A wonderful world
July 15, 2008
Distinctly packaged in a bottle emulating two pomegranates sitting on top of each other, Pom Wonderful Pomegranate Juice takes its name from what’s inside the bottle â€” the “Wonderful” variety of pomegranates from which it is made. Pom Wonderful, a wholly owned subsidiary of privately held Roll International Corp., Los Angeles, typically uses juice from four and a half pomegranates to fill a 16-ounce bottle of Pom Wonderful 100 percent Pomegranate Juice.
Already legendary in Greek, Roman, Spanish and religious cultures around the world, pomegranates began a new era of cultural influence with the introduction of Pom Wonderful Pomegranate Juice at the end of 2002. Feeding pomegranate’s popularity is its high level of antioxidants, which are thought to neutralize free radicals and prevent cell and tissue damage that lead to disease.
Going from zero to $165 million in juice and tea sales in six years, Pom Wonderful is taking pomegranate’s antioxidants to a new beverage category this fall with the creation of PomX Iced Coffee. The caffeinated kicker is that PomX Iced Coffee isn’t even pomegranate flavored, but it does have pomegranate’s antioxidant benefits.
Seeing Pom from the trees
Lynda and Stewart Resnick, owners of Roll International Corp., also own Teleflora, Fiji Water and agricultural concerns that produce fruits and nuts such as almonds, oranges and pistachios that are marketed under the Wonderful and Everybody’s Nuts brands. In 1987, the Resnicks acquired additional pistachio land in Central California that included 120 acres of pomegranate trees. Instead of leveling the trees as some suggested, the Resnicks decided to wait and see how the trees would do.
“We noticed a few years later that the return per acre for pomegranates was superior to our other crops, which are pistachios, almonds, oranges, clementines and lemons,” says Lynda Resnick, who oversees Pom Wonderful and is the marketing genius behind the brand.
The company initially marketed through another pomegranate packer, and the entire acreage was less than 1,000 acres. During these early stages, the Resnicks began reading about all the legends and history behind pomegranates and also discovered preliminary medical research on the potential health benefits of pomegranates. The couple’s interest was heightened by pomegranate’s antioxidants, and they tapped Israeli biochemist Michael Aviram, who had researched the antioxidant benefits of red wine, to study pomegranates. Although Aviram was reluctant at first, he concluded that the polyphenols in pomegranates were more effective than those in red wine, Resnick says. That motivated them to start the company.
Today, Pom Wonderful, with its 18,000 acres of orchards in California’s San Joaquin Valley, is the largest grower of pomegranates in the United States. To date, it has funded more than $25 million in scientific research.
“There is no good business reason to do all this research,” Resnick says. “The real motivator was not so much for business, but we reached a point, my husband and I, in our business life that we saw with the pomegranate a way to give back to society. We had about $300 million invested in this product before we saw one dime of profit. We did that because we really have a tiger by the tail when it comes to preventative medicine in prostate cancer, in circulation, in hardening of the arteries.”
The research wasn’t done without some controversy. In 2006, Pom Wonderful became a target of animal rights activists because of research the company did into its juice’s medical benefits. Early last year, the company announced that it had ceased funding animal research, and that it had no plans to provide additional funding in the future.
From trees to juice
Pom Wonderful began by selling fresh pomegranates in 2001. Kurt Vetter, senior vice president of sales for Pom began his tenure with the company that first year. “I received a call from Stewart Resnick saying, ‘We’re starting up this business around pomegranates and would you be interested in being a part of the team?’” Vetter recalls. “My reaction was probably similar to many: ‘I don’t know what a pomegranate is.’” Vetter wasn’t alone. Research that Pom conducted before Pom Wonderful juices launched showed that only 12 percent of the population knew what a pomegranate was.
The shift to beverages came with the addition of juice in September 2002. The company began with the attitude of “let’s just see what we have,” Vetter says. Pom began by taking its pomegranate juice to Southern California retailers. It worked its way through California and the West, and within 17 months, the product was national. The juice currently is available in 20,000 stores across North America, Vetter says.
