Rohan Vasudevan, Solicitor

The ACCC has come down on Australian gourmet food distributor and wholesaler HBC Trading Australia (“HBC”) for its product claims. Rather than serving a condiment or spice, the ACCC served up infringement notices after finding HBC were in breach of the Australian Consumer Law (ACL) for misleading conduct. Essentially, the regulator was not impressed by what Chef’s Choice, a brand owned by HBC, had on the menu and, after conducting their investigation, believed Chef’s Choice breached the ACL by making misleading claims for their “Alcohol Free Pure Vanilla Extract” product. The decision highlights the importance of ensuring that the overall impression of a brand’s advertising and packaging claims are accurate and do not mislead the public.

What happened?

Chef’s Choice is an Australian food brand that sells a variety of products, including spices and condiments, across Australian retail stores, such as supermarkets, as well as numerous online stores. Chef’s Choice tout themselves as a brand that sells quality items to gourmet food lovers. The product investigated by the ACCC was labelled as “Alcohol Free Pure Vanilla Extract” which was sold across Australia and was advertised online in Chef’s Choice’s catalogue. The issue for the ACCC was that while the label claimed the product was “Alcohol Free Pure Vanilla Extract” it was found that the product was neither “pure” nor was it made from vanilla extract. After conducting an investigation, the ACCC found that the product contained misleading representations and issued an infringement notice to HBC.

What’s in a name?

As many of you are already aware, vanilla is a versatile spice and is a must have in many kitchen pantries, particularly those who bake regularly. Pure vanilla is not only very popular but is one of the most expensive spices in the world. Frequently, products will not use pure vanilla and instead will use alternatives such as a synthetic version. Any product that is made from ‘pure’ vanilla is highly sought after and can often be sold at a premium price.

The ACCC are aware that pure vanilla is a popular (and expensive) spice and looks to have had this in mind when they investigated the issues with Chef’s Choice’s claims about their product which, on plain reading, contained “alcohol free pure vanilla”.

Firstly, Chef’s Choice used the word “pure” in the name of the product, followed by the word “vanilla”. Generally, when the word “pure” is used on a product, consumers reasonably believe that the product contains no other material besides what is directly after the word “pure” (for example, if a product outlines that it is “pure chocolate”, it is reasonable to believe the product is unblended chocolate). In this specific case, customers were led to believe that because the label outlined it was “pure vanilla”, the product contained no other ingredients other than pure vanilla. This assumption was reinforced by the statement “alcohol free” – implying that the product had not been topped up by another ingredient such as alcohol.

Secondly, the ACCC noted that the words “alcohol free pure vanilla” were accompanied by an image of a vanilla bean as well as an image of a vanilla flower. Looking at the words “alcohol free pure vanilla” and the images of a vanilla bean and a vanilla flower together, it is understandable that customers who saw the product erroneously understood they were buying pure vanilla that had no additional ingredients. However, this was not the case and the product was not made from pure vanilla at all. In fact, it was not until customers read the ingredients on the reverse of the bottle that they saw the product contained various other ingredients such as vanillin flavouring (which is derived from clove oil), glycerine, xanthan gum and food colouring.

Because of the overall impression given to customers by the claims of being “pure vanilla”, the ACCC determined that HBC had breached specific provisions of the ACL by engaging in misleading conduct.

Misleading Representations

The consumer law requires all in market claims to be honest and accurate and claims about a product’s quality, price, value and benefits must be substantiated. It is also required that the ‘overall impression’ of product’s packaging and advertising material must be truthful.

In this specific case, the ACCC outlined that customers who looked at the bottle had the overall impression from the name of the product (“Alcohol Free Pure Vanilla Extract”) alongside the images of a vanilla bean and flower, that they were buying “pure” vanilla. It was not until the customer read the ingredients that they would realise this was not the case. The ACCC determined that while the full list of ingredients was outlined on the back of the bottle, they noted that the font of the ingredients was significantly smaller than the large print font on the front of the bottle. Furthermore, it is a well-established rule of advertising in Australia that fine print or disclaimers cannot be used to cure what is otherwise a misleading message and they cannot be used as a ‘cure all’. As such, the ACCC determined that the information on the back of the bottle did not negate the misleading message as the overall impression of the product was that it was pure vanilla and that customers would be misled into believing the product contained pure vanilla when it did not.

Great care needs to be taken when promoting food and beverage products, when it comes to claims as to their ingredients, provenance or origin. Claims such as “pure”, “natural”, “organic” and the like can be very attractive to consumers and so are high risk if not true.

How did it resolve?

The ACCC issued penalties to HBC, amounting to $26,640, which HBC agreed to pay in lieu of having the action taken further (for example, litigation). HBC also agreed to modify the label of the Chef’s Choice product replace the words “pure vanilla” to “vanilla flavouring”.

When the ACCC issues an infringement notice, there is no legal obligation on the recipient to pay the fine. However if it does not pay, it takes the risk of the ACCC taking legal proceedings. The fine is generally less than the maximum penalty a court could impose if a breach of the ACL is found by a court. In this case the breach was clear.

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