Faegre Drinker’s 2021 Food & Agribusiness National Conference assembled speakers from global, market-leading companies from across the industry to discuss major issues and trends of note from across market segments and product categories. In the first in a series of alerts recapping the event, we’ll take a look at key takeaways from panel discussions on topics related to food manufacturing, processing and distribution.
Lawsuits over food labeling and marketing practices continue apace, as plaintiffs’ attorneys target new claims.
The volume of class actions filed over food labeling practice has remained high for years — and that trend has shown no signs of slowing. However, the specific claims are always changing, and understanding the issues plaintiffs (and plaintiffs’ attorneys) are targeting for lawsuits is important for stakeholders to keep in mind. In a panel discussion on “The Latest ‘Watch Out’ Labeling and Marketing Claims That Plaintiffs Are Challenging,” panelists examined the types of claims they have observed recently and their approaches to managing litigation risk.
The panel identified the following notable targets for plaintiffs’ attorneys:
- Flavor and ingredient claims. Many lawsuits challenge representations about a flavor or ingredient, claiming that a product lacks or contains an insufficient amount of the ingredient represented on the pack.
- Health and wellness claims. Lawsuits continue to attack products using label statements that make them sound “healthy,” but contain supposedly unhealthy ingredients, like sugar and fat.
- “Clean” claims. Plaintiffs’ attorneys are targeting claims that a product is “clean,” “simple,” “pure,” or “real” based on the presence of substances such as preservatives, artificial ingredients and heavy metals. These claims closely resemble those brought against label statements referring to a product as “natural.”
- Serving size claims. The plaintiffs’ bar is increasingly focused on serving size and servings per container, alleging that manufacturers have incorrectly calculated the serving size and overstated the number of servings per container.
To mitigate litigation risk, panelists advised that companies first and foremost ensure their products comply with the latest regulations. However, they also underscored the need to consider the labels holistically, and to ask themselves whether the overall impression the label creates tracks with what the product is offering.
COVID-19-related inspections decline as new regulatory and enforcement trends emerge.
As the FDA and USDA pivot away from the COVID-19-centric inspection and enforcement practices that have shaped the last 18+ months, new regulatory and enforcement developments have emerged to demand industry attention. A panel of industry leaders discussed these new issues at length in a discussion on “The Latest FDA and USDA Regulations and Enforcement Trends.”
The panelists discussed several issues of importance impacting food manufacturers and facilities, including:
- The Food Defense Rule. FDA has ramped up inspections regarding facility food defense plans under the Food Defense Rule — the seventh and final major substantive rule to be implemented under the Food Safety Modernization Act (FSMA). Especially as many companies run staggered shifts and work through staffing issues, ensuring that food defense plan trainings are effectively completed should be a point of emphasis as regulatory scrutiny increases.
- Sustainability, ESG and regenerative agriculture claims. Between public interest groups, consumer interest groups under attorneys general, and the newly established climate ESG task force within the Security and Exchange Commission (SEC), there are many parties eager to take companies to task for claims about the sustainability of their products, facilities, supply chain and other practices. For any claim — such as, for instance, that your company is reducing greenhouse gas and carbon footprint — define the scope of that claim, be sure to include a definition for how you’re meeting a specific commitment and describe the progress you’re making in practical terms. And remember: the broader the claim, the more angles of attack there may be.
- The Food Label Modernization Act (FLMA). In August, Congress introduced the FLMA, which would introduce significant changes to food labeling regulations. However, even if passed, there would be a significant runway of guidance and education for companies to make requisite label changes. The panel also questioned whether the FDA would have the bandwidth to enforce the significant scope of the proposed law, as drafted.
- Remote inspections? COVID-19 pushed the FDA to use technology to support compliance activities. The agency has continued to explore the use of remote audits, and the potential for expanded remote inspection practices going forward will be an interesting trend to monitor.
The pandemic accelerated dietary supplement market growth — but not without challenges.
Accelerating a trend that began before the pandemic, in 2020, the dietary supplement category experienced its highest growth rate since 1997. One recent survey found that 77% of consumers said that personal health was more important to them than it was a year ago — driving many to vitamins and dietary supplement products and suggesting that COVID-19 has prompted consumers to take a greater emphasis on personal health. In a discussion on “Manufacturing and Marketing of Dietary Supplements: How the Two Interplay More Than You Might Think,” a panel of industry leaders assessed this growth and other ways in which the pandemic has impacted this category.
Panelists noted that the sales growth has required companies to ramp up production and modify their approach to inventory over the last 18 months. This has been particularly challenging in light of persistent supply chain disruptions and a heightened consumer interest in complete supply chain and sourcing transparency for these products. As noted by the panel, to meet both consumer demand and consumer quality expectations, companies must be focused on “supply chain agility” and creating a diverse pipeline of suppliers without sacrificing quality control measures.
Unsurprisingly, the pandemic also accelerated the rise in e-commerce players in this category, including many that established their brands and products on social media. These new market entrants operate in less scrutinized spaces than traditional players, and making sure they abide by the same standards of advertising and product quality control will be important for the industry as a whole, especially as consumers continue to express an interest in transparency.
As advisers to many of the world’s leading food and agribusiness companies since 1912, Faegre Drinker’s food and agribusiness industry team has the scientific, economic and regulatory knowledge to address the full range of clients’ domestic and international business needs. Our experience working with core associations on industry issues means we have our finger on the pulse of key topics impacting your business. Whether your products are based on the farm, the table or somewhere in between, our team is designed to help you navigate the challenges of today’s marketplace.