Heinz fined $2.25m for misleading marketing of snacks for toddlers

The ACCC alleged the Heinz packaging is misleading the public. The expert witness called to give evidence to the court said the shredz bars more closely resembled confectionery than fruits or vegetables.

ICDC’s global monitoring report, “Breaking the Rules, Stretching the Rules 2017” contained an article in the Heinz chapter about how the company was taken to court by the Australian Competition and Consumer Commission (ACCC) over its Little Kids Shredz products.

Shredz is a sticky snack made from 99% fruit and vegetable ingredients. The product did not contain any preservatives, artificial colours or flavours but had a high sugar content. It was pulled from the market in 2016 when ACCC filed the court action. According to the ACCC, Shredz had over 60 per cent sugar, which is significantly higher than that of natural fruit and vegetables. For example, an apple contains approximately 10 per cent sugar.

The Shredz packaging features prominent images of fresh fruit and vegetables and statements such as ‘99% fruit and veg’ and ‘Our range of snacks and meals encourages your toddler to independently discover the delicious taste of nutritious food’.

At trial, the ACCC argued that the sticky snacks were higher in sugar than some confectionary but were marketed as being beneficial for young children when this is not the case.

In March 2018, Justice Richard White of the Federal Court found Heinz had deliberately misled the public about the nutritional content of Shredz through claims on the packaging.  “Heinz ought to have known that it was making the healthy food representation in relation to each product and that that representation was false or misleading,” he said

In August 2018, Justice White ordered Heinz to pay AUD$2.25 million to the Commonwealth of Australia within 30 days for breaching the Australian Consumer Law, as well as ACCC’s legal cost, he also ordered the food giant to establish a Consumers Protection Law Compliance Programme within 3 months.

ACCC chairman Rod Sims said the fine fell well short of the $10 million penalty the watchdog called on the court to impose. “Heinz is one of the largest food companies in the world (global sales in 2017 is USD 6.9 billion), we really do think that penalties need to be big enough so that the boards and senior management take notice of them,” he said.

In a statement, Heinz managing director Bruno Lino, said the company respects the decision that had been made.

While the penalty imposed fell short of what the ACCC wanted, it is an extraordinary decision and one which will force companies to be more circumspect with their marketing behaviour in future.