Litigation is the Flavour of the Day in Food Manufacturing

Putting some environmental claims behind its product has landed giant ice cream brand, Ben & Jerry’s, in hot water. A consumer advocacy group, The Organic Consumers Association, says Ben & Jerry’s parent company, Unilever, is misleading the consumer when it comes to its ‘green’ statements.

The association alleges that the big-name brand cannot claim commitment to a clean environment and high animal welfare standards, as most of the milk used in Ben & Jerry’s ice cream production does not meet its standards for animal care and labour practices. It casts further doubt on the brand’s advertising claims, by alleging that the farms which supply milk for the product range are polluting two lakes.

Whilst we have no idea what will result, particularly as Ben & Jerry’s is maintaining a wall of silence, this case highlights how false claims and trade descriptions can cause issues in any type of marketing and not just food product marketing. 

Over the past eight years, we have seen other high profile ‘false claims’ from food and drink manufacturers inspiring legal action.  Activia Yoghurt, in 2010, claimed to contain ‘special ingredients’ that could regulate digestion and boost the immune system.  Danone was left to settle a class action settlement because of these false health claims.  Similarly, Red Bull had to back down from claims that the product improved concentration and reaction speed (2014) and Rice Krispies’ lawyers were kept busy after the brand claimed it boosted immunity in children (2010).

Whilst the inaccurate labelling of food products and their ingredients can also cause issues, legal cases brought for this reason can be covered by product liability insurance. For false trade descriptions, as in the above instances, directors and officers of food businesses need other types of insurance protection.

Whether or not your claims have good foundation, defending a claim involving trade descriptions can be hugely expensive.  They are not, however, the only pothole awaiting food and drink manufacturers. Health and safety and environmental breaches can all hit a business hard in the pocket.

Consequently, directors of food businesses are well-advised to buy Directors & Officers insurance – or Management Liability Portfolio protection.  With this insurance protection, they can cover the cost of defending any claim brought against not just directors and officers, but also employees. This type of insurance policy will also cover awards or settlements that result after legal judgements, although criminal fines or penalties are excluded.

Food and drink manufacturing and retailing is highly regulated, and individuals and organisations are becoming very used to launching legal action if they feel wronged. Remembering that it is not just big brand names that can end up in court is a wise move, particularly when D&O and product liability insurance policies are easy to take out.  Here at Creative Risk Solutions we specialise in food and drink insurance so do not hesitate to get in touch for more information. You can contact a member of the team by calling 02920 822600.