Media Releases

Yoghurt Story fined for falsely claiming its products are yoghurt

14 October 2016

Yoghurt Story New Zealand Limited and Frozen Yoghurt Limited have been sentenced and fined in the Auckland District Court for misleading the public about the nature and characteristics of their frozen yoghurt products.

Yoghurt Story had around 22 frozen yoghurt stores throughout New Zealand when the Commission’s investigation started and about 10 are still operating. The Judge indicated that 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.

All charges were under the Fair Trading Act 1986. They relate to promoting frozen yoghurt products which did not contain yoghurt, and for making misleading claims about the product’s health benefits.

Yoghurt Story made a number of misleading 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
  • prevents infections once your immunity is strong – you won’t catch colds, fever and all such nasty viral and bacterial communicable diseases.

Judge David Sharp agreed with the Commission 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 also 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.

Commissioner Anna Rawlings said that this was an important case for the Commission because consumers rely on the information that they are provided by traders 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. 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.”

“Where any trader makes claims about the health benefits of a product, we expect they will have appropriate research to justify the claim. This is one of a number of cases that the Commission has taken which seeks to protect consumers from misleading information about the products they are buying,” she said.

Background

The penalty

The Judge identified that a starting point of $300,000 was appropriate to reflect the seriousness with which the judge viewed the companies’ conduct in misleading consumers (paragraph [26]). This was reduced to $270,000 after taking into account mitigating factors (paragraph [28]). 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 (paragraph [29]).

A copy of the judgment can be found on the Enforcement Response Register.

Whilst Frozen Yoghurt and Yoghurt Story companies have gone into liquidation, a number of Yoghurt Story stores continue to trade and this judgment will be relevant to the conduct of these stores.

Definition of yoghurt

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 1 million colony forming units of bacteria per gram.

Yoghurt Story testing

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.