Easter Basket Case: Equal Sues Splenda

As my readers may recall, on Halloween, I featured another story on recent competition that had emerged in the market for glucose tabs. With today being Easter, perhaps the second or third largest day for U.S. sales of candy (used largely to fill Easter Baskets), I wanted to keep this theme going by informing my readers of a nasty battle that is now underway in the courts between Merisant (the maker of Equal) and Johnson and Johnson (the U.S. marketer of Splenda). People with diabetes are no doubt familiar with both of these products. It is also worth noting that JDRF's new CEO, Arnold W. Donald, is the former CEO of Merisant, so it is indeed a small world, after all, as the Disneyland ride likes to note!

Essentially, Merisant is suing J&J claiming that the claim that "it tastes like sugar because its made from sugar" implies that Splenda is natural, when, in fact, Splenda is no more natural than Equal from a purely scientific standpoint.

Also, the recurrent rumors about Equal causing various cancers and other health ailments have finally been laid to rest by a study released last fall by the NIH which proved that all of these claims unsubstantiated, and in fact, Equal may be safer than Splenda. While some people claim there is a different taste, the reality is that these are personal preferences, not scientifically-backed claims. Regardless, this article from this weekend's Wall Street Journal should be interesting reading.

How Sweet It Isn't: Maker of Equal Says Ads For J&J's Splenda Misled

Chemistry Lesson for Jurors

By Avery Johnson, The Wall Street Journal
April 6, 2007; Page B1

A battle between makers of artificial sweeteners stands to turn bitter next week, as a trial begins over what a judge has termed a veritable "sugargate."

The fight pits Merisant Co., the maker of Equal and NutraSweet, against health-care giant Johnson & Johnson, which sells market-leader Splenda. Merisant alleges that a J&J consumer-products unit, McNeil Nutritionals LLC, deliberately confused consumers over whether Splenda is a natural product.

The dispute could prove to be a black eye for J&J at a time when sales tactics at its drugs and medical-device units are already under scrutiny. Revenue from Splenda is a tiny slice of J&J's $53 billion in annual sales, but the case is the first in a string of pending suits that could threaten the reputation of a highly visible product.

Splenda entered the market in 2000, touted as a breakthrough because the process used to make it includes sugar. Ads for Splenda carried the line "Made from sugar, so it tastes like sugar" followed by "But it's not sugar."

Unlike other artificial sweeteners, Splenda's chemical composition can stand up to heat and freezing, making it suitable for cooking. Capitalizing on that advantage, McNeil has rolled out a series of related products: a baker's bag in 2003, a sugar blend for baking in 2004 and a brown-sugar blend in 2005. The brand is an ingredient in over 4,000 products, including those of Coca-Cola Co. and Nestlé SA's Edy's brand, and it's offered at 65 food chains in the U.S., including outlets of Starbucks Corp. and McDonald's Corp. Splenda was also adopted widely by popular diets such as the Atkins Nutritional Approach. On its Web site, Atkins permits dieters to choose most any artificial sweetener but says, "the Atkins preference ... is sucralose [Splenda], the only sweetener made from sugar."

McNeil and Merisant don't break out sales for their products, but Splenda is now the runaway leader in the sugar-substitute category with $212.3 million in 2006 U.S. sales, according to market-research firm Information Resources Inc., while Equal brought in $48.7 million.

Merisant alleges that Splenda sales shot up in 2003 after McNeil shifted marketing tactics to more aggressively -- and inappropriately -- tie Splenda to sugar. For example, Splenda ads dropped the final "But it's not sugar" statement from their tagline, and, around 2003, a new campaign took off that was packed with sugar imagery. "What are little girls made of? Splenda and spice and everything nice," went one ad. Others featured images of children putting Splenda in their drinks and being fed treats baked with the sweetener. Merisant also alleges that Splenda's sweet taste has nothing to do with whether its chemistry includes sugar. McNeil says that it has used the same promotional claims for Splenda -- "Made from sugar, tastes like sugar" and "Made from sugar so it tastes like sugar," in all packaging and advertising since its launch. It declines to comment on having dropped the "But it's not sugar" line. McNeil stands by its claims. Merisant lodged a complaint with the National Advertising Division of the Council of Better Business Bureaus in late 2004, four years after Splenda's launch and two years after privately complaining to McNeil. McNeil then sued Merisant in Puerto Rico, seeking a judgment that its ads are not misleading, and alleging that Merisant complained after a judge in Puerto Rico had barred Merisant from selling a product with packaging that closely resembled Splenda's. Merisant responded by filing suit in the U.S. District Court for the Eastern District of Pennsylvania in November 2004, where the case will now be heard before a jury. McNeil then consented to the dismissal of its case in Puerto Rico, according to a memorandum by Federal District Court Judge Gene E.K. Pratter.

