The Law of Thirst: Gatorade Sues Powerade

ESPN's Darren Rovell on his Gatorade Blog writes about a lawsuit filed by PepsiCo, the makers of Gatorade and Propel, against Coca-Cola, the makers of Powerade, in the U.S. District Court for the Northern District of Illinois. The lawsuit claims that Coca-Cola is airing a misleading advertisement by claiming that "Powerade Option" has 80 percent fewer calories than "Gatorade." The problem, as Rovell writes, is that Powerade Option is a fitness water that competes with Coca-Cola's Propel, also a fitness water--and not Coca-Cola's Gatorade, an energy drink--and Option and Propel have nearly the same caloric content. But Coca-Cola apparently contends that it seeks to market Option as an energy drink, rather than as a fitness water, so the comparison between Option and Gatorade should be considered fair.

Rovell writes:

You can't say we didn't see this coming. I knew the people at Gatorade were really mad when they saw the bottles of POWERade Option. Their problem was that the bottles and the advertising claim to have "80 PERCENT FEWER CALORIES THAN GATORADE." The issue of course is that they are clearly not comparing apples to apples. POWERade Option is Coca-Cola's answer to Propel, so you have to compare Option to Propel, not Option to Gatorade. If you compare Option to Propel, they are pretty much identical. And if you compare Option to POWERade, Option has 85 percent fewer calories that POWERADE! But Coca-Cola wanted to try to sell this as a sports drink, not a fitness water. So the question now becomes, can they legally sell at as a lower calorie sports drink instead of a fitness water?

The lawsuit, according to John Schmeltzer of the Chicago Tribune, is unusual in the advertising world because disputes are normally settled before the National Adversiting Division ("NAD") of the Better Business Bureau, which assesses the truthfulness and accuracy of competing advertising (Schmeltzer, "Sports Drink Spat Lands in Court," Chi. Trib., 3/21/2006). PepsiCo tried the NAD last fall:

That's where Gatorade turned last fall when Coke launched an ad campaign claiming Powerade Option had 80 percent fewer calories without disclosing there were significant differences between the two drinks.

The NAD decided that Coke could not run the calorie commercial without disclosing "that consumers will not receive the energy replacement benefits provided by Gatorade."

Coke agreed "to take the NAD's recommendation into account in future advertising."

But Coca-Cola hasn't done anything about this ad campaign. It will be interesting to monitor this lawsuit, which is considered similar to one filed two years ago by potato chip-maker Jay's Foods against Frito-Lay and its ads comparing the two chips (those parties settled before trial, and I bet the same thing happens in this lawsuit between PepsiCo and Coca-Cola).

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