New Zealand Health Food Company Ltd (NZHFC) has been fined $377,000 after pleading guilty to engaging in conduct that was liable to mislead the public about the origin of ingredients in its royal jelly supplements.
The combination of phrases and images used by NZHFC to market its royal jelly products gave the impression that the products were from New Zealand when the key ingredient came from China.
The Commerce Commission’s investigation showed that from December 2015 to December 2020, NZHFC made various representations on product labelling, the company’s websites, social media, and through other marketing channels such as email newsletters, including:
– “100% New Zealand”
– “Our product range is a selection of some of the finest bee products that New Zealand’s wild and rugged landscapes have to offer”
– “The New Zealand Health Food Company is dedicated to bringing you premium quality products which have been sourced from the pristine environment that is synonymous with New Zealand”.
The images used on the packaging included the silhouette of the Kiwi and map of New Zealand, as well as mountain and pasture imagery.
The Commission filed three representative charges against the Christchurch-based company which sold the products under three different brands: New Zealand Health Food, Manuka South, and Kiwi Natural Health. NZHFC trades throughout New Zealand and also exports to overseas markets. The royal jelly in the supplements came from China, royal jelly processing took place overseas, and most of the other ingredients were sourced from overseas. The royal jelly was put into capsules and packaged in New Zealand.
Christchurch District Court His Honour Judge Ruth said in sentencing NZHFC “What the company knew at the start was that its royal jelly was from China. The customers must have been entitled to know the origin of the products they were buying and to not say where it came from was at best careless and at worst done deliberately due to the advantage that arose to the potential purchasers’ state of mind and advantage to be gained over the distributors who did abide by the rules.”
“There was potential harm to the New Zealand brand in a general sense. NZ products do enjoy something of a clean, green imagery benefit and our overseas markets would look with favour, I think, with a product said to be produced here,” said Judge Ruth.
Commission Chair Anna Rawlings said “Businesses need to consider the overall impression that consumers are likely to form from the phrases and images used in marketing, including brand names. Country of origin claims are very difficult for consumers to verify, so businesses must ensure packaging and marketing materials are clear and not misleading.”
“It is very disappointing to continue seeing traders using association with New Zealand in a misleading way for commercial gain. When consumers are not provided with accurate information, they may be deprived of the choice to buy an alternative product had they known the truth about the origin of the products’ ingredients. Conduct that misleads consumers also disadvantages other traders who produce goods that are genuinely made in New Zealand with ingredients sourced from New Zealand,” said Ms Rawlings.
Judge Ruth shared this view and said “My principle concern was the lack of action or any responsibility taken in the aftermath of the Topline prosecution. It must have been glaringly obviously to anyone with any business acumen that it needed to look at its labelling, its marketing and ask what might need to be fixed and go about doing so.”