Food and Beverage News and Trends

Food and Beverage News and Trends Series

Food and Beverage News and Trends

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This regular publication by DLA Piper lawyers focuses on helping clients navigate the ever-changing business, legal and regulatory landscape.

  • Report on consumer and retailer hurdles regarding electronic disclosure of GMO ingredients. Consumers and small retailers face “key technological challenges” regarding electronic disclosure of GMO ingredients in foods, a congressionally mandated third-party study has concluded. In July 2016, President Barack Obama signed the National Bioengineered Food Disclosure Standard, in which Congress gave USDA a year to produce a study of the challenges consumers and retailers face when trying to obtain information on biotech ingredients in food products via electronic disclosure. The study says that USDA will have to find ways to better educate consumers on using websites, QR codes and other cellphone scanning technologies to access product data, and the agency will also need to work with small retailers and rural retailers to help them cut the cost of offering in-store Internet access for shoppers. The Study of Electronic or Digital Link Disclosure, released on September 6 (but dated July 2017), was prepared by Deloitte. The USDA has until July 29, 2018 to issue a final rule giving companies the option of labelling GMO ingredients via an electronic disclosure method or through a package label.
  • Food industry is ready for the upcoming end of partially hydrogenated oils. In 2015, the FDA set a June 2018 deadline for companies to remove partially hydrogenated oils (PHOs), the major source of trans fats, from their products. PHOs have been found to increase the risk of heart disease and stroke. According to a Bloomberg News article published August 17, the food industry has already moved to eliminate most of these oils from their products nearly a year ahead of the deadline, and consumers are unable to tell the difference. Substitutes for PHOs include a variety of olive, canola, soybean and, at times, palm oils with healthier nutritional profiles.
  • Chocolate maker pledges to fight climate change. Mars, the world’s largest chocolate company, is pledging to invest $1 billion to combat climate change. Its Sustainable in a Generation plan, announced September 6, aims to reduce the company’s carbon footprint, throughout its supply chain, by more than 60 percent by 2050. Mars CEO Grant Reid said, “This plan is about not just doing better, but doing what’s necessary.” Mars has already been investing in wind power for some time – its UK and US operations have been wind powered for years now – but it intends to switch to wind and solar power in its operations in 11 countries worldwide, among them Australia, China and Russia, within a year. Other aspects of the plan address sustainable food sourcing, more environmentally sound farming, and a commitment to improving the working lives of 1 million people in its value chain by “focusing on increasing income, respecting human rights and unlocking opportunities for women.” Reid said, “We’re doing this because it’s the right thing to do but also because it’s good business.”
  • New York City agrees to hold off on enforcement of menu labeling. New York City officials announced on August 25 that as part of a settlement with retailers and restaurants, the city will not proceed with enforcement of a city ordinance that requires calorie labeling on restaurant menus. Retailers and restaurants had filed suit in federal court asserting that the NYC menu-labeling requirements were pre-empted by federal law, and the delayed federal menu labeling law that has not yet taken effect. The FDA filed a statement of support siding with the restaurants. “This settlement with New York City is a clear victory for common sense. States and cities cannot enforce menu-labeling rules until Food and Drug Administration rules are enforced. We’re pleased that New York City has agreed not to jump the gun,” said Lyle Beckwith, senior vice president of government affairs for the National Association of Convenience Stores. Also on August 25, FDA chief Scott Gottlieb said the agency will soon issue compliance guidance for the federal menu labeling law, which is set to take effect in May 2018.
  • Will the Trump Administration change school lunches nationwide? A September 5 article in The New York Times asked whether federally mandated changes in the nation’s school lunch program under former President Barack Obama, intended to make the lunches more healthful, would remain under the current Trump Administration. It concluded that school lunches have improved recently for several reasons and that any changes are now likely to be marginal rather than dramatic. “School-food leaders on both sides of the political spectrum – most of whom are trying to avoid politics altogether – say the Trump administration’s efforts are unlikely to affect what they agree is a powerful and well-established movement to improve school lunches. Since the Healthy, Hunger-Free Kids Act took effect in 2010, most of the key players have bought in: food producers, schools and even the children,” the article concluded. It said that children have become more food savvy now since they eat in restaurants more often and that school lunches are being affected by that development.
  • “Natural” food claims are the subject of ever more legal disputes. The Washington Post reports that consumers continue to sue food companies over “natural” claims and at an increasing rate. Between January and July this year, 19 class actions concerning companies’ claims that a product has been falsely labelled “natural” or “all natural” have been filed, compared with 27 such complaints in all of 2016. According to the August 30 article, part of the issue may be the FDA’s inaction on defining the term “Natural”. A 2016 survey indicated that 73 percent of consumers look for “natural” products in the supermarket, but there is no legal definition of the term. The agency began soliciting comments from the public on the issue in 2015 and set a deadline for February 2016. This deadline was delayed until May 2016. Since then, the FDA has not acted – which, one commentator said, is being seen as “tantamount to an admission they’re not going to act.” An FDA spokeswoman told the Post that the agency is currently reviewing the submitted comments.
