A Winning Equation

Los Angeles entrepreneurs Stewart and Lynda Resnick know how to make money buying things, from oranges to fire alarms to the Franklin Mint. But they were stymied by what to do with a 100-acre pomegranate grove that came along with farmland property they bought in 1987. Advisers suggested they chop down the trees, which produce a hard-to-eat fruit, to plant more pistachios. But Stewart kept them. "He said, 'Let's just watch it and see what happens'," recalls his wife, Lynda.

What happened is POM Wonderful, the company that single handedly transformed the ungainly pomegranate into a stylish libation. The popularity of the juice in the iconic figure-eight bottles was no accident. The Resnicks, who introduced the juice in 2002, cleverly handed out free samples to celebrities at the Oscars and Emmys. They also funded research ($10 million so far) documenting the potential health benefits of the antioxidant-rich juice--though the company's use of those studies in advertising has raised some eyebrows. Privately held POM Wonderful won't discuss revenues, but according to the market-data firm Information Resources, Inc., annual sales of its juice have risen from $12 million in 2003 to $91 million today.

Making health juice hip seems an odd bet for a sixtysomething couple whose holdings had mostly involved almond crops, keepsake porcelain dolls and Mother's Day bouquets. But the Resnicks, who rub shoulders with Hollywood executives on the L.A. philanthropy circuit, have a history of spotting opportunities. They originally bought up farmland in California's San Joaquin Valley in the '80s at bargain prices and now operate America's largest acreage of tree crops, growing 20 percent of Sunkist's oranges, as well as almonds and pistachios. After buying the Franklin Mint in 1984, the couple took the company beyond the souvenir-medallion niche by launching 1,500 new products, from $100 Rolls-Royce replicas to $4,800 Faberge-style eggs. (The Resnicks recently signed an agreement to sell the company.) Two years ago, the couple's holding company, Roll International, bought Fiji Water for a reported $150 million. The water already came in the signature square bottle, but Lynda tweaked the marketing pitch from the bland "A Taste of Paradise" to "Untouched by Human Hands. Until You Drink It." Sales jumped 67 percent in the past year, according to IRI.

Building the juice business took more time. For 12 years after the purchase of the 100-acre pomegranate grove and surrounding land, the Resnicks simply grew the fruit and sold it. But in the mid-1990s, they heard about the use of the pomegranate as medicine by the Egyptians, Greeks and Romans, and began reading up. At the same time, the couple was intrigued by emerging research by Israeli biochemist Michael Aviram, who'd pioneered studies into the antioxidant benefits of red wine. They tracked him down and asked him to test pomegranates, too. Aviram resisted at first, but relented. "I thought it would not be as important as red wine," he says. "To my big surprise, it was better."

So the Resnicks decided to market juice. There was one major hurdle: only 12 percent of the public knew what a pomegranate was, according to their research. Lynda Resnick praised the fruit to the then Disney chairman Michael Eisner, a friend. "He said, 'Lynda, just draw me one. I have no idea what you are talking about'," she recalls. But awareness grew quickly as the Resnicks launched a campaign to win over Hollywood and New York tastemakers. They hired a mixologist to invent a pomegranate martini--the POMtini--and supplied bartenders with the juice. Marketers stuffed bulbous POM bottles in gift bags at fashion shows and other events. They bought product placement on "Queer Eye" and "Desperate Housewives."

Meanwhile, the company began to fund more health studies--21 so far, with 44 more in the pipeline. Lynda Resnick says she is proud that by the year-end the company will have spent more on research ($17 million) than on marketing and advertising ($12 million). Earlier this summer, UCLA urologist Dr. Allan Pantuck published the results of a three-year study of prostate-cancer patients in Clinical Cancer Research that found the juice slowed the rate at which PSA levels increased. Pantuck, who is now organizing a bigger study, praises the Resnicks for their willingness to pay for solid research. "They are not [just] looking for quick-and-dirty studies to promote their juice," he says.

The health claims have prompted a backlash. POM Wonderful's ads have combined obvious hyperbole ("Cheat Death" one ad declared, showing a POM bottle with a noose around its neck) with factual claims that some thought went too far. One ad claimed that POM had "more antioxidant power than any other drink." Another reported that the juice "can help prevent premature aging, heart disease, stroke, Alzheimer's, even cancer." When Welch Foods complained last winter, the Council of Better Business Bureaus' National Advertising Division, a self-policing organization for the ad industry, investigated. "These were probably the strongest health-related claims that I'd ever seen" for a food product, says NAD director Andrea Levine. The company agreed to dial it back a notch.

The Resnicks recently introduced five pomegranate teas that Lynda hopes will outsell the juice. But competition is getting fierce. Since early last year, 350 new beverages using pomegranate have hit the market, according to trend tracker Productscan Online. Even Tropicana, the OJ leader, will launch a pomegranate-blueberry juice this month. Lynda Resnick says the couple isn't worried. "I've never been concerned with competitors," she says. "Execution is everything in life." Good thing they didn't "execute" those pomegranate trees.

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