Consumer goods purveyors are on to the American public: they know this crowd loves a good story.
Buzz words have always been a big component of marketing the latest goods, whether sold by startup brands or big behemoths. These days, it is all about promises that items being sold are “all natural,” “non-GMO,” or “organic.” Other trendy terms: “cage free” and “gluten-free.”
These days, it is all about being “transparent” and telling a story about how brands big and small formulate their products — in a healthy way.
Consumers are often willing to pay more for the goods they feel, well, good about. But that marketing strategy can backfire when things go wrong — or if regulators or courts find the product doesn’t live up to its promises.
Fortune takes a look at five brands that faced criticism in recent months about the pristine brand equity they had built.
Honest Co., an e-commerce startup that may be heading for an initial public offering, was founded in 2011 by actress Jessica Alba and former CEO of HealthChild.org, Christopher Gavigan. Both had sought to fill their homes with products they felt were the safest, non-toxic items for their families, vowing to “re-define the idea of the family brand.” The promise and feel-good message has resonated with shoppers and investors, which gave Honest Co. a “unicorn” valuation above $1 billion.
But Honest Co. has faced some criticisms. Most notably, last summer a wave of bad press percolated after some consumers alleged the company’s sunscreen line was ineffective. Last month, Honest Co. also was hit with a lawsuit by consumers, who accused the company of deceptive labeling; it alleges the “natural” products contain synthetic ingredients. And just this week, two independent lab tests commissioned by the Wall Street Journal found that the brand’s laundry detergent contained almost as much sodium lauryl sulfate (also called SLS ) as that found in Tide, the detergent made by Proctor & Gamble.
Alba’s company denied the Journal’s report, saying, “Despite providing The Wall Street Journal with substantial evidence to the contrary, they falsely claimed our laundry detergent contains Sodium Lauryl Sulfate (SLS). To set the record straight, we use Sodium Coco Sulfate (SCS) in our brand’s laundry detergent because it is a gentler alternative that is less irritating and safer to use.”
Honest Co.’s founders also say their products meets the highest standards. It said the lawsuit is “without merit” and contends the formulations it uses are made “with integrity and we remain steadfast in our commitment to transparency.”
The high-flying burrito chain found itself in hot water in the final months of 2015 as it grappled with the impact of E. coli and Norovirus outbreaks, which hurt sales and Chipotle’s stock price. Some criticized management for its slow response to the crisis. Even this week, the restaurant chain found itself generating headlines again when a store in Massachusetts was shut down after four employees became ill. The scandals dented the image around the fast-casual restaurant’s promise to serve “Food With Integrity.”
Chipotle’s shares are recovering very modestly so far in 2016, up around 6% since the start of the year after falling badly in the final three months of last year. Wall Street analysts are forecasting a 1% drop in revenue this year but an impressive 17% gain in 2017. Some key moves the company has made includes a new safety program that was implemented across all of the company’s stores. Executives told the media that the improved food safety practices would go well beyond industry standards.
KIND bars faced some problematic press in 2015 as well, when a warning letter from the U.S. Food and Drug Administration said several of the company’s products weren’t as healthy as advertised. The issue? Labels on several of the bars made promises that the snacks were a “good source of fiber,” featured “no trans fats,” or had “very low sodium.” The FDA said the snacks were also deemed healthy, though none of the bars meet the agency’s requirements for use of the nutrient content claim “healthy.”
KIND responded swiftly by promising to make adjustments to the labeling language on the bars in question, both on the packaging and on the company’s website. “We couldn’t be more proud of our snack foods and their nutritional benefits. While we make these updates to our packaging and our website, please know that our recipes will stay the same,” the company said in a blog post.
“There has been significant debate surrounding the FDA letter that KIND received, as many in the nutrition community rose to KIND’s defense,” said Joe Cohen, SVP of communications at KIND in a statement to Fortune. He added that late last year, KIND and other nutrition organizations petitioned the FDA to update its guidance, which it claims is at odds with the current dietary guidelines.
Blue Diamond, the producer of Almond Breeze milk, was hit with a lawsuit last year that alleged false advertising; it alleged that the almond milk had far fewer almonds than the milk maker led consumers to believe.
Just 2% of the milk contains almonds, though Blue Diamond told Time that’s fairly standard. It adds that the primary ingredient in nearly all beverages is water. (Cow’s milk, it pointed out, is 85% to 95% water). The lawsuit further claimed consumers purchased the product “based on the belief that it was a healthy premium product.”
Forbes looked at the suit and generally found it is flimsy, though it pointed out a graphic on the side of the carton that shows two hands cupped together with an overflowing supply of almonds could be problematic.
Welch's Fruit Snacks
While the label on Welch’s Fruit Snacks says the brand’s food is “made with real fruit,” a lawsuit filed last year alleged the product’s manufacturer, Promotion in Motion, deceptively marketed the snacks as containing “significant amounts of actual fruits.” The lawsuit alleges sweeteners are two of the top three ingredients and the product is “no more healthful than candy.”
Promotion in Motion has called the complaint “false and misleading.” The company said, “It is a fact that fruit, whether in the form of juices or more recently purees, has always been the first ingredient in Welch’s Fruit Snacks. Our labeling is truthful and gives consumers the information they need to make informed decisions.”
This story has been updated to include a statement from KIND.