United States: Distributors Beware: Don't Get Caught With Your Hand In The Cookie Jar

Last Updated: June 10 2015
Article by Amy R. Mudge and Randal M. Shaheen

By Amy Mudge, Randy Shaheen and Taylor G. Sachs*

The reasonable consumer couldn't possibly believe that every Danish cookie, must, as a matter of law, be made in Denmark. Yet, a recent NAD decision may suggest that this reasonable consumer is not as cookie-cutter as one might expect.

In today's global economy, it is common for U.S. distributors to sell products manufactured and packaged overseas. A downside of this system, is that neither the distributors nor the sellers can necessarily oversee each advertising claim placed on the product's packaging. This practice contradicts a recent NAD decision, which warns that before a seller can distribute an international product throughout the United States, it should be cognizant of any and all claims found on the product's packaging.

What makes this particular NAD decision notable is the fact that Danisa Cookie distributor, Takari International, Inc., was held accountable for packaging and labeling claims made by the Mayora Group, the Danisa Cookie's manufacturer. Based in Indonesia, the Mayora Group is a completely separate entity that produces and packages the Danisa Traditional Butter Cookies before shipping the product worldwide. Takari simply acts as the Mayora Group's U.S. distributor. Takari does not manufacture the product. Takari does not label the packages and claims to have been completely unaware of the cookie's ingredients. Yet, as the distributor of the Danisa Cookies, the NAD labeled Takari as the "advertiser" and thus, accountable for such claims.

The NAD reviewed the Danisa Cookie marketing claims after a challenge was raised by Campbell Soup Company, on behalf of its subsidiary Kelsen, Inc., a competitor in the premium Danish cookie industry. The challenger made two substantial claims. First, Campbell noted that the Danisa package is labeled and sold as "Traditional Butter Cookies," yet the product itself is not simply made with butter. To classify as a "butter cookie" under the official FDA definition, butter must be the sole shortening ingredient. If other ingredients are used, the FDA requires the product to be labeled as "butter flavored." Since the Danisa Cookies are indeed made with other ingredients along with butter, the NAD found it to be false and misleading to use the descriptor "butter cookies."

Campbell also claimed that the product's label stated that the cookies are an "original Danish recipe" and "produced and packaged in Denmark," when in fact the Danisa Cookies are produced in Indonesia. The NAD agreed, finding that the product's descriptions and use of Scandinavian imagery are misleading to consumers because the cookies are not produced in Denmark.

This NAD decision is one tough cookie. Now, a distributing company like Takari can be classified as an advertiser simply by selling a product still wrapped in its original packaging. The NAD decision has broad implications that should put all distributors on notice to examine and confirm each statement made by the manufacturer before it should sell any given product in the U.S.

Compliance with this ruling will be difficult, but that's just how this ambiguously-flavored cookie crumbles.

* Taylor G. Sachs is a Venable summer associate and not admitted to practice law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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