ACCC protects consumers against false oregano labelling

Dried oregano is a culinary herb sold in supermarkets and shops.

Packages labelled OREGANO should contain 100% oregano, otherwise the label may be false or misleading and contravene the Australian Consumer Law (section 29(1)(a)).

The ACCC (the Australian Competition & Consumer Commission) was alerted to false oregano labelling by Choice, a consumer advocate group. Their testing revealed that other ingredients, mainly olive leaves, made up to 50% of the contents in some packages and containers. Shredded olive leaves are visually indistinguishable from shredded oregano leaves in the plastic bag packaging in which oregano is sold.

When contacted by the ACCC, some of the sellers and distributors used the defence: ‘we have been misled by our suppliers’. That is, they relied upon their suppliers to supply pure oregano.

But the ACCC was not swayed because a business is responsible to ensure its products are accurately labelled under the Australian Consumer Law. And so one after the other, the sellers and distributors have taken remedial action and have given court enforceable undertakings to the ACCC to ensure that their oregano is pure.

In this article we outline the action taken, and the court enforceable undertakings given, and in one case a fine, as a guide to what food sellers and distributors might need to consider in similar circumstances. At the end is a marketing commentary by Michael Field who looks at the marketing of oregano through the consumer’s lens.

Action taken by sellers and distributors in response to concerns raised by the ACCC

This action was taken by the sellers and distributors when contacted by the ACCC:

• Commissioning their own independent testing of the oregano product
• Introducing a testing regime with suppliers to conduct routine testing
• Removal of the product from the shelves
• Offering refunds or replacement products to consumers
• Placing a notice in store and on its website apologizing to consumers
• Promising to ensure that all oregano is certified pure oregano
• Tracing the adulterated batch of the product
• Reviewing its supply chain for all herb and spice products

It is important to take prompt and comprehensive action when contacted by the ACCC.

Small suppliers, namely “G Fresh Oregano Leaves ‘Mediterranean’”, “Master of Spices Oregano Leaves” and “Spice & Co. Oregano Leaves” took remedial action promptly. They satisfied the ACCC that they:

• had taken action to ensure they had ceased supply of oregano products that contained contents other than oregano leaves; and
• would take steps to confirm the authenticity of their oregano products for future supply.
  Therefore, the ACCC did not request a court enforceable undertaking from them.

The Section 87B court enforceable undertakings given

The larger sellers and distributors took the action described, and at the request of the ACCC, gave section 87 court enforceable undertakings to the ACCC which contained these paragraphs:

For a period of three years:

• annually, obtain written evidence from a laboratory, which confirms that the laboratory has tested one sample of the product supplied and represented by [the seller] as only oregano and found that each sample was a product containing only oregano
• establish and implement a process for annual testing of the composition of random samples of herb or spice products supplied by [the seller], other than oregano, and
• retain the test results obtained, and if requested, provide the ACCC with a copy of those test results.

Menora Foods gave an undertaking with these additional paragraphs, because it had not taken sufficient action to satisfy the ACCC:

• not represent any of its herb or spice products are of a standard, quality, value, grade or composition without a reasonable basis for making such a representation.
• ensure that a practical training course on consumer law compliance will be provided to all employees whose duties could result in them being concerned with conduct that may contravene Part 3-1 of the ACL
• notify retailers and consumers of the alleged conduct and the resolution agreed with the ACCC.
• publish on Menora’s website a corrective notice.

List of sellers and distributors which have given court enforceable undertakings

ALDI Foods – ALDI is a supermarket chain with a sales volume of 126,809 units of its Stonemill branded oregano in 2015. Tests results indicated a substantial presence of olive leaves. Its packages were front labelled ‘Oregano’ and back labelled ‘Ingredients: Oregano (100%)’. The undertaking was given on 8th November 2016.

Menora Foods – Menora is a food marketing and distribution company with a sales volume of 61,480 units of oregano in 2015. Test results indicated a substantial presence of olive leaves. Its packages were front labelled ‘Oregano’, and back labelled in small print: contents ‘oregano, other than possible traces of tree nuts, peanut, wheat, sesame seeds and soy’. In the undertaking given on 8th November 2016, Menora was allowed to retain its disclaimer ‘other than traces of …’ on its labelling.

