Tyson scored a coup when it became the first marketer to receive approval from the U.S. Department of Agriculture to tout in advertising and on packaging that its birds were "raised without antibiotics." The pitch resonated with consumers concerned about developing immunity to antibiotics through the food they consume -- and who are willing to pay more to make sure that does not happen.
"It's almost a no-brainer to know they don't use antibiotics and look for that when they're in the store," said Chris Waldrop, director of the Food Policy Institute for the Consumer Federation of America. "To be able to make a claim like that or differentiate yourself from the competition certainly gives you an advantage."
Not entirely antibiotic free
There was one catch, however: While Tyson's chickens did not receive any antibiotics that are commonly given to humans, they did, however, receive ionophores, which are antibiotics that are used only in veterinary medicine and therefore not thought to affect resistance in humans.
After the USDA learned that, it worked with Tyson to modify the claim last December to state the chickens were "raised without antibiotics that impact resistance in humans." But that wasn't enough for competitors Sanderson Farms, Perdue Farms and Foster Farms, which filed a false-advertising case in Maryland District Court the following month, claiming that the ad message would lead to "irreparable harm" to their brands. The implication, they said, was that their chickens were not as fit for human consumption.
But the campaign's last straw came when the USDA learned earlier this year that Tyson was administering a small amount of an antibiotic used in humans. It rescinded approval for the modified label, dismissing Tyson's argument that it should be able to keep the claim because the drug is administered before chicks hatch. Tyson sued the USDA after the modified label was rescinded, but that case has been dismissed.
Tyson and Perdue declined to comment for this story. But Randall K. Miller, a partner with law firm Arnold & Porter who worked with both Sanderson and Perdue on the suit, said those companies lost business as a result of Tyson's now-defunct claim. Sanderson lost at least $4.1 million and Perdue lost about $10 million in sales, according to testimony. However, Mr. Miller said the losses could reach the "hundreds of millions" when loss of reputation and goodwill taken into account, though no damages were awarded.
"Tyson's internal documents admit it 'wrecked' and 'devalued' the Perdue brand while at the same time enhancing its own," the companies pleaded in the original complaint. "This kind of diversion of goodwill and brand equity is precisely the type of irreparable harm that requires injunctive relief."
Others likely to make similar claims
All cases related to the issue have now either been settled or dismissed. But Mr. Miller said that the body of litigation will now make it harder for any company wanting to claim that its meat has been raised without antibiotics. But because Tyson has demonstrated how lucrative the market is, he said it's only a matter of time before someone tries.
Court document indicate that Tyson's chicken sales jumped 35 million pounds as a result of the campaign. Tyson declined to give a dollar value on the sales increase.
Tyson is by far the biggest advertiser of the four companies, with $36 million spent on measured media during 2007, according to TNS Media Intelligence. Tyson's agency is Arnold Worldwide, Boston. During that time, Perdue spent $13 million, Foster $10 million and Sanderson $1 million.
Amanda Eamich, a spokeswoman for the USDA's Food Safety and Inspection Service, said her organization "made a mistake" in approving Tyson's labels last year and finally pulled the modified label after more details about the company's chicken-raising processes came to light.
Ms. Eamich declined to comment on the whether Tyson's competitors played a role in making the additional information available.