Grocery/Food Processors

We are approximately nine months into FDA’s animal feed and pet food facility inspections for compliance with the Food Safety Modernization Act (FSMA) Preventive Controls for Animal Food (PC) rule. With PC inspections starting for small businesses this Fall, there are a few lessons we have learned from the inspections that have occurred to date.

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Food manufactures facing deceptive food labeling claims under the Missouri consumer fraud statute were recently dealt a setback by the Missouri Court of Appeals for the Eastern District of Missouri. On November 8, 2016, the appellate court issued an opinion in Murphy v. Stonewall Kitchen, LLC, reversing the trial court’s adoption of the so-called

The FDA Food Safety Modernization Act (FSMA) sets forth sweeping reforms of US food safety laws with the primary goal of strengthening the food safety system through prevention of food safety problems rather than relying primarily on reacting to problems after they occur.

The FSMA aims to preempt safety concerns at all levels of the

Legal Issues Involved in the Online Purchase and Sale of Packaged Foods

Part I of this blog posted on May 12, 2015, discussed the business and economic opportunities presented by online purchases and sales of packaged foods as well as some of the business challenges to be overcome to make the opportunities profitable. Part II discusses the legal challenges that should be addressed to make online purchases and sales of packaged foods a practical and profitable reality.

Those companies that choose to enter the online packaged goods marketplace will face legal challenges similar to those faced by other entities operating in the e-commerce space. In order to reach their intended markets and to receive the full benefit of operating in the online market place, companies will need to utilize websites containing e-commerce features and functionalities. In connection with the operation of these websites, retailers should draft and post on the site certain legal terms and conditions addressing:

  • The customer’s use of the site (i.e. website terms and conditions);
  • The retailer’s data collection and data sharing practices (i.e. the privacy policy); and
  • The terms and conditions under which customers purchase products offered through the website (i.e. the terms and conditions of sale).

While the content of these legal terms will need to be tailored to fit the particular retailer’s risk profile and operational particularities, there are several concepts that each retailer should consider addressing through these legal terms.
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Online Purchases and Sales of Packaged Food

This is the first of a two-part post discussing the business and economic opportunities presented by online purchases and sales of packaged foods. The second part will discuss the legal challenges that should be addressed to make online purchases and sales of packaged foods a practical and profitable reality.

Consumers largely purchase packaged food products at grocery stores and convenience stores although for years many of those same consumers have been making online purchases of products as diverse as apparel and footwear, computer hardware and software, autos and auto parts, consumer electronics, appliances, televisions, and movie tickets, to name just a few. Selling packaged foods online represents a substantial growth opportunity for packaged food manufacturers and food retailers that some have already begun to exploit. One study reported in the digital version of Advertising Age on September 14, 2014, predicted that online purchases of food and beverages would account for 2.3% of the $304 billion that would be spent in e-commerce retail in 2014, suggesting significant untapped potential. Other studies have led certain researchers to conclude that digital sales and distribution methodology will continue to grow but there are challenges that must be met. Nevertheless, packaged and processed food marketers and retailers would do well to explore the steps necessary to enter into the online market and to consider the legal issues they will of necessity confront.

Explanatory Note

There are many studies and more detailed descriptions of online packaged food marketing and distribution and the strategies to implement these types of sales and distribution channels than are set forth in this blog. This post draws heavily on an extensive study of online purchases of consumer packaged goods (which would include packaged foods) and in certain instances, our conclusions are extrapolated on data provided for online sales and marketing of consumer packaged goods. The source of much of the information came from Digital Commerce in the Supermarket Aisle: Strategies for CPG Brands, Deloitte University Press, which is affiliated with the well-known global auditing, business consulting and advisory firms (“Deloitte”). The same is true with respect to information drawn from an article by E.G. Schultz Packaged-Goods Marketers Wade Warily into E-Commerce – Big Brands Stymied by Executional Strategies in a World Where Online Retailers Control the Consumer Relationship, Digital Advertising Age, September 16, 2014. Accordingly, this is a broad overview of the potential growth opportunities and challenges and the legal issues presented by e-commerce and online shopping for packaged food products which have been gleaned from experts we have studied coupled with the knowledge of our attorneys who practice in the Food and Agribusiness industry unit of our firm.
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In response to the growing body of scientific understanding of obesity, cardiovascular disease, high blood pressure and the ways our diet impacts such health issues, the FDA has proposed two updates to the venerable nutrition label found on all food packaging in the United States. These two rules propose to update the label, removing some dietary information and adding others, and to provide better context for the values presented to consumers. In addition, the economic, manufacturing and logistic impact these changes will have on the economic cannot be understated. Members of the industry should be aware of these proposed changes, and that the FDA has opened a comment period on the proposed rules until August 1, 2014.

