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Q&A: Label With Caution

Fri, 02/24/2012 - 9:36am
David L. Ter Molen, Food Industry Team lawyer and Partner, Litigation Practice Group, Freeborn & Peters LLP

Wal-Mart recently announced its “Great for You” program, which labels some of its house-brand foods with a seal to promote healthier products. Discretionary nutrition labeling is becoming commonplace for food companies and retailers, but the practice poses some issues. David L. Ter Molen spoke with Food Manufacturing about how manufacturers can utilize discretionary labeling effectively, while reducing legal risks.

Q: What risks do food companies face when adding discretionary nutrition labels to their packaging?

A: Discretionary nutrition labels mean front-of-package (FOP) claims that are not mandated by the FDA or USDA and which highlight certain attributes of a food item. Such claims can be specific, such as “No Trans Fat” or “Made with 100% Whole Wheat,” or more general, such as “All Natural” or “Good Source of Fiber.” There are several potential risks in making such claims. First, the FDA might accuse a product of being in violation of federal law and FDA regulations if an FOP claim is “false and misleading,” such as an “all natural” product that contains a synthetic preservative.

In addition, even when there is compliance with all applicable FDA regulations and guidelines, companies are at risk from consumer lawsuits alleging that a particular FOP claim was somehow deceptive. This is evidenced by a recent flood of class action lawsuits alleging that numerous companies deceptively labeled certain products as “all natural” when they included allegedly “unnatural” ingredients such as high-fructose corn syrup or genetically-modified organisms. Moreover,  FOP claims such as “No Trans Fat” can draw unwanted attention as the target of consumer watchdog groups (such as the Center for Science in the Public Interest) for implying that a product is healthy if the food item is relatively high in saturated fat or added sugars.

There are also so-called FOP labeling programs (or systems) that are designed to help consumers make healthier food choices using standardized and easy-to-comprehend facts and/or symbols. These include the “Facts Up Front” campaign sponsored by the Grocery Manufacturers Association (GMA) and the Food Marketing Institute (FMI) and the “Great for You” program that was just announced by Wal-Mart. Food companies face minimal risks when participating in these programs.

Q: What are some of the major flaws with labeling programs such as “Smart Choices"?

A: The goal of FOP labeling programs is to help consumers make healthier choices by providing standardized symbols and information that can quickly and easily be understood “at a glance.” These programs fall into one of two different categories: interpretive or reductive. Interpretive programs, including  Wal-Mart’s “Great for You” icon and the Institute of Medicine’s proposed rating system of assigning foods zero to three points, seek to interpret the complex information on the information panel (found on either the side or back of a product) by explicitly telling consumers which products are healthier. In contrast, reductive programs, such as the “Facts up Front” campaign, highlight key information (such as calories, saturated fats, sodium and sugars) and allow consumers to decide whether the product is healthy or not.

Both types of programs have their drawbacks. Interpretive FOP programs are often accused of creating bright lines between food products without recognizing important differences between foods that are relevant to making healthier choices. In fact, this issue is what led to the “Smart Choices” program ceasing operations in late 2009 after it received strong criticism when products such as Froot Loops and Cocoa Krispies qualified for the “Smart Choices” icon. On the other hand, critics assert that reductive FOP programs don’t identify specific products as being healthy choices and that they are thus less effective in helping consumers select healthier foods and in getting the food industry to produce a greater amount of healthier foods.

Q: Are retail food labeling programs, such as Wal-Mart’s new “Great for You” seal, viewed as a more favorable option for manufacturers than food industry-supported programs? Why or why not?

A: Program’s such as Wal-Mart’s “Great for You” seal pose more risks for manufacturers because they generally create a bright line between healthy food products and all other products. This differentiation is consistent with a key goal of such programs, which is to provide food manufacturers with an incentive to create new products or reformulate existing products that will qualify as being “healthy.” But if a product doesn’t qualify and it lacks the seal, there’s a risk that shoppers will view the product as inherently “bad for you.” This is one reason why the industry has backed the less-interpretive “Facts up Front” campaign, which launched last year and is now being used on approximately 70 percent of packaged foods in the United States.

Significantly, although Wal-Mart’s “Great for You” program only applies to products sold at its stores, Wal-Mart is the largest food seller in the United States and this new program thus has the potential to create a ripple effect across the industry.

Q: The FDA announced in 2009 that it would propose guidance regarding FOP labeling, but the agency still has not provided guidance. What should food companies do in the meantime?

A: Food companies should carefully review all FOP claims based on a firm understanding of the evolving business and legal risks in this area. In addition, food companies should monitor how consumers react to the new FOP programs and use that information to evaluate whether they should reformulate certain products to take advantage of those programs. Significantly, companies should not wait for the FDA to act in this regard because that might still be years away.

Q: What should food processors consider before implementing a labeling program?

A: As previously mentioned, food companies should fully understand existing business and legal risks in relation to their specific food products. Based on that understanding, they can determine what FOP claims make sense for their product lines. Food companies should not, however, try to develop their own FOP programs like the “Facts Up Front” or “Great for You” systems. Rather, they should consider participating in these already-existing programs and continue to monitor industry developments in this regard.

David L. Ter Molen is a Food Industry Team lawyer and Partner in the Litigation Practice Group at Freeborn & Peters LLP in Chicago. His areas of focus include intellectual property litigation and complex disputes.

Interview by Lindsey Coblentz, Associate Editor

 

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