Clean Label: Effective Marketing and Avoiding Regulatory Potholes

stienborn-blog-imageOctober 14, 2016–Global Food Forums, Inc.
The following is an excerpt from the “2016 Clean Label Conference Summary,”
sponsored by Givaudan, RiceBran Technologies, TIC Gums, Blue Pacific Flavors, World Technology Ingredients, Inc. and IOI Loders Croklaan.

Steven Steinborn, J.D., Partner, Hogan Lovells, US LLP, had one main goal in his talk: to help manufacturers reconcile dynamics in the marketplace with a legal framework for clean labels.

“A clean label means a simplified label, with fewer ingredients, nothing artificial and transparency to consumers,” he began. “Keep in mind that what is meant on the label is formed by the consumer. Their expectations are very important from a legal perspective, as labels cannot be misleading on the basis of consumer understanding.”

When cleaning up labels, it’s important to remember some ingredient names are specified by a Standard of Identity in the federal regulations. If an ingredient is covered by a Standard of Identity, it must be named accordingly. If no standard exists, then an established common or usual name is to be used. “So, if something has been named for decades, it cannot generally be changed now,” Steinborn cautioned.

If no common name exists, then a new name can be chosen, but it must be appropriately descriptive. In naming an ingredient, it is advisable to use the basic nature of the food and to work to freely inform consumers. The ingredient statement cannot include adjectives, brand names or marketing terms—only the facts. Exemptions are also considerations. Incidental additives and processing aids are not required to be declared. But it is a narrow category—so be careful.

Steinborn advised: “Think strategically; while regulations are prescriptive, they do have some flexibility.” For example, USDA approves all food labels, and if USDA signs off on a new ingredient name, the company is then in a much stronger position.

“‘Made with’ claims deserve consideration and can be very good strategically. These claims allow a company to zero-in on specific ingredients. It can be much easier to substantiate an ingredient in the formula than [to substantiate] the whole product. But there must be a meaningful amount of the ingredient present. Claiming ‘2g of whole grain,’ for example, is not that much. Be thoughtful, as these ‘amount claims’ can be useful but can also be a source of trouble,” he offered.

An explosion in lawsuits has caused companies to be risk-averse. The cost of defending and damage to brand reputation is high, even if the lawsuit is dismissed. “Litigation should not prevent good companies from making good claims,” Steinborn noted.

The key is to know what attracts litigation. “Natural” claims, which are ill-defined, can get a company into trouble. Organic, on the other hand, is subject to a statutory definition and a whole regulatory scheme.

Another area of caution is technical mislabeling, where the wrong name is used on a label. Currently, this is a subject of a number of lawsuits. “Evaporated cane juice,” for example, is not an appropriate name for “sugar.”

GMO labeling has become quite popular and, for most processors, the Vermont law will become the federal standard, because companies cannot segregate Vermont products. At the time of this conference, Congress tried but could not vote to preempt the Vermont law. “Imagine, the outlook for the food industry must be pretty bleak for it to go to Congress for help, as Congress is typically so helpful,” he jested.

In closing, Steinborn provided some tips for clean labeling. Understand FDA regulations and apply them creatively but sensibly. Recognize the importance of technology; a company with strong R&D has a competitive advantage.

Do not try to fix a clean label problem through labeling; rather, consider changing the formula and ingredients. Leverage suppliers’ expertise but also conduct independent evaluations. Articulate clear benefits (i.e., “healthier eating” is too generic)—being more specific is less risky. Ingredient-focused claims are the wave of the future, as they are easier to communicate and to substantiate.

Lastly, think about leveraging third-party certifiers; they are a big deal now and, from a litigation-risk perspective, may offer protection. Government would be less likely to go after a company, if the certifying body is also included in the lawsuit.

“Clean Label: Effective Marketing and Avoiding Regulatory Potholes,” Steven Steinborn J.D., Partner, Hogan Lovells US LLP, steven.steinborn@hoganlovells.com

Posted on:October 14, 2016

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