Full Federal Court provides further insight into the use of ‘natural’ in product branding and advertising

Natural skin care products, natural beauty products, natural cosmetics…the list goes on.  These so called ‘natural’ products are on-trend and are in high demand in the Australian and Asia Pacific retail market.  The rise of consumer demand for natural products is a result of its association with health and wellness and as the Australian Competition and Consumer Commission (ACCC) described it, ‘Suggests that a product is superior because it has certain natural characteristics’.

However, any business thinking of using such ‘natural’ claims on their labels must use caution and ensure that any such representations are not misleading and comply with the Australian Consumer Law (ACL).  This year, the ACCC has been cracking down on such advertising techniques and have been issuing various infringement notices to businesses whose products deceptively claim that their products  are ‘pure’, ‘natural’ and ‘organic’.  The growing trend of natural products has required increased monitoring to ensure compliance with regulatory standards (in relation to food claims such as natural and organic, see our previous post on the Food Standards Code in Australia here).

The Full Federal Court provided further guidance on this topic in a recent appellate case over a hair care product which had natural marketing claims on its bottles as well as claims of performance benefits.  However, despite the fact that the product was not wholly or substantially composed of natural ingredients, the representation was held not to be misleading or deceptive.

One of the key highlights of this decision is that it’s not not what the manufacturer and/or business considers to mean ‘natural’ which is important, but rather the key factor will be what the consumer is likely to interpret from any such representation.  The trial judge was considered to have erred because she had considered what the ordinary consumer would understand the dictionary meaning of ‘natural’ to be, rather than what ‘natural’ on the packaging conveyed to the consumer when attached to the product.  The court stated “…armed with the dictionary definition her Honour was understandably seduced into asking whether the ingredients in the products could be described as ‘natural’ when the correct question was what did the use of the word ‘NATURALS’ convey to ordinary reasonable consumers. “

Going forward, this means that a business should consider what the ordinary reasonable consumer, in the context of the shopping experience, would perceive the word ‘natural’ to mean.  This can take into account a range of factors such as whether the store selling the product is high end or not, the price of the product, the size of the product or any contextual element that could influence the consumer.

Notwithstanding the above, the Court found that performance benefits claims, such as ‘strengthening hair’ and ‘delivering shine and hydration’ on the bottles were found to mislead consumers because there was no reasonable foundation for them.  The Court rejected evidence from the manufacturer as ‘mere claims’ and stated that there must be substantiation.

Key points to take away from this case are:

  • Exercise caution when marketing a product as being ‘natural’ and ensure that any representation is not misleading or deceptive.  Bear in mind that any determination of a breach of the ACL will depend upon the individual circumstances of the case.
  • The product does not have to wholly or substantially contain natural ingredients to be labelled as natural.  The important aspect is how the consumer would perceive the label and product in context.
  • Obtain and maintain any evidence which substantiates any performance benefits claims you use on your products.  Any claims made which cannot be substantiated will most likely be treated as a breach of the ACL.

This blog was co-authored by Josephine Gardiner, Jessie Buchan and Melinda Upton.