In a much anticipated decision, the Federal Court has ruled in ACCC v H.J Heinz Company Australia Limited that the packaging for Heinz's Shredz products conveyed a false and misleading representation that the products were beneficial to the health of children aged 1-3 years when, by reason of their high sugar content and sticky texture, the products do not have such health benefits. As a result, Heinz has been found liable for conduct that is misleading or deceptive (or likely to mislead or deceive) and for making a false or misleading representation in contravention of sections 18 and 29(1)(g) of the Australian Consumer Law (ACL).

Key learnings

The case is an important reminder of the risks of making implied health claims, or the “health halo” effect, arising from the use of prominent health related cues. In this instance, those cues include (in combination) pictures of wholesome fresh fruit and vegetables, images of a young boy climbing a tree and (truthful) statements that the products contained no artificial colours and that Heinz used "dedicated nutritionists who are also mums".

Those involved in creating and clearing packaging for food should be reminded to:

  • avoid the use of health related images and cues (eg, fresh fruit and vegetables and words such as "nutritious") in respect of products which, by virtue of their sugar content or other properties, cannot reasonably be described as healthy.
  • assess packaging claims in the context of the packaging as a whole, including all surrounding images. Claims such as "no preservatives" may be technically accurate and truthful when considered in isolation. However, the combined effect of such claims and nearby images may be to convey an impression of healthiness that cannot be substantiated.
  • exercise particular care when preparing marketing materials for high sugar foods to avoid implicit positive health claims being made in respect of them.
  • not assume that consumers will read, let alone comprehend, nutritional information displayed in a nutritional information panel (NIP) on back of pack when making purchasing decisions in store. You cannot rely on information conveyed in a NIP on back of pack to qualify a dominant impression of healthiness conveyed on front of pack.
  • exercise care when using images of real fruit and vegetables on front of pack in circumstances where the product contains a highly processed derivative of the fruit and vegetables depicted. While consumers are accustomed to seeing images of fruit and vegetables on packaging for processed foods and do not ordinarily take this as a representation of nutritional equivalence, each case must be assessed in its own context bearing in mind the nature of the product, the form of the fruit and vegetable ingredients used in the product, the extent to which it is clear from the packaging that the product is heavily processed and the surrounding claims.

Facts

The case concerned a product known as Heinz Little Kids fruit and veg SHREDZ. There were three variants, namely berries apple & veg; peach apple & veg; and strawberry & apple with chia seeds. The products were sold in packaging with a combination of the following features:

  • a coloured photograph of certain fruit and vegetable ingredients on front of pack, together with a less prominent image of the finished product in the form of sticks;
  • claims including "99% fruit and veg", "no preservatives" and "no artificial colours or flavours" appeared on front of pack in combination with an image of a tree and a young boy climbing a tree ladder;
  • references to "nutritious food" on back of pack, including the claim "we love to inspire a love of nutritious food that lasts a life time";
  • the claim "our wide range of snacks and meals is packed with tasty goodness of vegetables, fruits, grains, meat and pasta to provide nutritious options for your toddler" on back of pack.

All of the products contained at least 62% sugar. The amount of sugar per serving and per 100g was indicated in the nutrition information panel on back of pack in accordance with the requirements of the Food Standards Code.

The ACCC's case

The ACCC alleged that the packaging for each product conveyed representations to the effect that each product:

  • is a nutritious food and is beneficial to the health of children aged 1-3 years (the Healthy Food Representation);
  • is of an equivalent nutritional value to the natural fruit and vegetables depicted on the packaging (the Nutritional Value Representation); and/or
  • encourages the development of healthy eating habits for children aged 1-3 (the Healthy Habits Representation).

Each of the alleged representations was argued to be false and misleading or deceptive (or likely to mislead or deceive), in contravention of the ACL. The ACCC alleged that the Healthy Food Representation was conveyed by the packaging as a whole and, in particular by the repeated use of the word "nutritious" or its cognates. The ACCC argued that the Healthy Food Representation was misleading or deceptive for a number of reasons, but primarily because of the products' high sugar content and lack of dietary fibre.

