Although the courts have differentiated between free speech claims of individuals and corporate speech of companies, businesses still have wiggle room when they claim their products are "best," which really means they're no worse than other superior-placed products.
When everyone's product is equally good, then they are all "best." Just be careful if you claim your product is "better," because that could mean you're saying your product is really "best." And some feel the claims of products being "all-natural" is giving companies similar wiggle room too.
Arizona Bottling, maker of the popular Arizona Iced Teas, just beat back a class action lawsuit over claims its drinks aren't "all natural" because the drinks contain high-fructose corn syrup, or HFCS,and citric acid. The court said those filing the challenge didn't show a "scintilla of evidence" for their claims. Several years ago Cadbury relented in its claims that its 7-Up soda was "natural" when it was threatened with a lawsuit because it contained HFCS.
But other lawsuits progress. Unilever's (NYSE: UL ) ice cream maker Ben & Jerry's is under attack for including genetically modified ingredients in its "all natural" desserts, as is Campbell Soup (NYSE: CPB ) , which faces criticism for GMOs appearing in its "100% Natural" soups. General Mills (NYSE: GIS ) is also in court because its Nature's Valley division markets its granola bars and "thins" as being natural, but they contain high-maltose corn syrup and maltodextrin, which the plaintiffs charge are highly processed and don't even exist in nature.
While hyperbole in advertising may be tolerated by consumers, corporations jumping on a bandwagon and flogging their products with whatever's hot these days ends up creating a backlash.
Similar to "greenwashing," where companies mislead consumers on the impact their products or their operations have on the environment, consumers may just be getting tired of all these "all-natural" products that have ingredients that are unpronounceable.
The market researchers at Mintel suggest we're seeing a bit of "consumer fatigue" when it comes to claims made about a product's naturalness, while a Harris Interactive poll of 2,276 adults revealed that 59% merely see corporate attempts at labeling a product "organic" as just an excuse to charge more. Even Whole Foods Markets (NASDAQ: WFM ) has been criticized for combining the worst of both worlds: "selling quasi-natural products at premium organic prices," as the Organic Consumers Association puts it.
One would imagine similar feelings about so-called natural products, too, which could explain why Mintel found that the number of new products being introduced as "natural" dropped from 14% in 2010 to 12% last year.
When it comes to natural food, the best you can do is grow your own in your backyard. It might not be so simple for investors who want to go all-natural in their portfolios.
It's hard to believe that a grocery store could book investors more than 30 times their initial investment, but that's just what Whole Foods has done for those who saw the organic trend coming some 20 years ago. However, it may not be too late to participate in the long-term growth of this organic foods powerhouse. In this premium report on the company, we walk through the key must-know items for every Whole Foods investor, including the main opportunities and threats facing the company. So make sure to claim your copy today by clicking here.