Scotts Miracle-Gro made a mistake when it filed a 173 page lawsuit against the small New Jersey organic plant food company, TerraCycle®.
As reported back in April, Scotts Miracle-Gro's suit alleges among other things false advertising and trade dress infringement. They claim TerraCycle's packaging too closely resembles their Miracle-Gro® product packaging.
Scotts has a strong product line - so what is the motivation for going after a small company like TerraCycle?
It appears the lawsuit is really an attempt by Scotts Miracle-Gro to prevent TerraCycle from becoming established in the rapidly growing market for organic non-chemical based fertilizers and plant food, which coincidentally Scotts Miracle-Gro is trying to crack into with its Organic Choice® line of products.
Clearly Scotts is concerned by the fact TerraCycle is carried by Wal-Mart & Home Depot as well as numerous other large retailers and that this will some how impact their business.
They couldn't be more wrong. Scotts has an established brand of lawncare products that millions of consumers swear by each year. They are lawn and garden giants with over fifty percent of the related market share. Consumers who buy Scotts products are not going to one day stop and switch to a TerraCycle type product. Its just not going to happen.
Many of these consumers are results based consumers. All they care about is will my lawn be green or will my plants grow big. They aren't thinking about the impact too much fertilizer might have on rivers or streams or whether its good to be eating vegetables grown with synthetic fertilizers.
In the wake of increased federal and state regulation of their products and a growing demand for organic/natural fertilizers by consumers Scotts is striking out at who they can - potential competitors.
The decision to file a lawsuit was a mistake
The problem with this plan is its going to backfire. By Scotts filing suit against TerraCycle they have legitimized the company as a serious competitor. TerraCycle overnight went from a small fertilizer company catering to a growing niche market to a company Scotts Miracle-Gro is actually worried about.
Whats worse for Scotts is now the whole country and world knows about it. When a company like Scotts Miracle-Gro is worried about a company like TerraCycle people notice and ask why.
Scotts Miracle-Gro's numerous brands are strong. The company is getting poor legal/marketing/PR advice and the decision to go after TerraCycle was a bad one.
In the end TerraCycle is going to come out stronger with a larger market share. Inc. reported this month the company's investors weren't swayed a bit by the looming Scotts Miracle-Gro lawsuit.
TerraCycle gets it. Scotts doesn't. Strong arm tactics weren't necessary in this case and by employing them (lawsuit) Scotts will only further alienate itself from the very consumer base they are trying to capture.
Scotts doesn't get it on this one. Su Lok a company spokesperson was quoted in the June issue of Inc. as saying their actions against TerraCycle were "common sense, business 101." That may be the case in "business" but what they are missing is the fact that consumers in the markets they are trying to get into (organic fertilizers) don't like "business 101" and strong arm bully tactics.
Generally speaking consumers who buy organic products are often highly concerned with trade practices, are internet savvy, tend to spend more time researching products available to them and have higher education levels. All of this is common knowledge business 101. Scotts needs to understand their target consumer base isn't going to react well to their going after a small organic company like TerraCycle.
The Scotts Miracle-Gro Company and TerraCycle have reached a settlement in a lawsuit filed by Scotts.
See our earlier coverage of the Scotts/TerraCycle lawsuit 