Nirvana, Inc., the parent company of Nirvana spring water, recently filed a lawsuit in New York State Supreme Court against Nestlé Waters North America. The suit alleges that Nestlé breached a non-disclosure agreement (NDA) and engaged in anticompetitive practices that aimed to drive Nirvana out of business, according to a company release.
The release claims that Nestlé expressed interest in acquiring Nirvana in 2012, and after the two companies signed an NDA, Nestlé “examined Nirvana’s financial information and its natural resources.”
The suit alleges that Nestlé then lowered prices for commercial buyers who agreed to stop carrying Nirvana, and the company indicated Nirvana’s interest in a sale by showing letters to partner supermarkets. The suit also alleges that Nestlé paid supermarket chain Stew Leonard’s in 2011 to stop carrying Nirvana spring water.
“By expressing interest in an acquisition, Nestlé got Nirvana to lower its guard,” Richard Pertz, legal counsel for Nirvana, said in the release. “A small business success story is becoming a tragedy.”
Jane Lazgin, Nestlé’s director of communications, responded to the allegations with the following statement:
“We believe in full and fair competition,” Lazgin told BevNET. “If what is in the press release are their claims, we’re disappointed that they chose to make those claims. We feel they are meritless and we intend to defend those claims vigorously.”
The full release is below:
NEW YORK — Today, natural spring water bottler Nirvana, Inc. (Nirvana) filed a lawsuit in New York State Supreme Court against Nestlé Waters North America (Nestlé) for breach of a non-disclosure agreement (NDA) and unlawful anti-competitive practices aimed at driving a small, family-owned competitor out of business.
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 states, 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.
According to court filings, 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 initially entered discussions with Nestlé in 2005 regarding the co-packing of Nestlé’s Pure Life® brand. That same year, Nestlé made an oral offer to buy the company, which Nirvana declined. In 2011, Nirvana 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’s 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’s 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.