Once you go down the rabbit hole of the government determining what's "natural" and what's not, it's hard to get back out, but food and beverage companies like PepsiCo (NYSE: PEP ) may need it to do so since plaintiff's attorneys seem determined to wring cash out of them for dubious violations of labeling laws.
Pepsi's Naked Juice brand recently agreed to settle for $9 million a class action lawsuit that the claims of "natural" made on its bottles were misleading or false because they contained unnaturally processed and synthetic ingredients. They were also charged with using genetically modified ingredients.
As readers may know, I'm a proponent of GMO labeling because I believe that when an organism is being manipulated in the lab and being released into the food chain, consumers ought to know they're ingesting that. Yet while I might not be big supporter of GMO crops, I wouldn't stop Monsanto (NYSE: MON ) or Syngenta from developing their seeds. I just want to know if what I'm eating or drinking contains their Frankenfood strains.
But when it comes to claims of what constitutes "all natural," I'm willing to give food and drink producers a bit more leeway as there's a certain amount of processing that has to go on to make the goods available. Even the FDA recognizes the difficulty in the task and has posted on its website the reasons behind its reluctance to pursue the issue.
From a food science perspective, it is difficult to define a food product that is 'natural' because the food has probably been processed and is no longer the product of the earth. That said, FDA has not developed a definition for use of the term natural or its derivatives. However, the agency has not objected to the use of the term if the food does not contain added color, artificial flavors, or synthetic substances.
And because the regulatory agency has not stepped in, the trial lawyers have filled the void. Whole Foods Market (NASDAQ: WFM ) has been sued because its "natural" private-label soda contained caramel flavoring, citric acid, and carbon dioxide. Kraft Foods' (NASDAQ: KRFT ) "all natural" Capri-Sun was sued previously because it contained high fructose corn syrup and Kellogg's Kashi brand has been similarly sued because it contains bromelain, an enzyme derived from pineapples, which requires acetone in its production.
Campbell Soup finds itself in the netherworld between "all natural" claims and the issue of GMO labeling. A new line of soup has been targeted by lawyers because it contains GMO corn, and with around 86% of the country's corn corp having been genetically modified, it's tough to avoid its use. Unilever's Ben & Jerry's Ice Cream -- the poster boys for the all-natural set -- have been sued as well because 48 of their 53 ice cream flavors are claimed to be decidedly unnatural as they contain "alkalized cocoa, corn syrup, partially hydrogenated soybean oil, or other ingredients that either don't exist in nature or that have been chemically modified."
As part of its settlement, Naked Juice will stop claiming its beverages are "all natural" and non-GMO, though it will be hiring a third-party testing lab to verify its claims that it meets Europe's stringent threshold of less than 0.9% GMO content per ingredient to allow the non-GMO label.
Allowing the government to determine what is and what isn't a certain type of food is a slippery slope I'd prefer not letting them start on. Yet if we don't, food and beverage makers will be left naked and exposed for the trial lawyers who will continue to exploit the vacuum the government's absence creates.
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