Being a fresh juice product, Pom Wonderful needs to be kept chilled, which limits its retail and distribution options. Pom approached its contacts in produce departments, where juice was a very small emerging category at the time, to place the product in coolers with fresh fruit.
“We were able to show the fact that this is a premium product and we deserve to be in a premium part of the store,” Vetter says. “We’re a premium-priced product, and we also deliver premium profits and incremental sales.
“Our intent never was to take our pomegranate juice and have them sell less orange juice or less of other products they carry. The idea was that we would add new sales and category dollars for them.”
For distribution, Pom’s strategy was to contact each customer and ask how they would like to receive the product. In some cases, the company uses distributors, and in other cases retailers pick up product from Pom and take it to their warehouses. And in cities like New York City and San Francisco, the company offers a direct store delivery system, Vetter says.
To handle its sales, Pom organizes its team by channel, such as mass merchandise, foodservice, supermarket and direct store delivery. Since 2007, the company also has operated a sales location in London to explore opportunities in Europe.
Plethora of pomegranates
Pom Wonderful was a loner in the juice category in its early days, but so far in 2008 alone, 85 new beverages that contain pomegranate or pomegranate flavoring have launched, according to Mintel’s Global New Products Database. In 2006, Mintel reports that 98 new pomegranate beverages launched, and 134 were released in 2007.
Of the more than 100 items in the super-premium juice category in the grocery store produce department, the No. 1 item in the United States is the 16-ounce Pom Wonderful 100 percent Pomegranate Juice and the No. 2 item is the 48-ounce size, Vetter says. Pom Wonderful 100 percent Pomegranate Juice brought in more than $36.5 million in sales, which was up 33 percent, for the year ending May 18 in food, drug and mass merchandise retailers, excluding Wal-Mart, according to Information Resources Inc., a Chicago-based market research firm.
Pom’s top-selling blend is its Pomegranate Blueberry juice, Vetter says. The company also offers Pom Cherry, Pom Mango and Pom Tangerine. Many Pom consumers start with pomegranate juice bends, but after acquiring a taste for pomegranate juice shift to Pom Wonderful’s 100 percent Pomegranate Juice, Vetter says.
“I think there will always be consumers who want the flavors, but really, the 100 percent are the items that sell the most,” he says.
And with seven SKUs in the juice category, which includes the four blends and the 16-, 24- and 48-ounce bottles of 100 percent Pomegranate, the company doesn’t release unnecessary SKUs to have more shelf space, Vetter says.
“We take pride in each one â€” that each one is contributing to the core business and is contributing incremental sales to the retailer,” he says.
Additionally, the company is launching a 60-ounce multi-serve bottle of Pom Wonderful 100 percent Pomegranate Juice for distribution in club stores, which will supply consumers with a full week’s supply, says Matt Tupper, Pom Wonderful’s president.
Because of the growing number of pomegranate offerings, Pom works hard to define how its pomegranate products differ from its competitors in the marketplace. The company tries to relate the authenticity of its pomegranate juices through its Pomegranate Truth campaign, for which it established a Web site at pomegranatetruth.com.
“There is no other pomegranate juice on the market that you can buy that controls the process from the tree to the bottle, which is a big deal to us,” Tupper says. “We own the land. We grow the trees. We harvest the fruit by hand. We crush the fruit ourselves in our facility. We actually even blow the bottles ourselves. Every step along the way is directly under our control.”
Pom Wonderful’s initial consumers were young people in their 20s and 30s who cared about their health, Resnick says. Now Pom Wonderful consumers are skewing in their mid-30s and are still health conscious consumers, but also have higher incomes.
“Pomegranate juice is, frankly, expensive,” Resnick says.
Processing of Pom Wonderful Pomegranate Juice requires care, she says. Pomegranate juice needs to be blended like wine, taking into consideration that, depending on the orchard where the fruit is grown, low- and high-acid and low- and high-sugar variations occur, Resnick says. The company has a mixologist “who makes Pom Wonderful taste the same whenever you open a bottle,” she says. Pom’s presses also have the precision of a “chorus line,” she explains, “because a million pieces of fruit are processed every day and pomegranates can’t be squeezed too hard or too little.”
