• by Karlene Lukovitz  @KLmarketdaily, May 9, 2014

In the latest development in the controversy around use of the term "natural," The Kellogg Company has agreed to drop the words "all natural" and "nothing artificial" from the labeling and advertising for some Kashi products, as part of a settlement of a class-action suit.

The suit, filed in California in 2011, accused Kellogg of false advertising, given that some products using those terms included ingredients like pyridoxine hydrochloride (vitamin B6), calcium pantothenate (a form of vitamin B5), and soy oil processed using hexane, a component of gasoline, reports The New York Times. Such ingredients occur naturally, but food companies and vitamin makers often use synthetic versions to control costs and ensure consistent supplies, it noted. 

Kellogg declined to disclose which products would be removing their "all natural" and  "nothing artificial" claims. The Kashi products listed in the original lawsuit included some of its cereal and granola bars, waffles and shakes, and some GoLean items. 

In a statement, Kellogg, which will also pay $5 million as part of the settlement, said that it stands behind its advertising and labeling, adding: "We will comply with the terms of the settlement agreement by the end of the year and will continue to ensure our foods meet our high quality and nutrition standards while delivering the great taste people expect.” Kellogg and Kashi admitted no liability in settling the suit.

Separately, according to court papers also filed in the southern district of California on May 2, Kashi's Bear Naked subsidiary agreed to pay $325,000 to settle similar allegations in a related class action suit, reports FoodNavigator.com.

The publicity around the suit and its settlement is obviously not good news for Kashi, which was very successful for years after Kellogg acquired it in 2000, but has seen its sales slide in recent times. 

Kellogg has attributed that in part to the brand's having become "too mainstream" for health-food influencers. The brand's challenges have been exacerbated by controversy around use of genetically modified ingredients and Kellogg's contributions to help defeat California's Proposition 37, which would have required label disclosure for products containing GMOs. (Despite that opposition, Kellogg has "paid to have some Kashi products certified by the Non-G.M.O. Project," according to the Times.) In addition, the overall cold cereal category has experienced stagnant U.S. sales over the past five years.

The Food and Drug Administration has never established a formal definition of  the term "natural," although its guidance has stated that it has not objected to the use of the term if a food does not contain added color, artificial flavors or synthetic substances.

But lawsuits over such wording have proliferated in recent years. In November 2013, attorneys estimated that at least 100 such suits, most seeking class-action status, had been filed during the previous two years against dozens of different brands, including Unilever's Ben & Jerry's and Beam Inc.'s Skinnygirl alcoholic beverages, reported The Wall Street Journal. 

And the growing movement to require labeling of foods containing GMOs — especially now that Vermont has just signed such a law into effect (making it the first such U.S. law not to require "triggering" by similar laws in other states) — is also expected to fuel such suits (although the food industry plans to challenge Vermont's law in court).

In late March, a court rejected General Mills's effort to dismiss a class action suit accusing the company of misleading consumers by using "100% natural" in marketing  Nature Valley products, when, contends the suit, the products contain GMOs. General Mills had argued that the suit should be dismissed or stayed because the FDA has thus far failed to clear up the "natural" definition. 

Last September, three Congressional representatives introduced a Food Labeling Modernization Act that would define common claims such as "natural" and "healthy," as well as create a single, federal, standard front-of-package label and require greater disclosure of sugar and caffeine content. 

While the outcome of that remains to be seen, more food and beverage makers have been quietly pulling back from "natural" claims — which has been a powerful marketing tool over the years — because the risks of lawsuits and damage to brand reputation now outweigh the benefits. 

For example, PepsiCo changed Natural Quaker Granola to Simply Quaker Granola, and Frito-Lay's "Simply Natural" chips to "Simply." In 2013, PepsiCo also agreed to remove "all natural" from its Naked juices products to settle a suit based on the contention that the drinks contained artificial ingredients. And this past February, snack maker PopChips agreed to a $3.4-million settlement of another "all natural" lawsuit. 

According to Datamonitor, just 22.1% of food products and 34% of beverage products launched in the U.S. during 2013's first half claimed to be natural, down from 30.4% and 45.5%, respectively, in 2009.