Spencers – Spencers Gourmet Trading is a distributor with a sales volume of 100,000 units of oregano in 2015. Test results indicated a substantial presence of olive leaves. Its packages were front labelled ‘Oregano’. The undertaking was given on 15th December 2016.

Penalty imposed

Hoyt’s Food had a more serious contravention. Test results indicated that its oregano product contained approximately 50% olive leaf. Its packages were front labelled “OREGANO LEAVES RUBBED’ and back labelled ‘oregano has a strong aromatic camphor like scent’.

The ACCC issued an infringement notice upon Hoyt Food Manufacturing imposing a penalty of $10,800, which was paid.

ACCC Commissioner Sarah Court said:

“Suppliers of food products must ensure the accuracy of representations about the ingredients on labelling and any other packaging.”

“Consumers use labelling on food products to make their purchasing decisions and are entitled to expect accurate labelling.”

Refer ACCC Media release: Hoyt's Food pays $10,800 penalty for alleged false and misleading 'Oregano' representations

The literary use of oregano

Shakespeare used sweet marjoram, a close relative of oregano, in this clever word play:

LAFEU ‘Twas a good lady: we may pick a thousand salads ere we light on such another herb.

CLOWN Indeed, sir, she was the sweet marjoram of the salad, or rather, the herb of grace.

From: All’s Well That Ends Well Act 4 Scene 5

Marketing commentary by Michael Field from EvettField Partners

Oregano is now a commonly used dry herb in many Australian pantries. With the rise in popularity of television cooking shows such as Masterchef and My Kitchen Rules, the traditional Australian home-cooked family meal has been upgraded from ‘steak and three veges’ to Masterchef inspired meals such as spanakopita, hung yoghurt with pine nuts and raisins or grilled quail with butter roasted cauliflower and red eye gravy – all of which are Masterchef meals seasoned with oregano.
Although our collective culinary palettes and vocabularies have all been swept up by foodie fever, our capacity as home cooks to select and evaluate ingredients for quality and authenticity has not kept pace. We might know our foie gras from our filo, but the average grocery buyer can’t tell the difference between oregano leaves and olive leaves apparently. And according to the suppliers, they can’t either.

With so many Australians relying on Curtis Stone, George Calombaris or Matt Preston to tell them what to cook, which ingredients and brand to buy, and from where, the consumer has become a sitting duck for product substitution and potential profiteering.

The food producers and retailers know if they want to supercharge their sales and revenues, you just have to get your ingredient featured in a cooking show or have a celebrity food blogger extol its virtues as a superfoood and your revenues will skyrocket. Let’s face it; we wouldn’t be buying kale, coconut sugar or chia seeds if a celebrity food blogger hadn’t proclaimed their claimed fat-busting superpowers as a secret smoothie ingredient.

So what does all this have to do with oregano? The food producers and retailers including the supermarket chains know the consumer is largely unsophisticated when it comes to buying dry herbs and spices. They rely on the brand, packaging and product information, and trust the supermarkets and their brand ambassadors to direct them and assure them of the quality and maintain high standards in their supply chain.

The claims from the distributor that they ‘had been misled by their suppliers’ seem to lack substance. Regular testing of a product for quality and grade, especially a product that is prone to product substitution, would seem to be a minimum requirement.

As the ACCC has highlighted, the business is responsible to ensure its products are accurately labeled under the Australian Consumer Law. So it seems unusual that the distributor did not already have their own independent product testing in place.

ALDI is likely to feel the most pain in this episode as they have recently had a number of high profile food complaints and product recalls including claims of maggots in meat pies and chicken and metal shavings in hot dog rolls. They have worked hard to win over consumers with an extensive advertising campaign designed dispel the belief that their products are only cheaper because the quality is lower. I am not surprised that they settled quickly. Any further brand damage linked to quality issues will make their fight for market share even more difficult. Low prices with correspondingly low quality is not a compelling value proposition. Consumers don’t really like taking risks when buying food for their families.

Finally, the penalty for Hoyts Food Manufacturing appears inconsequential for what appears to be ongoing consumer deception, which would likely have netted enormous profits up the supply chain. The ACCC imposed a penalty of $10,800, which would likely be a fraction of their advertising budget.

Michael Field is a partner in strategy consulting firm EvettField Partners
 

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