The firm behind the Better Whey of Life Greek yogurt brand has filed a lawsuit alleging that Kroger’s manufacturing arm effectively destroyed the brand's reputation by producing a moldy, grainy, sub-par product.
In a complaint filed in Ohio on May 1 and seen by FoodNavigator-USA, Tula Foods accuses Kroger Co. of breach of contract, fraud, fraudulent inducement and misappropriation of trade secrets.
Separately, Tula accuses flavor supplier Edgar A. Weber & Company of breach of express warranty, breach of implied warranty of merchantability, fraud and fraudulent inducement.
Kroger and Weber agreed to strict specifications
According to Tula, Kroger's Inter-American Products (IAP) division agreed to manufacture Better Whey of Life at its plants in Layton, Utah, while Weber Flavors agreed to supply a vanilla flavor base for the range, which launched in January 2012.
Both signed contracts containing strict specifications about how the yogurts were to be produced, claimed Tula, a start-up created by former Kraft executives Daphne Mazarakis and Brian Sambor.
Failures caused permanent damage to Tula Foods’ reputation with consumers and retailers
However, just weeks after they were launched - to an “overwhelmingly positive reception” at 400+stores in Illinois Colorado and California - Tula was forced to recall them.
“Weber’s vanilla flavor yogurt base in fact contained significant amounts of contaminants and/or foreign materials prior to the expiration date, including mold”, which in turn contaminated other flavors used at the Layton facility, alleged Tula.
As a result, it was forced to recall the moldy yogurts in February 2012, causing permanent damage to its reputation with consumers and retail customers such as Whole Foods Market.
Meanwhile, Kroger’s failure to adhere consistently to the heating specifications laid out in its contract with Tula resulted in a “grainy, unappetizing and generally unmarketable” product, it added.
Adherence to the specifications was essential in order to prevent the whey protein in the yogurts from “improperly denaturizing”.
Manufacturing and ingredient failures were ‘particularly devastating’ as product was brand new
The lawsuit further alleges that Kroger misappropriated Tula’s trade secrets and used Tula's proprietary texturizing equipment and know-how to produce its private label Greek yogurt at the same factory, which competed directly with Better Whey of Life.
The actions of Kroger and Weber were “particularly devastating” for Tula because retailers and consumers were just getting to know the Better Whey of Life brand, added the complaint.
“Were it not for the actions of defendants Kroger and Weber… Better Whey of Life Greek yogurt would have continued its extremely positive sales growth trajectory and attained the full measure of success its owners and investors deserved.”
The case is Tula Foods, Inc. v. The Kroger Co. and Edgar A. Weber & Company d/b/a Weber Flavors, filed in the Court of Common Pleas of Hamilton County, Ohio.
Tula is represented by Alan Littmann, Shayna Cook, and Jennifer Greenblatt of law firm Goldman Ismail Tomaselli Brennan & Baum LLP, and Kendall Shaw of law firm Porter Wright Morris & Arthur LLP.
According to Littmann, Tula only discovered the manufacturing problems after the product had been launched and was then able to determine that Kroger had failed to consistently follow its specifications.
Weber Flavors and Kroger did not respond to requests for comment from FoodNavigator-USA.