Advertising Claims for No Added Sugars Permanently Discontinued for Oatly Oatmilk Products Following NAD Challenge

New York, NY – June 28, 2019 – Oatly, Inc., producer of various oatmilk products, has advised the National Advertising Division that it has permanently discontinued certain challenged “no added sugars” claims in its advertising for Barista Edition Oatmilk, Oatmilk Chilled, Low-fat Oatmilk Chilled, and Chocolate Oatmilk Chilled. Further, while the National Advertising Division concluded Nutrition Facts Panels are not advertising and, therefore, did not assess Oatly’s compliance with FDA regulations, the National Advertising Division has recommended that Oatly not re-post or restate the “added sugars” line of the Nutrition Facts Panel in its advertising. The claims were challenged by Campbell Soup Company on behalf of its subsidiary Pacific Foods of Oregon, LLC.

NAD is an investigative unit of the advertising industry’s system of self-regulation and is a

division of the BBBNP’s self-regulatory and dispute resolution programs. The express claims challenged by Campbell included:

• “Includes 0g Added Sugars”
• “Includes 8g Added Sugars” (for Chocolate Oatmilk Chilled product only)
• “No added sugar(s)”
• “We don’t add sugar (We thought it was worth repeating)”
• “. . . we have added some sugar to this product, but only 8 grams per serving” (for Chocolate Oatmilk Chilled product only)”
• “Sugar-Free”

When a product or claim before NAD is also the subject of federal regulation or federal agency action, the self-regulatory forum harmonizes its efforts with any applicable regulation so that advertisers are held to consistent standards. However, deference to regulatory authority is not automatic, and it never completely replaces the obligation of the self-regulation system to exercise its own sound discretion.

The challenger contended that “0g added sugars” claims on the Nutrition Facts Panel of the label for Oatly oatmilk products is misleading because the hydrolysis process, which turns oats into oatmilk, creates sugars “in situ” as the oats are broken down into smaller components. Oatly countered that its “Includes 0g added sugars” claims declarations are on labels mandated by the Food and Drug Administration (FDA) under its new “added sugars” rule, which will come into effect on January 1, 2020.   NAD noted that if FDA’s “added sugars” rule clearly required Oatly to claim that its oatmilks contained 0g added sugars, NAD would not be able to review the truthfulness of the claim since it would be mandated by federal law. Here, due to uncertainty around the definition of added sugars, NAD did not conclude that claims about added sugars are “mandated or expressly approved by federal law or regulation” such that NAD would be deprived of jurisdiction.

However, NAD determined that the Nutrition Facts Panel, standing alone, is not advertising as defined by ASRC Procedures, and is therefore outside the scope of NAD review. The Nutrition Facts Panel is placed on product packaging for the purpose of complying with FDA rules, not for the purpose of conveying a commercial message in order to induce a sale.

NAD concluded, however, that when the Nutrition Facts Panel is restated and used in advertising, its purpose is not compliance with FDA rules, and it can be treated as a paid commercial message whose purpose is to induce a sale. When the advertiser chooses to use the Nutrition Facts Panel as advertising, the consumer takeaway from the claims about “added sugars” must be considered. Without taking a position on whether Oatly’s Nutrition Facts Panels are in compliance with FDA regulations, NAD recommended that Oatly not re-post or restate the “added sugars” line of the Nutrition Facts Panel in its advertising, but noted that nothing in the decision prevents Oatly from using the “added sugars” line of the Nutrition Facts Panel in a context that is not advertising, such as on product packaging for the purpose of complying with FDA regulation.

NAD, relying on the advertiser’s representation that the “no added sugar” advertising claims at issue have been permanently discontinued, did not review the claims on their merits. The voluntarily discontinued claims will be treated, for compliance purposes, as though NAD recommended their discontinuance and the advertiser agreed to comply.

Finally, with regard to the “Sugar-Free” claims which appeared on third party websites, NAD noted the advertiser’s representation that it had taken steps to ensure that third-parties were not falsely describing its products as “Sugar-Free.” NAD will treat the advertiser’s actions, for compliance purposes, as though NAD had recommended them and the advertiser agreed to comply.

In its advertiser’s statement, Oatly stated that it “supports the self-regulatory process   and agrees to comply with NAD’s recommendations,” and that it is continuing to seek greater regulatory clarity regarding hydrolysis related sugars.