Natural spring water bottler Nirvana, Inc. filed a lawsuit in New York State Supreme Court Wednesday against Nestlé Waters North America (Nestlé) alleging a breach of a non-disclosure agreement (NDA) and unlawful anti-competitive practices aimed at driving the small, family-owned competitor out of business.
According to the lawsuit, after Nestlé expressed interest in a possible acquisition of Nirvana, the two companies signed an NDA in 2012. Nestlé examined Nirvana’s financial information and its natural resources, conducting aerial reconnaissance of Nirvana’s property. At the same time, the legal complaint alleges, "Nestlé and its agents were engaging in a persistent campaign of anti-competitive practices meant to weaken Nirvana or drive it out of business entirely."
Reached Thursday, Jane Lazgin, Director Corporate Communications at Nestlé Waters North America, said "We’ve not yet received a copy of the complaint filing, but intend to review it when we do," adding, "We believe in full and fair competition. If the claims are what the press release states, we are saddened Nirvana chose to suddenly make these meritless claims against us. We plan to defend ourselves vigorously."
In the court filings, Nirvana alleges that Nestlé’s illegal activities included lowering prices for commercial buyers who agreed to stop carrying Nirvana’s water and showing letters to supermarkets indicating that Nirvana approached Nestlé about selling itself, undermining those customer relationships. The lawsuit alleges that Nestlé even went so far as to directly pay Stew Leonard’s supermarket chain in 2011 to stop carrying Nirvana spring water altogether.
“By expressing interest in an acquisition, Nestlé got Nirvana to lower its guard,” said Richard Pertz, Esq., legal counsel for Nirvana. “A small business success story is becoming a tragedy.”
Nirvana says it initially entered discussions with Nestlé in 2005 regarding the co-packing of Nestlé’s Pure Life brand. That same year, according to Nirvana, Nestlé made an oral offer to buy the company, which Nirvana declined. Nirvana goes on to say that In 2011, it transitioned from a co-packing business model to a self-branded water company and began directly capturing market share from Nestlé’s Poland Spring and Deer Park brands. Over the last two years, during the period of Nestlé’s NDA-protected intelligence gathering, Nirvana says its sales have fallen dramatically.
“Anticompetitive practices have real victims,” Pertz added. “When a big company strangles a small competitor, it doesn’t just hurt consumers, it costs people their jobs and sends shockwaves throughout a community.”
Nirvana was founded in 1998 in Forestport, New York. Nirvana says its water is "exceptionally pure, sourced from an Ordovician aquifer on 2,000 acres in the foothills of the Adirondack Mountains. The water flows naturally to the surface at a temperature of 42 degrees Fahrenheit, unheard of in the industry. The company is currently capable of bottling 25 million cases per year and employs between 100-150 people. Unlike most other commercial bottled waters, Nirvana is actually bottled at the source, reducing the company’s carbon footprint."