Pom also chose to grow only the Wonderful variety of pomegranates. “It’s unique in its combination of very high antioxidants and incredibly delicious taste...” Tupper says. “We never ever, ever buy juice from anyone else and we never ever source juice from countries overseas.”
Pom also does not supply any pomegranate juice to other companies.
Questioning the authenticity of some of its competitors, Pom has conducted testing of competing pomegranate juices through independent laboratories, and discovered that many pomegranate labeled juices contain added sugar, colorants and other low-grade filler fruit juices, and some of them contain no pomegranate at all.
“People are desperate to get pomegranates and antioxidants, and it left an opening for these wannabes to come into the marketplace and create juices that have pomegranate flavorings or amounts of inferior product from places that don’t harvest and take care of their crops the way we do,” Resnick says. “Therefore, people are thinking that they are protecting their hearts, protecting themselves against prostate cancer, but they are really drinking high fructose corn syrup and belly wash.”
Pom Wonderful’s juice also is unique in the fact that the company processes the whole fruit. A pomegranate contains arils, the botanical term for seeds surrounded by a juice sac; an albedo, the white, fleshy substance directly under the skin of a pomegranate; a membrane, a see-through yellow material surrounding the pomegranate arils that is bitter and not recommended for consumption, and the rind, the outer peel. Since antioxidants come from both the arils inside the fruit and the peel, higher levels of antioxidants are achieved by processing the whole fruit.
Many of the pomegranate’s health benefits begin with its polyphenols, a class of antioxidants, says Mark Dreher, vice president of scientific and regulatory affairs and chief of science and technology. Pom Wonderful pomegranate juices have a class of polyphenols called ellagitannis that include punicalagin, a polyphenol unique to pomegranates, and six anthocyanins, which are responsible for giving pomegranate juice its rich red color. Because of antioxidants’ cell protective and inflammation-reducing benefits, the company has and continues to support medical research into heart health, cancer, (primarily prostate cancer), sports performance and immunity. In addition, all the scientific research that Pom Wonderful funds has been done on Wonderful pomegranates.
In business, good things can come out of unfortunate circumstances or what Resnick calls “oppor-threats” â€” opportunities and threats. In 2005 and 2006, Pom saw low crop yields because of unfavorable weather conditions, and didn’t have enough pomegranate supply to meet the demand. However, it did have a lot of PomX, a highly concentrated form of polyphenol antioxidants from pomegranates. PomX provided opportunities beyond its antioxidant benefits because it is calorie and sugar free.
“People were asking for a lighter pomegranate juice,” Resnick says. “Well, you can’t make a light pomegranate juice because the sugars themselves exhibit unique antioxidant properties, and if you take them out of the juice, you’ve lost some of the efficacy.”
Pom’s solution was to use PomX to make a tea. Pom Tea, an all-natural blend of Pom Wonderful Pomegranate Juice, whole-leaf tea and PomX, launched in the spring of 2006, and is placed beside Pom Wonderful juices in the refrigerated section of the produce department. The company also released PomX Pills and PomX Liquid that provide the same amount of antioxidants as an 8-ounce glass of Pom Wonderful 100 percent Pomegranate Juice.
Pom Tea is low in caffeine, averaging only 2 mg. per serving. The first four teas â€” Pomegranate Tea, Pomegranate Lychee Green, Pomegranate Peach Passion White and Pomegranate Blackberry â€” released in reusable glasses. Pom Tea Pomegranate Lychee Green and Pomegranate Peach Passion White emerged as the leading SKUs in the line. In September 2007, Pom added three light varieties â€” Light Wildberry White, Light Orange Blossom Red and Light Hibiscus Green â€” that are sweetened with erythritol and fructose and contain 35 calories per serving. This summer, Pom replaced the teas’ glass packaging with 16-ounce and 1.5-liter plastic bottles.