The FDA has proposed two new rules that make significant changes to the nutritional panel: The first removes some required nutritional information and replaces it with newly required values while slightly changing the overall organization of the Nutrition Facts panel on food packaging; the second changes how manufacturers describe and calculate a “serving size” based on what an individual might actually consume.

Nutritional Musical Chairs

Since the Nutritional Panel on food packaging was last substantively changed in 1994, there have been significant advances in our understanding of human nutrition and how it affects our health. This understanding, combined with the rising rates of cardiovascular disease, stroke, obesity and other diet-related illnesses in the United States has prompted the FDA to make its first proposed rule change. This change involves the subtraction and addition of nutritional information to and from the nutritional panel, as well as subtle changes to its overall structure and appearance to facilitate these additions and subtractions. These changes are meant to highlight those nutritional values that are most important to consumers’ health.
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With the exception of adding trans fatty acids, the Nutrition Facts Label has not undergone any significant changes since Congress first approved it under the 1990 Nutrition Labeling and Education Act until now.  In March 2014, the U.S. Food & Drug Administration (the “FDA”) unveiled proposed changes to nutrition labels that will affect all packaged food products, other than meat, poultry, and processed egg products regulated by the U.S. Department of Agriculture. 

The proposed label format is intended to emphasize the caloric content of food products.  Calories from fat will be removed from nutrition labels, while information on unsaturated, saturated, trans, and total fat will remain.  According to the FDA, this proposed change is based on research studies indicating that the type of fat is more significant to our health than the number of calories from fat.  The FDA has also proposed adding a separate line on labels to alert consumers to the amount of “added sugars” to draw attention to sugar that is added beyond what is naturally occurring in the particular food product.

To make it easier for consumers to accurately determine the number of calories they are consuming, the FDA proposed revising serving sizes to more accurately reflect the amount typically consumed.  Although the original serving sizes were based on serving sizes reported during the 1970s and 1980s, the portion sizes consumed by the average consumer have gotten significantly larger.  The proposal, for example, changes the serving size of a 20 oz. bottle of pop from 2.5 servings to one serving.  Similarly, the serving size of ice cream would increase from a half-cup to one-cup.  For food packages that could be consumed in one or more sittings, FDA proposed a new dual column label requirement that provides both “per serving” and “per package” nutritional data. 

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According to a recent UN report, one-third (1.3 billion tons) of the world’s food is wasted each year.  The report, entitled Food Wastage Footprint: Impacts on Natural Resources, analyzes the environmental impacts of global food wastage, but also highlights the significant economic impact to food producers – $750 billion in costs annually.

In the report, the Food and Agriculture Organization of the United Nations (FAO) attributes food loss costs as follows: vegetables 23%; meat 21%, fruits 19%; and cereals 18% percent. According to the FAO, meat (excluding fish and seafood) accounts for only 4% of total food wastage, but 20% of the total economic costs of food waste due to high producer cost.  Conversely, total costs attributed to cereals are driven mostly by high food wastage volumes.  The report calls for further research to quantify food waste costs along the food supply chain.

One such study was conducted by RMIT University’s Centre for Design in Australia. In addition to addressing the causes and sources of food waste along the supply chain, this study identifies opportunities for greater food security through improved design and use of packaging.  For example, the RMIT study suggests that spoilage during distribution could be offset by increasing use of retail ready packaging to reduce double-handling.

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