Much Ado About Natural

By Ivan Wasserman and Danny Andrews

With a 2004 national survey showing that 63 percent of consumers prefer natural foods and beverages, it's--well--natural for food, beverage, dietary supplement and even personal care marketers to promote their products as being natural. Determining whether a product is natural, however, is not as simple as it may seem. The following is a brief overview of how the use of the word "natural" is regulated or, perhaps more accurately, not regulated. Although there is currently no regulatory definition of what is or is not natural for most products, this may change in the near future.

THE FDA, USDA, AND WHAT SUGAR'S GOT TO SAY
The Food and Drug Administration (FDA) has primary jurisdiction over information that appears on the labeling of food products (and dietary supplements). It has established a comprehensive set of regulations defining claims that appear on such products, including "low fat" and "fresh." The Federal Trade Commission (FTC) looks to FDA definitions to determine if claims made in advertising are misleading. With respect to natural, there is no FDA regulation--yet.

Back in 1993, the FDA declined to undertake a formal rule-making to define "natural," and instead repeated its informal guidance that the term means that nothing artificial or synthetic has been added to a food product that would not normally be expected to be in the food. Early last year, in the wake of the rise of Splenda (discussed below), the Sugar Association (SA) decided that the informal guidance was not enough, and petitioned the FDA to establish specific regulations defining these natural claims. The SA argued that, given the increased consumer interest in natural products, stricter guidelines for natural claims are imperative to eliminate consumer confusion and to prevent misleading competitive practices by advertisers and manufacturers alike.

The SA proposes that the FDA adopt rules that are consistent with the United States Department of Agriculture's (USDA's) rules regarding natural claims. (The USDA regulates claims made for meat and poultry products.) Under the USDA rules, a product may only be labeled "natural" if: (1) the product does not contain any artificial or synthetic ingredients; and (2) the product and its ingredients are not more than "minimally processed." Minimal processing includes certain traditional processes used to make food edible, or to preserve it, or to make it safe for human consumption (such as smoking, roasting, freezing, drying and fermenting). It also includes any physical process that does not fundamentally alter the raw product and/or that only separates a whole, intact food into component parts (such as meat grinding and pressing fruits to produce juices).

Severe processes such as solvent extraction, acid hydrolysis and chemical bleaching go beyond these minimal processing standards. The USDA, on a case-by-case basis, may allow products containing ingredients that have been more than minimally processed to be labeled "natural," if it can be shown that the use of such ingredients would not significantly alter the character of the product to the point that it could no longer be considered natural. Even in these exceptional cases, the USDA requires that the natural claim be qualified to clearly and conspicuously identify the ingredient in question (e.g. "all natural ingredients except..."). In addition, under the USDA rules, all products claiming to be natural should be accompanied by a brief statement, placed in close proximity to the natural claim, explaining the basis of the claim, e.g., "this product is a natural food because it contains no artificial ingredients and has been minimally processed."

IN COURT AGAIN, NATURALLY
Without an express definition to turn to, companies making natural claims in labeling or advertising are vulnerable to allegations that the claims are false or misleading. Of course, advertisers are not only responsible for express natural claims, but also may be responsible for implied natural claims as well.

Several cases involving natural claims have been decided by the National Advertising Division of the Council of Better Business Bureaus (NAD).

In a case involving the sweetener NutraSweet (aspartame), the challenger asserted that advertisements linking NutraSweet with natural foods implied that NutraSweet itself was natural. The advertisements depicted a farm and claimed: "NutraSweet tastes like sugar.... Banana plants don't make NutraSweet, neither do cows, but they might as well." Although the NAD agreed with NutraSweet that the three components of aspartame exist separately in nature, it stated that the particular combination of ingredients in aspartame did not. The NAD found that the advertisements, when viewed as a whole, might lead consumers to believe that aspartame itself was natural. NutraSweet agreed to modify its future advertisements to eliminate any confusion that aspartame itself was natural.

In a case involving Tom's of Maine mouthwash, the challenger asserted that the advertising claims: "pure and natural," "pure, simple ingredients from nature," and "natural mouthwash...made of ingredients that are in nature," were misleading. The NAD recognized that there was no uniformly accepted definition of the term "natural." Consequently, the NAD relied on the following factors to resolve the issue: (1) the origin of the ingredients; (2) how the term "natural" is presented in the context of the challenged advertising; and (3) reasonable consumer expectations as to the meaning of "natural." The NAD recommended that Tom's of Maine (a) avoid claiming, directly or impliedly, that its product is 100 percent or completely natural; and (b) specifically state on its label and advertisements that the mouthwash contained an ingredient (poloxamer 335) that was not inherently natural. The NAD found that Tom's of Maine could call its product "Natural Mouthwash," if the recommended safeguards were followed.

In a case involving Proctor and Gamble's fat substitute "Olean," the challenger claimed that advertisements depicting soybean fields and farmers, and which claimed that "soybeans are being used to make a new fat-free cooking oil, Olean," implied that Olean was a natural product when, in fact, it was a synthetic chemical. The challenger relied on the USDA's definition discussed above to support its claim. Despite the fact that the word "natural" was never used, the NAD found that the advertisements, when viewed as a whole, could reasonably be interpreted by consumers to mean that Olean is a natural product. The NAD recommended that the advertisements be modified to avoid any potential for consumer confusion.

Natural battles are also being waged in court. The most high-profile case is the current lawsuit involving two artificial sweetener manufacturers, Merisant Co. (maker of the one-time industry leader Equal) and McNeil Nutritionals (maker of the current industry leader Splenda). Merisant claims that Splenda's tagline "Made from sugar, so it tastes like sugar" causes consumers to think that it is natural or contains sugar, when in fact it contains a synthetic compound created by putting sugar through a complex chemical process. McNeil is not arguing that Splenda is natural. Rather, it counters that because it uses sugar in the manufacturing process, even if it is not part of the final product, its tagline is truthful and not misleading. Stay tuned as this case develops.

THE NATURAL CONSEQUENCES
A new FDA rule in response to the SA's petition could limit a company's ability to call its product natural. But until there is a definition or specific regulations regarding the making of natural claims, anyone making such claims--express or implied--is open to challenges by regulators, competitors and consumers alike. And remember, just because something is natural doesn't also mean it is safe. Hemlock and poison ivy are natural!

Ivan Wasserman is a partner with Manatt Phelps & Phillips in Washington, D.C. He can be reached at (202) 585-6529, or via e-mail at iwasserman@manatt.com. Danny Andrews is an associate with Manatt in Los Angeles. He can be reached at (310) 312-4206, or via e-mail at dandrews@manatt.com.