Kind CEO Daniel Lubetzky: Rules on health claims "outdated"

Kind CEO Daniel Lubetzky: Rules on health claims "outdated"

US snacks maker Kind LLC has been one of the country's most successful challenger brands in recent years, with its products eating into the sales of larger, more-established competitors amid growing demand for simpler, less processed foods. Last year, the US Food and Drug Administration claimed Kind was breaching rules on content claims by putting the word 'healthy' on its bars, as the products contained higher-than-permitted levels of saturated fat, principally due to the nuts in the recipes. Kind changed its packaging but started work on challenging the FDA's decision. Earlier this month, after discussions with Kind, the FDA relented. Dean Best spoke to Kind CEO Lubetzky about the episode.

Without question, regulators have a critical role to play in the sourcing, production, distribution and marketing of food. And, at a time when there is rising interest in healthier foods, consumers need a watchful regulator to ensure manufacturers do not unfairly take advantage of that growing demand.

There are, however, times when regulators can over-reach and make ill-judged decisions. US snacks maker Kind LLC believes it was at the centre of one such instance in 2015.

Last spring, the US Food and Drug Administration announced Kind had breached rules around making health claims on products. The FDA looked at four lines and found they broke regulations on health claims and on the listing of ingredients.

Among the violations, the FDA said Kind was making nutrient content claims on products that did not meet the requirements to match the assertions. The regulator said Kind was making "an implied nutrient content claim" on four bars by using the phrase "healthy and tasty, convenient and wholesome" on the labels.

The FDA said Kind could not say the bars were "healthy" as they contain higher-than-permitted levels of saturated fat. Kind immediately changed its packaging but started work on challenging the FDA's decision, launching a citizens petition, with the support of a range of US academics.

Kind argued its use of the phrase "healthy and tasty" was part of its "corporate philosophy", rather than a health claim. Earlier this month, after talks with Kind, the FDA relented. In an announcement on 10 May, the FDA reversed last year's decision and said Kind could use the word "healthy" on the packaging of its snack bars and on its website.

"It never was a nutrient content claim," Kind founder and CEO Daniel Lubetzky tells just-food in an interview 48 hours later. "We were stating our corporate philosophy. We have something called the philosophy, where we try to think with 'and' instead of 'or'. We try to make products that are healthy and tasty, wholesome and convenient, economically sustainable and socially impactive.".

Wall Street analysts covering the major names in the US food sector have often touted Kind has an example of the smaller, up-and-coming businesses that have been able to ride the changes in the industry to their advantage and grabbed sales from larger, incumbent competitors.

Consumers, more interested in health, are shopping in a wider range of outlets than before, with natural, organic, club and dollar stores benefiting. The rise of the digital sphere has broken down a traditional barrier to entry, making marketing more cost-effective and helping smaller brands build relationships with consumers.

It would not be a surprise if the FDA's decision last April had had an impact on Kind's volumes or, at least, taken the wind out of the company's sails. However, Lubetzky insists the popularity of Kind's products had not been due to the company's use of the word 'healthy'.

"We wanted to come into compliance immediately. We didn't want to be confrontational. For us, truly, it was not what was driving our sales and we did not want to be distracted by the issue. It was a little bit of a headache to have to change labels for 65 products but we went ahead and did it," he says. "Removing it did not have any impact. I don't think we sold Kind bars based on the tiny print on the pack. We used it on the back. I don't think people had noticed it. It is possible we would have grown even faster. Back in March and April, when we followed the sales, it didn't seem to have slowed down our sales but we would never know if our sales could have been higher and they were depressed by this."

Pressing Lubetzky further, he seems keen not to look back on the episode with ill-feeling. Asked if he now feels satisfied the FDA had admitted it was wrong over the label, Lubetzky, whose career interests involve leading the non-profit OneVoice Movement, which campaigns for a two-state solution between Israel and Palestine, says: "I'm an activist by nature. I work to build bridges between people. I'm very driven to try and improve society. I've worked with government in other realms and I realise how hard it is to move that rock. It was really energising to their credit that the people we worked with at the FDA were commendably open to understanding this needed to be revisited."

