Commercial and Corporate case note: Court’s decision ‘shredz’ $2.25 million from Heinz for misleading or deceptive health claims

Sep 17, 2018

In the recent case Australian Competition and Consumer Commission v H.J. Heinz Company Australia Limited [2018], the Federal Court determined that the well-known food manufacturer and food supplier, Heinz, breached the Australian Consumer Law by making misleading or deceptive representations that its ‘Little Kids fruit & veg SHREDZ‘ products were beneficial to the health of children aged 1 to 3 years.

The Court held that Heinz ought to have known that the ‘health claims’ made in respect of this range were misleading or deceptive and handed down a $2.25 million penalty, along with ordering Heinz to pay the ACCC's legal costs.

Little Kids fruit & veg SHREDZ products

The products – which included Heinz Little Kids fruit & veg SHREDZ berries apple & veg, Heinz Little Kids fruit & veg SHREDZ peach apple & veg and Heinz Little Kids fruit & chia SHREDZ strawberry & apple with chia seeds – were a snack food derived from fruit and vegetables in the form of small sticks.

Witnesses in the case described the products as similar in sticky texture and taste to confectionary jubes or dried fruit.

The packaging of the products contains the ‘offending representations’ that the products were beneficial to the health of children aged 1 to 3 years.

The Court was easily satisfied that the packaging conveyed the representation that the product was a healthy and nutritious snack through the use of organic imagery, pleasant colours and specific words such as “99% fruit and veg”, “No preservatives” and “No artificial colours”.

In particular, the images of fresh fruits and the healthy young boy climbing a ladder under a tree, combined with the words “99% fruit and veg” evoked ‘naturalness and wholesomeness’. Reinforcing these impressions were phrases on the back of the box referring to Heinz’s “dedicated nutritionists who are also mums”.

Too sweet to be healthy

The ACCC – the consumer watchdog who brought the proceedings against Heinz – convinced the Court that the products conveyed a representation that the products were beneficial to the health of children aged 1 to 3 years and that this representation was misleading or deceptive, or likely to mislead or deceive.

As approximately two-thirds of the product was sugar, the judgement largely turned on the high levels of sugar in the product.

Significant weight was given to the World Health Organisation (WHO) Guidelines on sugar, which indicates that these are authoritative objective standards courts may have regard to when determining compliance with consumer laws. A single serve of the products was found to be in excess of the recommended intake of 'free sugar' for children aged 12 months, equivalent to the recommended intake for two year olds and provided 75% of the recommended intake for three year olds.

Heinz itself displayed on the packaging that 68% of the berries product was sugar.

Expert evidence was also accepted on the link between foods with high sugar content (especially foods sticky in texture) and poor dental health.

The penalty

The Court handed down a $2.25 million penalty and ordered Heinz to pay the ACCC’s legal costs. Further, Heinz must establish a consumer law compliance program.

The lesson here …

Food manufacturers should pay heed to the Heinz case in order to reduce exposure to contraventions of the Australian Consumer Law.

In particular, food manufacturers should:

  • give due regard to authoritative health recommendations such as the WHO Guidelines when developing products;
  • only make truthful claims about the health content of a food product in marketing; and
  • be careful in using ‘powerful’ or ‘alluring’ imagery on products which may convey a false impression about the product itself.

Finally, any food manufacturer making health claims about products that are high in sugar, especially when targeting consumer groups such as toddlers, should expect to attract scrutiny from the public which could ultimately fall in the hands of the ACCC.

To read the judgement in full and to view the packaging, click here.

More information

If you have any questions about this case or require advice regarding compliance with the Australian Consumer Law, please contact Jeremy Goldman, Principal Lawyer and Head of KCL Law's Commercial and Corporate practice, on (03) 8600 8886 or jgoldman@kcllaw.com.au.

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