Post settles sugary cereal lawsuit for $15M and agrees to drop health-focused label claims

Dive Brief:

• Post Consumer Brands received preliminary approval from a judge to settle a lawsuit accusing it of making misleading health claims on its cereals. As part of the settlement, Post will no longer use labeling terms including “no high fructose corn syrup,” “less processed,” “wholesome,” “smart” and “nutritious” on products where 10% or more of the calories come from sugar.
• The cereal company is also creating a $15 million fund for the settlement. Consumers who purchased specific Post cereals between 2012 and 2020 could be eligible to receive a payout.
• Consumers overwhelmingly rely on health claims when making purchase decisions at the supermarket, according to the Food and Drug Administration’s 2014 Health and Diet Survey. However, the FDA does not have official definitions for terms like “healthy,” “wholesome” and “nutritious,” or regulate the amount of sugar that products with these labels can contain.

Dive Insight

Post’s sugar-focused legal battle began in 2016 when plaintiffs filed a lawsuit saying the health and wellness claims on some of their cereals — including Great Grains, Bran Flakes and Raisin Bran — were false and misleading because of the amount of sugar the products contained.

With low/no/reduced sugar labeling claims increasing by 45% in 2017 alone compared to the five years prior, according to Kerry, legal teams have plenty of products to scrutinize. Post is not the only CPG to wind up in the crosshairs. Kellogg shelled out $20 million to settle a similar lawsuit that claimed its use of the term “lightly sweetened” on its Frosted Mini-Wheats and Smart Start cereals was misleading. A similar lawsuit against General Mills was dismissed in 2019 because the judge ruled consumers “cannot plausibly claim to be misled” about the sugar content since products had clear labeling on package fronts and sides.

Outside the courtroom, health experts have raised concerns about the amount of sugar in some food products calling label claims on packaging into question. More than seven in 10 consumers told Kerry they look at sugar content when deciding whether to buy products, and many are looking for ways to cut sugar from their diets rather than eating artificial substitutes. 

Many food industry stakeholders have called on the FDA to create an official definition for label claims including “healthy.” While the department opened a docket to take comments on the best definition more than four years ago and held a public hearing in 2017 for input, it has yet to establish anything official. Other changes have taken effect, though. The revamped Nutrition Facts panel, which has been gradually adopted by products since its design rollout in 2016, includes the amount of added sugar in products. 

A number of companies aren’t waiting for a legal battle or more formal FDA action to change their product formulations. The consumer trend towards cutting sugar is providing ample motivation. Hershey is focusing its efforts on creating more reduced sugar and sugar-free offerings, and recently announced a partnership with with ASR Group — one of the world’s largest sweetener companies — to co-lead an equity investment in Bonumose, a startup working on innovations in plant-based food ingredients, including rare and natural sugars. Pepsi launched a new drink called Frutly aimed at teens that has no added sugar or artificial sweeteners. Ocean Spray partnered with Amai Proteins to develop a cranberry juice using sweet proteins that has at least 40% less sugar. Smithfield pledged last month to reduce sugar and sodium in its products by 10% while pushing for more clean labels across its product portfolio.