Dannon’s to reimburse US consumers - Will it impact health claims in the EU?

Dannon Co. have agreed to reimburse consumers up to $100 for products purchased out of a $35mn fund, according to settlement terms of a class action lawsuit filed in January 2008 regarding advertising for its Activia and DanActive products. The suit had claimed that the marketing and advertising materials for Activia, DanActive and Dan Active Light were deceptive.

Under the conditions of the settlement , Dannon have agreed to some significant amendments to their labeling and marketing materials.

1. They will remove the word “immunity” from the product labeling and packaging of its DanActive branded products.

2. The phrase “they have a positive effect on your digestive tract’s immune system” will be removed from the inside packaging.

3. The company may substitute that phrase with the phrase “they interact with your digestive tract’s immune system.”

4. For claims related to Activia, Dannon must attach a qualifier statement to the effect of, ‘The claim must be qualified with the explanatory statement that the product helps with slow intestinal transit when eaten daily for two weeks as part of a balanced diet and healthy lifestyle’.

This qualifier statement shall also be displayed prominently in television commercials, on point-of-purchase displays, on web sites, in medical marketing materials and in print advertising.

Outside of this fall out Dannon has been able to run with the cleaver marketing of their probiotic strain under a trademark implying an immune effect i.e. L.casei Immunitas. However, Dannon will now have to place the correct genus, species and strain designations when referring to the probiotic strains on the inside packaging at least the first time Bifidus Regularis or, as applicable, L. Casei Immunitas is mentioned on the inside packaging.

The damage of these issue on consumer understanding and confidence in the brand should not be underestimated. Although according to Dannon;

The decision to settle this case is based on the Company’s desire to avoid the distraction and expense of litigation and to quickly resume 100 percent focus on making products that provide proven health benefits to millions of highly satisfied consumers. This resolves the plaintiff’s concerns while affirming the essence of the claims of Activia and DanActive, which are substantiated by years of scientific research.

Michael Neuwirth, spokesperson for The Dannon Company.

But would a company who has spent millions on clinical trials and running with the tag lines “scientifically proven” or “clinically proven” settle for the reason of inconvenience? This latest blow comes in the wake of Dannon also pulling their health claims from assessment process under directive 1924/2006, stating issues to do with a lack of clarity about the assessment process.

It could be suggested that the science from Dannon is not a solid in relation to their specific claims as thought by many. This latest legal implication of problems with product substantiation may cause more problems in the future, especially in the EU where over 80% of all claims assessed so far by EFSA have been rejected for lack of science. Members of the assessment team within EFSA will no doubt be following the news which may increase to scrutiny by which they review Danone’s recently withdrawn claims, if Danone do resubmit.

Currently, Danone is trading up a little over half a point (0.55) at 41.30 (€) but this fallout could significantly hurt price as the brand is impacted in the US, only time will tell.

Sources:

http://www.finance.danone.com/phoenix.zhtml?c=95168&p=irol-stockQuote

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