A High Court ruling earlier this month has set an important precedent for New Zealand businesses that make claims about the country of origin of their products. The decision makes it clear that a “New Zealand made” representation may be a representation about where the raw ingredients come from.
In a case taken by the Commerce Commission, the High Court found that New Zealand Nutritionals (2004) Limited (NZ Nutritionals) made misleading “New Zealand made” claims about two dietary supplements.
Declarations were granted by the Court under the Fair Trading Act 1986 that NZ Nutritionals made misleading claims about the origin of Vitafit Goat’s Milk Powder and Pro-life Goat’s Milk and Calcium Tablets. Both products were labelled as “100% New Zealand made” when all the active ingredients, including the goats’ milk powder itself, were imported from overseas.
NZ Nutritionals argued that the representations were not misleading because the products had been manufactured in New Zealand and the labels did not represent where the goat’s milk powder was sourced.
They said that the New Zealand manufacturing involved:
mixing the Vitafit goat’s milk powder with a calcium supplement (which had also been imported into New Zealand in powder form), putting the mixture into a plastic container and labelling it.
mixing a number of local and imported ingredients including the imported goats’ milk powder, putting the ingredients into a tabletting machine and pressing the powder into tablets, packaging the tablets and labelling the packet.
The Commission’s case was that the imagery and “New Zealand made” and “100% NZ made & proud of it!” wording on the labels would lead consumers to believe the goats’ milk was sourced from goats milked in New Zealand and that the milk was converted into powder in New Zealand.
Professor Phillip Gendall, an expert in marketing from the Department of Marketing at the University of Otago, gave evidence for the Commission. His view was that consumers were likely to understand a representation that a goats’ milk supplement is made in New Zealand to mean that the key ingredient, the goats’ milk powder was obtained from goats’ milk in New Zealand.
In his judgment Justice Venning rejected NZ Nutritional’s argument that the mixing, pressing and/or packaging of the products was sufficient to call them New Zealand made. He said, “It is unrealistic to suggest that… a reasonable person would deconstruct the process in their mind and consider that if the powder was imported into New Zealand then blended, as is the present case, it could be said to be made in New Zealand.”
Commerce Commission General Counsel, Mary-Anne Borrowdale said the judgment is important for the Commission, particularly as country of origin claims are of escalating concern.
“We have previously raised issues about country of origin labelling with the natural products industry…and this ruling puts all businesses on notice that they must be able to substantiate their claims.”
“Consumers are influenced in their purchasing decisions by “made in New Zealand” claims and New Zealand made products are also particularly appealing to tourists. We are very pleased that the Judge agreed that it is misleading to say that these dietary supplements, which are effectively only mixed and packaged here, are made in New Zealand,” she said.
A copy of the full Judgment is here.