Jurors will have to endure a heavy-duty chemistry lesson. One of Splenda's main ingredients is sucralose, a chemical entity manufactured in a lab that McNeil makes from sucrose, or table sugar.


Its patented technique replaces some of the chemical groups found in sugar with chlorine, creating a substance that McNeil says is not recognized by the body as a carbohydrate and has no calories. Merisant alleges that Splenda shouldn't be able to claim that it's "made from sugar," since sugar is not one of the ingredients on its product label and the use of the phrase misleads consumers into thinking the product is natural or contains sugar. McNeil said in a statement that Splenda is made from pure cane sugar by a patented process that makes three atomic changes to the sugar molecule.

All sides agree that Splenda is not a natural product. A Web site run by McNeil called Splendatruth.com states that sucralose "is not natural," and that Splenda marketing materials "do not represent the product as 'natural.'" But the chemistry may not be intuitive to the average consumer, and Merisant argues that McNeil has intended for consumers to be confused. Some of McNeil's own documents may bolster that argument, Judge Pratter noted in a March 2 ruling sending the case to a jury trial.

"Merisant cites to internal McNeil documents or third-party documents provided to McNeil that indicate that, at the very least, McNeil was aware that the perception existed among consumers that Splenda was 'natural' or was 'not an artificial sweetener,"' Judge Pratter wrote.

She cited an advertising presentation by an outside consultant for McNeil that listed among "carefully considered decisions" the choice to position Splenda as "not artificial."

The presentation said, "Think of it as sugar without the calories" and the message should convey a "strong 'natural,' 'healthy' playback."

Other documents show company executives walking a fine line. An April 22, 2002, letter from McNeil's then-president Colin Watts told Merisant's then-chief executive Arnold Donald that "Splenda has never been promoted as 'natural.'" But shortly after, a document cited by Merisant from McNeil's files to the court noted that the consumers' perception of Splenda as "not an artificial sweetener" was one of the largest gains in response to the company's marketing.

A May 5, 2004, email from an outside consulting firm to McNeil executives discusses perception research for new packaging for Splenda's sugar-blend-for-baking product. The consultant wrote that there is "some confusion" among consumers about the main Splenda product.

"About 40% to 50% of respondents think that base Splenda contains sugar/is a mix of Splenda and sugar (most likely due to our made from sugar/tastes like sugar messaging)," the consultant's report states.

Eric Paul, McNeil's head of market research, responded in an email on May 6, 2004, that "you're still getting consumer confusion around base product (ie. you put the statement 'contains sugar' in front of consumers as it relates to base Splenda and you're going to get a sizable percentage agreeing with it)." McNeil has sought to have the documents excluded from the trial, arguing that the survey was flawed.

McNeil said in a statement that Merisant's allegations are "based upon its selective, out-of-context quotation from documents obtained by its lawyers from McNeil Nutritionals' files" and that none of them reflect an intention to confuse consumers. "To the contrary, the documents demonstrate that McNeil Nutritionals consistently rejected experimental advertising approaches that might have led to consumer misunderstanding." McNeil's arguments and court filings claim that Merisant waited too long to bring suit, having realized belatedly that it had been outmaneuvered on the marketing front.

The trial will provide a test for some other cases now pending. The Sugar Association and McNeil have filed suit against each other over advertising; the cases are scheduled to be heard in November by the U.S. District Court for the Central District of California.

The Sugar Association's suit claims that McNeil engaged in misleading advertising to draw consumers away from sugar.

McNeil alleges that the Sugar Association and its members engaged in false advertising aimed at misleading consumers about Splenda.

Write to Avery Johnson at avery.johnson@WSJ.com

URL for this article:
http://online.wsj.com/article/SB117582405851161797.html