uses a machine to sustain the Poland Spring, which
ran dry nearly 50 years ago and is defunct, claims the suit.
The Vevey, Switzerland-based company has come under fire
regarding Poland Spring before. In 2003 the company settled a U.S.
class action for $12 million. That lawsuit claimed that the water
in Poland Spring bottles comes from wells, not bubbling springs,
and isn't as pure as its advertising claims. Nestlé at the time
described the settlement as a fair solution.
Nestlé recently identified bottled water as being one of its
priority areas for investment. The company in recent years has
boosted investment in the U.S. market for bottled water, building
production lines and rolling out new flavors in a bid to take
advantage of rising consumer concerns about sugary soda. In March,
U.S. annual sales of bottled water overtook soda sales for the
first time ever.
Last year, Nestlé's bottled water business delivered the
strongest sales growth among all categories other than pet care ,
another high-priority area for Nestlé. The company owns about 50
bottled water brands: In addition to Poland Spring and Ice
Mountain, it also sells Perrier, San Pellegrino and Buxton.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
August 19, 2017 02:48 ET (06:48 GMT)
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