Both the ACCC and Heinz relied heavily on expert evidence which, in the case of the ACCC involved well known nutritionist Dr Rosemary Stanton.

The decision

The Court concluded that of the 3 representations claimed by the ACCC, only the Healthy Food Representation was conveyed by the product packaging.

In reaching this view the Court emphasised the combined effect of the images and claims on both front and back of pack, including the image of a tree which conveyed "natural and healthy growth", the claim "99% fruit and vegetables" together with the prominent images of fruit and vegetables. Impressions of nutritiousness and health were reinforced by other features including:

  • the statement that the fruit and vegetables have not been adulterated by preservatives or artificial colours or flavours; and
  • the reference on back of pack to Heinz's "dedicated nutritionists who are also mums" which conveyed implicitly that those responsible for the product know, by both training and practical experience as parents, that the product is wholesome and nourishing.

Having found that the Healthy Food Representation was conveyed, the Court went on to consider whether the products were not, in fact nutritious or beneficial to the health of 1-3 year olds.

The Court attributed a narrow meaning to the word "nutritious". It found that, because the products had some of the nutrients necessary to sustain human life, the ACCC had not established that the products were not "nutritious".

In contrast, the Court was satisfied that the representation that the products are beneficial to the health of 1-3 year olds was false given the weight of the expert evidence which indicated that dental caries is a major problem in young children and that foods high in sugar (especially those with a sticky texture) are a significant cause of dental caries. All of the products had those characteristics. The Court was also influenced by the recommendations of the WHO Guidelines and Dr Stanton's expert opinion that "a single serve of any product contributing so much of the recommended levels of sugars could not be regarded as healthy food".

The Court dismissed the ACCC's claim that Heinz had actual knowledge that it was making a false representation as to the health benefit of Shredz products to young children. It did, however, hold (in a finding potentially relevant to penalty) that Heinz ought to have known that the Healthy Food Representation was made and was false.

Sugar

The ACCC's success was dependent on the Court's assessment of the impact of the high sugar content in the Shredz products on health of young children.

The Court considered dental health detriment, weight gain and obesity risk in the context of World Health Organisation guidelines and expert evidence.

Marketing materials for high sugar foods need to be prepared and reviewed with particular care to avoid implicit positive health claims being made in respect of them. The ACCC (and the Courts) can be expected to give very close consideration to the marketing of high sugar content products.

Nutritional equivalence and healthy habits representations – ACCC's case failed

The ACCC’s allegations that the packaging conveyed the impression that: (a) the products were nutritionally equivalent to natural fruit and vegetables depicted on product packaging; and (b) the products would encourage the development of healthy eating habits for children aged 1-3 years, were not made out.

The Court concluded that the reasonable consumer would readily understand that the product was a processed product and that the fruit and vegetable imagery conveyed a representation that the product was derived, at least principally, from the depicted ingredients. The pictures of the sticks of the product on front of pack confirmed that impression. Consumers well understand that the processing of multiple ingredients will change those ingredients and they would not expect that, despite processing, nutritional equivalence would be preserved.

The Court rejected the ACCC's argument that the Healthy Habits Representation was conveyed by the totality of the pack and, in particular, the statement on back of pack "we aim to inspire a love of nutritious food that lasts a lifetime". This claim would be understood by the reasonable consumer as "aspirational" in kind rather than a representation that the product encourages healthy eating habits for young children.

Conclusion

The issue of penalty remains to be determined. The ACCC will likely be pushing for a significant penalty in light of the Court's declaration that Heinz ought to have known that the Healthy Food Representations were misleading or deceptive.

The case is an important reminder of the risks associated with the "health halo" effect and the importance of carefully considering product claims in the context of packaging as a whole, including all surrounding images.

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