“The good thing about the glass for Pom Tea when it launched was that it was totally reusable, so you really weren’t adding to the landfill,” Resnick says. “I wanted that unique package to launch so we would stand out from other brands on the shelf. I wanted people to see the uniqueness. Now that people have 65 of them, we decided to go into a more portable package. We call it ‘tea-moble’ now.”
From lightly caffeinated to extremely caffeinated, PomX offers the company opportunities to venture into new beverage categories, such as ready-to-drink coffees. Launching this September in New York City and in Whole Foods Markets in the Northeast and Atlantic states, PomX Iced Coffee combines PomX, which provides the same antioxidant strength as 8 ounces of Pom Wonderful 100 percent Pomegranate Juice, and 175 mg. of caffeine. With the tagline “The Healthy Buzz,” PomX Iced Coffee uses Rainforest Alliance certified, Italian-roasted Arabica coffee beans blended with reduced-fat or non-fat milk from cows not treated with rBST growth hormone, and organic cane sugar.
“I wanted to compete in the energy drink market, but I would never ever do anything that had a chemical in it,” Resnick says. “… Here we have a healthy buzz that’s all natural.”
Available in Café au Lait and Chocolate flavors, PomX Iced Coffees are not pomegranate flavored. Additional varieties will be added at a later date. From a consumer standpoint, Pom will have to educate consumers that although PomX Iced Coffee contains the healthful attributes of the pomegranate, it doesn’t taste anything like a pomegranate, Tupper says.
“It’s not pomegranate-flavored coffee,” he says. “It’s delicious, very high-quality coffee infused with the antioxidant potency of pomegranates through PomX. PomX doesn’t taste like pomegranate juice.”
PomX Iced Coffee marks Pom’s first entry in the RTD coffee field and also its first shelf-stable beverage. The 10.5-ounce round bottles will appear near competing energy and coffee drinks, with a suggested retail price of $2.99.
“The people who are going to purchase this product, who have the need for a healthy buzz, may not be in a refrigerated produce case,” Tupper says. “We want to make sure that we’ve got a product that our retailers can get to these consumers at an arm’s reach at any time. Therefore being shelf stable is actually critical.”
Since PomX Iced Coffee is shelf stable, it allows the company to move into new locations in grocery stores and other retailers, and also opens more distribution channels not available for refrigerated Pom juices, Vetter adds. While Pom will keep building its refrigerated juice distribution, the company will use Fiji Water’s distributor system in both off- and on-premise locations to deliver PomX Iced Coffee. Leveraging Fiji Water’s assets to sell and distribute Pom products marks the first joint venture for the sister companies.
Pom continues to benefit from consumer trends that are in its favor. “With each passing year, people are understanding more and more the importance of a healthy diet in leading a healthy life,” Tupper says.
Consumers also are shifting to natural, less processed products and reading labels more, Vetter adds. “As that trend continues, people become more and more conscious of where their food comes from,” he says.
With the significant demand for pomegranate juice and pomegranate products, Pom Wonderful has responded by planting more pomegranate trees, which will enable the company to continue to expand. “Our plans for growth are actually quite aggressive as we look into the future because of the planting that we’ve already put into the ground,” Tupper says.
The annual harvest from October to December, jokingly referred to as “The Red Tide” because of all the juice the pomegranates make, obviously helps determine how much juice is available, but the company always carries a reserve and has “plenty of juice in the barn, so to speak,” Tupper says. With optimal weather and plenty of blooms on the trees, the company is expecting a nice crop this year.
“Our duty is to go and make consumers aware of pomegranate juice and how unique and interesting it is and make it available for them to buy,” Tupper says.
“As we think about growth and new products it always starts with the question: ‘How do we harness the power of the pomegranate and deliver it to the consumer in a way that makes sense for them and also deliver a true and genuine health benefit?’” he continues. “ ... So as we look to the future, we hope to make available more and more of our core products on juice, on tea, as well as offer very unique and special new products in the market â€” for example, PomX Iced Coffee â€” and there will be more of all that.” BI