New York, NY – May 4, 2009 – The National Advertising Division of the Council of Better Business Bureaus has referred advertising from Coca-Cola Company to the Federal Trade Commission (FTC) for further review, following NAD’s second compliance review of advertising for Powerade products.

NAD, the advertising industry’s self-regulatory forum, opened a compliance proceeding following a complaint from Stokely-Van Camp, the manufacturer of Gatorade.  NAD examined recent television and print advertising comparing Coca-Cola’s new product Powerade Zero, with original Gatorade. Powerade Zero is Coca-Cola’s replacement product for Powerade Option. Powerade Option, which is no longer sold, had 10 calories, Powerade Zero has zero calories.

In the underlying case, opened in 2006, NAD reviewed Coca-Cola advertising for Powerade Option Low Calorie Sports Drink that compared itself to Gatorade.

NAD found that because of (1) the absence of an FDA or industry accepted definition of the term “sports drink,” (2) the absence of evidence establishing that the term “sports drink” is misleading when used in conjunction with Powerade Option, and (3) the fact that the leading “sports drinks” on the market are not labeled as a “sports drink” on the bottle, that the advertiser’s use of the term “low calorie sports drink”  was not, in and of itself, likely to mislead consumers.

NAD determined, however, that the comparative claims being made versus Gatorade on the Powerade Option bottle and in its print advertising failed to disclose material differences between the products. Specifically, NAD found that the absence of carbohydrates in Powerade Option, which provide a key benefit (energy) to many consumers of “sports drinks,” was a material difference between the products that should be clearly and conspicuously disclosed in any advertising comparing the two products.

NAD noted then that the Coca-Cola was free to tout the fact “that consumers can receive re-hydration benefits from Powerade Option without the extra calories contained in Gatorade, so long as it clearly and conspicuously discloses that consumers will not receive the energy replacement benefits provided by Gatorade.”

Several months later, Stokely-Van Camp initiated a compliance proceeding that took issue with similar claims made in several new print and broadcast advertisements.

NAD noted then that it was particularly concerned with a broadcast commercial that featured what appeared to be and Amish wagon race.

The winning wagon followed a superimposed number “10,” while the losing wagon, which barely moved from the starting line was linked to the onscreen number “50.”

The commercial stated “10 is less than 50”  and concluded by showing a chart comparing the “carbohydrate energy” of Gatorade (50) and Powerade Option (10). A second spot compared two blue sneakers, one with 10 eyelets and the other with 50 eyelets, and stated “10 is less than 50” and, again, concluded with a “carbohydrate energy” comparison chart.

NAD noted then that “[n]ot only is it not conspicuously disclosed that Powerade Option does not provide the energy component provided by Gatorade, but in NAD’s view it actually implies that Powerade Option provides more energy. The wagon attached to the “10” takes off and wins the race while the wagon attached to the “50” does not even leave the starting line. In NAD’s view, one (if not the most) reasonable interpretation of this commercial is that Powerade Option (which contains 10 calories) is superior and/or provides more energy to win a race than does Gatorade (which contains 50 calories). The fact that the 10 and 50 are intended to refer to number of bales of hay in the wagons, is completely overshadowed by the actual race being depicted.”  

Coca-Cola informed NAD that the “Amish” commercial aired only a few times, and was then permanently discontinued and the sneaker commercial was pulled and replaced by with a spot that included a voiceover that stated, “Calories provide energy. But how much energy do you need?” A third commercial featuring a woman lifting barbells with two different sized arms, one muscular (obviously a male’s arm) and the other, her own featured the clarifying voiceover, as well. Coca-Cola informed NAD that going forward, it would be airing the “sneaker” commercial and the “barbells” commercial, both with the clarifying voiceover.

Since NAD’s first compliance review, the advertiser had been advertising its original product, Powerade Option, with the tagline “calories provide energy, but how much energy do you need,” which NAD found to be an adequate disclosure.

In late 2008, Coca-Cola discontinued Powerade Option and replaced it with Powerade Zero. The new advertising for Powerade Zero includes a print advertisement and a television commercial.

The challenger contends that Coca-Cola’s new advertising for Powerade Zero makes the same unqualified comparisons, emphasizing the caloric differences between the beverages without disclosing that Powerade Zero does not provide the energy replacement benefits that Gatorade does.

The challenger maintained that much like the Amish commercial that was the subject of the first compliance proceeding, new print and broadcast advertising communicates the message that Powerade Zero is a better choice, and will actually enhance performance, for consumers engaging in vigorous activity, since the calories in Gatorade will only weigh them down. 

The print advertisement at issue features a bottle of Gatorade with the super “50,” a bottle of G2 with the super “25,” a bottle of Propel with the super “10,” and prominently in front of all of them is a bottle of Powerade Zero with the super, “0 Calories Per Serving.” The print advertisement then states, “If You’re Counting Calories It Doesn’t Get Any Better Than Zero And If You’re Counting On Great Taste, It’s Got That Too. Zero Calories. Zero Limits.”

Following its review of the advertising, NAD determined that the print advertisement simply conveyed a caloric comparison and did not require modification.

NAD found that the television commercial, however, did not disclose material information, specifically that Powerade Zero does not provide the same energy benefit/carbohydrates as Gatorade. Accordingly, NAD recommended that the commercial be modified to include a disclaimer that clearly and conspicuously discloses that Powerade Zero has zero calories, and therefore, no energy component.

Coca-Cola declined to accept NAD’s recommendation. Pursuant to Section 2.10(B) of NAD/NARB Procedures, NAD is referring the matter to the FTC for review.