Hamilton-based dairy company Milkio Foods Limited has been fined $420,000 after pleading guilty to 15 charges under the Fair Trading Act. This is for falsely claiming that its ghee products were “100% Pure New Zealand,” despite sourcing the main ingredient, butter, from India.
“Milkio breached the Fair Trading Act by misleading customers about the origin of their dairy products with claims like ‘100% Pure New Zealand’ despite importing the core ingredient from India,” Vanessa Horne, the Commerce Commission’s general manager of fair trading, explained.
“Milkio pleaded guilty to 15 breaches of the Fair Trading Act for making false representations about the country of origin of the butter used in their ghee products and using the FernMark logo and licence number without proper authorisation,” she added.
Horne stated that Milkio provided false and incomplete information to maintain approval for using the FernMark logo and licence number, a trusted international symbol identifying products made in New Zealand.
She also noted that prosecuting this case was essential for the Commission because of the significant global value of New Zealand’s export brand.
“New Zealand has built an international reputation for high-quality dairy products, which underpins the value of our dairy industry and exports,” she stated.
“Milkio took advantage of this reputation to promote their own products through the use of descriptions like “from the clean green pasture-based dairy farms in New Zealand” and “produced and manufactured in pristine New Zealand,” despite some of their products using imported butter from India.”
The damage that the misrepresentations could cause to the New Zealand dairy industry was a factor in determining the amount of the penalty. Beyond just misleading consumers, the misrepresentations also undermine other producers who rely on the “100% Pure New Zealand” brand to market their products globally.
“This conviction should serve as a warning to others who may be looking to falsely claim the New Zealand brand,” Horne emphasised. “The Commission will act to protect consumers and businesses that are upholding the requirements of the Fair Trading Act for accurate information that can be backed up by producers and retailers.“
Milkio Foods is among several companies that have faced legal action for providing misleading information about their products.
In 2021, the New Zealand Health Food Company was charged $377,000 after incorporating phrases and images, including “100% New Zealand,” in its royal jelly supplements when the key ingredient was imported from China.
In 2019, Go Healthy claimed its supplements were made in New Zealand when the key ingredients in most of its offerings were also imported. Go Healthy was fined $337,500 as a result.
Consequences of Misleading Claims
The ruling against Milkio Foods highlights the serious repercussions for companies that engage in deceptive practices. Aside from hefty legal penalties, misleading claims can potentially lead to long-term damage to consumer trust, resulting in decreased sales and market share.
Furthermore, the fallout from dishonesty not only damages the reputation of individual companies but also threatens the integrity of the industry as a whole.