  • USDA and Cook County reach agreement on county’s beverage tax. Officials in Cook County, Illinois, say they have resolved a problem with the county’s new beverage tax that could have cost the state $87 million in federal funds. Purchases made under the federal SNAP program, administered by the USDA, are exempt from the tax. However, the county was collecting the tax from SNAP recipients, then immediately refunding it in a separate transaction, thus running afoul of federal law. The USDA warned the county that this approach could result in the loss of federal SNAP funds not just for Cook County but for all of Illinois. The county addressed the issue by striking language permitting refunds from the regulation, and allowing retailers to use manual overrides for SNAP recipients. The USDA found the corrective measures acceptable. In separate lawsuits, Walgreens and Circle K have been sued in Cook County for allegedly taxing unsweetened beverages. In early August, a stay on the tax arising from a lawsuit brought by the Illinois Retail Merchants Association was lifted; the IRMA appealed the decision and a resolution is expected this fall. Separately, a bill introduced in the state House of Representatives, aiming to prevent Illinois counties from taxing sweetened beverages based on weight or volume, is winning broad bipartisan support.
  • FDA unveils new software tool designed for use in complying with the FSMA. On August 21, the FDA unveiled a free software tool called the Food Safety Plan Builder that is “designed to help owners and operators of a food establishment with the development of a food safety plan that is specific to their facilities” and compliant with the Food Safety Modernization Act. FDA has reiterated that “use of this tool is strictly optional,” and use of the tool does not automatically mean that a company’s food safety plan, preventive controls, good manufacturing practices, and other food safety procedures are approved by FDA or compliant with FDA requirements. The desktop tool may be downloaded from the FDA website here and more information about it is available here.
  • Appeals court rejects settlement of case involving sandwich length. On August 25, the US Court of Appeals for the Seventh Circuit rejected a proposed settlement in a matter alleging that the Subway sandwich chain deceived customers by selling “footlong” subs that were less than 12 inches long. The court said that the settlement, which awarded $525,000 to the lawyers for the plaintiffs, plus $500 each to 10 plaintiffs, was “worthless.” Circuit Judge Diane Sykes wrote for the three-judge panel, “A class action that seeks only worthless benefits for the class and yields only fees for class counsel is no better than a racket and should be dismissed out of hand.” The settlement, agreed upon by both sides and by a US district judge in Wisconsin, required Subway to use baking techniques that ensured a six-inch sub was six inches long and a 12-inch sub was 12 inches long. Subway said it had long since adopted those techniques. The appeals judge also noted that most Subway sandwiches were the advertised length, that most people did not measure their sandwiches, and that, regardless of length, each sandwich contained the same amount of meat, cheese or other filling.
  • FDA declines to express a view on the current dispute over milk labeling. On August 29, the FDA released a statement related to the ongoing heated dispute between the dairy milk industry and the plant milk industry over the use of the term “milk” on package labels for soy and similar plant-based beverage products. However, the FDA’s contribution to the debate took the form of a very brief letter to the Good Food Institute explaining that it hasn’t had time to address the Institute’s March 2 petition on the topic because of the agency’s “competing priorities.” Douglas Balentine, head of the FDA’s Center for Food Safety and Applied Nutrition, wrote in the letter, “We will complete our review of your petition and consider any amendments to our regulations as warranted and in the context of other program priorities.” Representatives of both the dairy milk industry and of the plant-based foods industry expressed disappointment that the agency had chosen not to issue any clarification of the issue.
  • Judge dismisses lawsuit challenging “100% Grated Parmesan Cheese” label. On August 24, the Northern District of Illinois dismissed multi-district litigation plaintiffs’ allegations that various brands of parmesan cheese were deceptively labeled as “100% grated parmesan cheese” despite containing non-cheese ingredients such as cellulose. The court dismissed largely on common sense grounds of how a reasonable consumer would interpret the phrase “100% grated Parmesan cheese.” The court held that the phrase itself is ambiguous and could be interpreted 1 of 3 ways: (1) that the product is 100% cheese and nothing else; (2) that 100% of the cheese is parmesan cheese; or (3) that the parmesan cheese is 100% grated. Furthermore, the court reasoned that reasonable consumers know that cheese and dairy products are not the type of products that are packaged and shelf-stable at room temperature. To overcome any ambiguity from the “100%” statement, a consumer could review the ingredient list on the back panel to see that other ingredients, such as cellulose, are included in the product. The judge also noted that most reasonable consumers would assume that the product, which is stable at room temperature, would contain preservatives and would not be 100 percent cheese. Notably, FDA regulations expressly permit anti-caking agents such as cellulose in grated cheese products under the standard of identity for grated cheeses.
  • Cheeses recalled in New York state for Listeria contamination. Hillcrest Dairy in Moravia, New York, has recalled three kinds of cheeses made with raw milk after testing positive for Listeria. Shari Ripley, a spokesperson for the company, said, “Stricter testing policies have been put in place to insure all cheese leaving our facility has been thoroughly tested to provide you the safest product possible.” No illnesses have yet been reported. Raw milk is not allowed to be sold in New York state, with the exception of sales at dairies, such as Hillcrest, that are made directly to consumers.