Made in New Zealand or is it?

These words can be an important marketing tool and can carry significant weight in New Zealand and beyond, particularly for some food products where a consumer may have concerns about the safety and quality of such products from a specific country of origin.

Whether a product will be considered made in New Zealand will depend upon the circumstances of the case. The essence of making or of manufacturing is to produce a different thing from that out of which it is made[1]. Where a raw food product was processed outside New Zealand to make a processed food product, and then mixed or blended with other ingredients in New Zealand to form a nutritional supplement, the nutritional supplement was held not to have been made in New Zealand.

Therefore, statements on labelling that were perceived as indicating that the product was made from a basic ingredient that had been processed in New Zealand was misleading and deceptive, liable to mislead the public as to the nature or characteristics of the goods, and misleading as to the place of origin of the goods contrary to the Fair Trading Act 1986.

The current case[2] involved two products, Goat’s milk tablets and Goat’s milk powder. The products were developed by the defendant in New Zealand.

The goats’ milk powder product contained goats’ milk powder (99 per cent) and calcium citrate (1 per cent). These two ingredients were imported (mostly from Spain or the Netherlands).

The Goat’s milk tablets were made of 12 ingredients, eight of which, including the two active ingredients, were imported into New Zealand. Four of the 12 ingredients were produced in New Zealand and made up approximately just over 50 percent by weight of the product. However, these New Zealand made ingredients were excipients or pharmacologically inactive substances.

On the packaging the goods were described as “New Zealand made”:

On the packaging label the goods were described as “100% New Zealand made” and the label also carried the statement “100% NZ made & proud of it!” in two places on the label:

In New Zealand, the various ingredients for the two products were weighed, sieved and mixed; weighed and blended together; weighed again and packaged. For the pills, the mixed powder was compressed into tablet form and then packaged.

For the milk powder product, the High Court found the substantial transformation of the basic ingredient or the key step in producing the final product was the conversion of the goats’ milk into milk powder. The blending of the goats’ milk powder with calcium citrate in the New Zealand factory was considered to be an insignificant step in the manufacture of the final product – goats’ milk powder fortified with calcium.

In these circumstances, the statement “100% New Zealand Made” was not technically true.

The Court then had to consider the effect of the labelling on a reasonable consumer of the goats’ milk powder and goats’ milk and calcium tablets. The Court accepted the plaintiff’s expert’s evidence that it was reasonable to assume that in this case consumers would assume the powder would have been produced in New Zealand:

“In my judgment a reasonable person would take from the labelling of the powder that it was made in New Zealand from goat’s milk that had itself been processed in New Zealand. It is unrealistic to suggest that such a reasonable person would deconstruct the process in their mind and consider that if the powder was imported into New Zealand and then blended as in the present case it could be said to be made in New Zealand”[3].

The label on the powder packaging was found to be misleading[4].

In relation to the tablets, the defendant argued that the representation is technically true, as the tables were produced by a tablet machine in the New Zealand factory. However, the Court found that the significant conversion process in the manufacture of the principal ingredient which was the focus of the label was not the forming of the tablets, but the conversion of the goats’ milk into the powder which formed the basis of the product in the tablets.

The label on the tablets’ bottle was also found to be misleading.

The Court also found that the representation that the powder is made in New Zealand is liable to mislead a reasonable consumer as to its nature or characteristics[5] and that referring to “New Zealand made” on the labels for the tablets the defendant has made a false or misleading representation concerning the place of origin of the goods[6].

When describing your product as being made in a particular country consider where the act producing a thing different from the raw materials took place. Make sure that any claims that your product was proudly made in New Zealand or Australia do not fall foul of the consumer protection legislation by misleading the consumer as to the place of manufacture of the product.

Elena Szentivanyi - 23 May 2016

[1] Australian Competition & Consumer Commission v Lovelock Luke Pty Ltd [1997] FCA 1100, (1997) 39 IPR 439, citing from FCT v Jack Zinader Pty Ltd (1949) 78 CLR 336; and McNicol v Pinch [1906] 2 KB 352 at 361.

[2] Commerce Commission v New Zealand Nutritionals (2004) Limited [2016] NZHC 832

[3] At [42]

[4] In breach of section 9 of the Fair Trading Act 1986: 9 Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[5] In breach of section 10 of the Fair Trading Act: 10 Misleading conduct in relation to goods

No person shall, in trade, engage in conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for a purpose, or quantity of goods.

[6] In breach of section 13(j): 13 False or misleading representations

No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services,—

(j) make a false or misleading representation concerning the place of origin of goods or services.

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