Lubetzky seems a positive person by nature but he does admit to that outlook slipping in the early stages of the affair. Asked if he knew who had complained to the FDA about Kind's use of the word 'healthy' or whether a larger competitor had contacted the regulator, he says: "That's what everybody told us. Every single person we consulted told us that's how it happened. At the beginning we were upset because we thought we had been unfairly attacked but then we tried to stop thinking that way as there was nothing we could do about it. We started to think constructively with the cards we'd been dealt with and fortunately we were able to do something good out of it. When we started, the most interesting thing was every single person we consulted with told us we were wasting our time, that there was no chance anything as going to come out of this, that we're dealing with a gigantic government bureaucracy. I'm very much driven by justice and I couldn't let that issue go."

The positive, conciliatory Lubetzky then resurfaces, praising the regulator. "Us entrepreneurs, when we believe in something we stick to our convictions and we are really gratified we found a partner in the FDA that this recognised to be changed. To their credit, the people we worked with at the highest level at the FDA agreed with us that whoever did this 25 years ago had either the wrong science or the wrong influences."

He is unsure Kind will put the word 'healthy' or the phrase 'healthy and tasty' back on its labels. "It's really not that important for us," he says. "It's very costly and time-consuming but we're very proud we have the right to do it."

There is a more significant consequence of the Kind episode. More critically for those selling food in the US, Lubetzky and Kind appear to have played a role in persuading the regulator to look again at nutrient content claims more broadly.

"In light of evolving nutrition research, forthcoming Nutrition Facts labelling final rules, and a citizen petition, we believe now is an opportune time to reevaluate regulations concerning nutrient content claims, generally, including the term 'healthy'," the FDA said on 10 May. "We plan to solicit public comment on these issues in the near future."

As Kind embarked on its challenge, the company began to see the regulation on the claim "healthy" was obselete, Lubetzky says. "We learned that this regulation was really outdated and created disincentives for you to eat empty calories rather than nutritionally-rich foods. We consulted with a lot of scientists, nutritionists, doctors and policy-makers and started to file a citizens' petition and [then] collaborated with the FDA in a very respectful and amicable way to find a more reasonable way to update this 25-year-old regulation. Fortunately the FDA didn't just address our specific issue, they acknowledged that our citizens petition was worthwhile. They have gone on-record now saying that they are going to be looking into potentially redefining, amended the definition of the regulatory term 'healthy'. There's obviously a hole in the regulation that it doesn't think about issues like sugar and so unwittingly it doesn't just penalise healthful products that have high-fat content - if the fat is the good type of fat - but they also actually encourage empty carbs and calories, just because they might have been enriched with vitamins and lack the fat or sodium nexus.

"The suggestion from these doctors and scientists - and in hindsight it is very logical but took us months of thinking - was that if the Dietary Guidelines are recommending increased consumption of certain goods as they are given to us by nature, we should not be deconstructing those foods into their micro-nutrient components and worrying about the micro-nutrient levels. In other words, if almonds are healthful and encouraged for increased consumption, don't start isolating whether they happen to have fat. It happens to be a good type of fat. If you eat almonds, you're going to be fine - the same with salmon, the same with avocado, same with other products that may trip up the fat limitations but that in fact have polyunsaturated and monounsaturated fats that are good for you and we have now learned are essential to our bodies' functions and for our hearts to be healthy."

From the outside looking in, it will be a significant challenge for the FDA to redefine when companies can or cannot use the word 'healthy'. The FDA has recently completed a consultation on whether it is appropriate for the agency to define the term 'natural' and how the word can be used on food labels. The request for comment on the subject closed earlier this month. The FDA received over 7,000 responses. Will the FDA be able to come up with a new definition of the word 'healthy' that meets the latest scientific research, while taking into account manufacturers' concerns? The regulator deserves praise for trying.