All charges were laid under the Fair Trading Act 1986. They relate to promoting frozen yoghurt products that did not contain yoghurt, and for making misleading claims about the product’s health benefits.
Judge David Sharp said he would have fined the companies a total of $270,000, but because they are both in liquidation the fine was reduced to $35,000 each.
Yoghurt Story made claims on its website about the health benefits of eating frozen yoghurt, including that its product: “Increases your immune system; lowers the risk of subsequent heart disease and diabetes; and prevents infections once your immunity is strong.”
When is yoghurt not yoghurt?
Judge Sharp agreed with the Commerce Commission, prosecuting, that the Yoghurt Story product was not yoghurt as defined by the Australia New Zealand Food Standard, nor did it have the specific health benefits that were claimed. It was also not probiotic yoghurt as was claimed.
“The defendants’ conduct was a cynical attempt to take advantage of consumers’ desire to make healthier food choices. The defendants themselves considered the product to be more akin to an ice cream product, yet they decided to call their stores ‘Yoghurt Story’ because it was more attractive to consumers than calling it ’Ice Cream Story,” he said.
In sentencing, Judge Sharp said that the health claims were a “significant departure from the truth.”
“The product simply was not yoghurt. The samples taken showed the product provided rarely met with its description,” he said.
The Australia New Zealand Food Standards Code, Food Standards 2002 – Standard 2.5.3 – Fermented Milk Products (the Standard), states that yoghurt means: fermented milk where the fermentation has been carried out with lactic acid producing micro-organisms.
Yoghurt must contain a minimum of 1m colony forming units of bacteria per gram.
Seventeen samples of the Yoghurt Story frozen yoghurt were taken from eight different stores on four different dates. These were tested by Eurofin NZ Laboratory Services Limited in Auckland.
Of the 17 samples, 15 did not meet all four criteria as required by the Standard and therefore cannot be defined as ‘yoghurt’ according to the Standard.
Commissioner Anna Rawlings said this was an important case for the Commission because consumers rely on provided information when they make decisions about the products they buy.
“Where health claims or claims about product composition are made, customers rely on these claims to be accurate because they are not in a position to test the claims themselves,” Rawlings said.
“In this case the health claims made by the companies were not supported by scientific justification and the product was not what it was marketed to be. Yoghurt Story’s conduct was misleading as a result.”
Given both companies were in liquidation and were no longer controlled by the directors this was reduced to $70,000 (split evenly) so as not to unfairly affect other creditors who were owed money by the companies.
Court documents state that there was no evidence before the Court as to the exact financial position of the defendants and of their means to pay the fines imposed on them.
Yoghurt Story had around 22 frozen yoghurt stores throughout New Zealand when the Commission’s investigation started, and about 10 are still operating, and the Commission said this judgment will be relevant to the conduct of these stores.
Yoghurt Story was contacted by DairyReporter.com for comment, but has not responded.