Will You Have to Substitute Ingredients?

Russia's invasion of Ukraine continues to disrupt the supply of critical commodities worldwide, forcing many food and beverage manufacturers to substitute ingredients. This disruption is having repercussions on food labelling and the legal status of products.

With its significant wheat, corn, barley and sunflower oil production, Ukraine's agribusiness is one of the largest in the world, accounting for 50 percent of global exports and 90 percent of European imports of sunflower oil.

In response to the war, Ukrainian authorities have introduced quotas on some exports, which have had an immediate effect on food companies, particularly in the European Union but around the globe.

Given the strict European labelling and food safety rules, changing an ingredient is not trivial. Hence, as food businesses struggle to find substitutes for their recipes, New Zealand manufacturers need to keep an eye on what this means for food labelling and get ahead of any changes that are likely to occur here.

France announced that it would allow food companies to tweak recipes for products containing sunflower oil and adapt their labels later. French authorities will authorise derogations for two months, except for essential information. After that, companies will have to adapt their labels, including stickers. Companies will have to ask the French authorities for a derogation and publish their approval decision on a dedicated webpage.

For Kiwi manufacturers, we struggled to find a definitive answer on how they should handle product reformulations. However, MPI did provide the following statement:

"From our work with food businesses, it isn't the case that large numbers of businesses are substituting ingredients," said Vincent Arbuckle, Deputy Director-General, NZ Food Safety.

"We work closely with food businesses to ensure the product being sold doesn't impact the food safety for consumers. The current approach is to assess any substitutions on a case-by-case basis, and where food safety is met, no label change is required.

"This is a pragmatic approach that takes business continuity of food supply into account and the efforts of food businesses to mitigate against unforeseen circumstances. There can be cases where a sticker on top of a product or label is sufficient as a cost-effective and easy to implement option."

Consumers will often make purchasing decisions based on claims about characteristics. Country of origin or claims such as 'free-range or 'organic' must be accurate and should not mislead or deceive consumers (reference 'Making Accurate Claims' NZ Commerce Commission).

Indeed, consumers have the right to know if a product they are purchasing has had its sunflower oil substituted. For example, consumers would want to know about a substitution like Palm oil, an ingredient known for its adverse effect on the environment due to deforestation. Of course, any ingredient changes affecting allergen warnings are far more critical.

The situation is even trickier as, on top of a shortage of sunflower oil, food companies are experiencing supply disruptions for paper used for food labelling, including stickers which are needed to update existing labels amid the current crisis.

For those in France, the temporary derogation will only be possible for non-essential information. It won't apply, for instance, to changes with an impact on allergens or which would contradict essential mentions such as "palm oil-free" or "100 percent biological" on the labels. Those critical changes will have to be displayed on labels immediately, for example, by adding stickers.

An official from France's Directorate-General for Competition, Consumer Affairs and Fraud Control (DGCCRF, in French) explained that companies could be sanctioned by having products withdrawn from the market or even by opening a criminal procedure for misleading commercial practices.

So, what is happening here? Are we prepared?

The short answer from industry agencies is no.

Just as New Zealand is the first to see the sunrise, we believe we should also get in front of this situation before it becomes a problem for local producers.

While recipe tweaks due to sunflower oil shortages, for example, will be needed very soon, changing packaging takes longer. It is vital for producers and manufacturers here to look seriously at their ingredients list and start preparing now for changes that will be coming sooner than many will expect.

We are calling on all players in the industry from ingredient suppliers, government agencies, manufacturers, packaging suppliers and industry bodies/associations to get on the same page and plan a way forward - we might not need it. Indeed, it is better to have a system in place before we end up searching for a solution after the fact.