P.O. Box 1784 Shortland Street Auckland 1140 New Zealand Telephone: +64 9 367 2800 Facsimile: +64 9 367 2819 Nestlé New Zealand Limited Consumers Right to Know (Country of Origin of Food) Bill Submission to the Primary Production Committee May 2017 Physical Address: Level 3 Buildings 1 & 2, Carlaw Park Commercial, 12 16 Nicholls Lane, Parnell, Auckland, New Zealand www.nestle.co.nz
Consumers Right to Know (Country of Origin of Food) Bill Page 1 Introduction Nestlé New Zealand acknowledges calls for clarity around the country of origin of food and beverage products, and welcomes the opportunity to provide input on the Consumers Right to Know (Country of Origin of Food) Bill ( the Bill ). Nestlé New Zealand is part of the worldwide Nestlé group. It operates as part of Nestlé Oceania, which covers Australia, New Zealand and the Pacific Islands. Nestlé sells a wide range of packaged food and beverage products in New Zealand as outlined below. Single component products within the scope of the Bill include: Baking cocoa Breakfast cereals (eg Uncle Tobys) Coffee: Soluble coffee, pod coffee (eg Nescafé, Nespresso and Nescafé Dolce Gusto) Single component products which are unclear as to whether they are in the scope of the Bill include: Bottled water (eg San Pellegrino) Condensed milk Other food and beverage products which are not single component foods and thus probably not in the scope of the Bill include: Confectionery: chocolate bars and blocks, medicated confectionery (eg Soothers), sugar confectionery (eg Allen s) Baking chocolates Condensed and baking milks, including sweetened milks (eg Highlander) Breakfast cereals (eg Uncle Tobys) Sauces and recipe mixes (eg Maggi) Instant noodles (Maggi) Coffee mixes (eg Nescafé and Nescafé Dolce Gusto) Coffee substitutes (eg Caro) Other beverages (eg Milo, Nesquik, Malted Milk), both powdered and ready mixed Carbonated soft drink Infant formula (S26, Nan) Toddler formula Medical nutrition products (eg for use in hospital and aged care settings) A wide range of food products for use in professional food service, including ready made cakes, recipe bases, soup mixes, beverage products etc Other Nestlé products sold in New Zealand include: Pet food and accessories (Purina) Skin care products The majority of Nestlé products sold in New Zealand are made in either Australia or New Zealand, with a single label shared between the two countries. These are predominantly manufactured in our own factories, although in some instances we work with local co manufacturers.
Consumers Right to Know (Country of Origin of Food) Bill Page 2 As well, Nestlé New Zealand imports a number of products made in Nestlé factories elsewhere in the world. These include: Products with labels unique to New Zealand Products with a label shared by Australia and New Zealand Products with labels shared by multiple countries, including multilingual labels Nestlé does not support the Consumers Right to Know (Country of Origin of Food) Bill in its current form as it pertains to packaged food. Nestlé is concerned that aspects of the Bill are not feasible on many packaged foods as the impact of these labelling requirements has not been adequately considered. Packaged food may have longer and more complex supply chains which change frequently, making establishing consistent traceability more difficult than for fresh foods, which are more likely to be perishable in the short term and rely on quicker movement through shorter supply chains. 1. Our primary concern with the wording of the Bill relates to the complexity and cost of providing this information on single component packaged foods. Providing this information on a number of Nestlé products would have unintended consequences with significant implications for the cost and complexity of bringing products to the New Zealand market. Many of our single component foods actually contain blends of the single ingredient which may be sourced from multiple countries; as the selection of ingredients is dependent on a number of factors, resulting in the origin of the ingredient can vary between batches, and traceability may not be readily available. Establishing origins, then printing labels that reflect batch by batch changes is not feasible. There are circumstances where an ingredient may be sourced from a number of countries, the labelling of which would be extensive and not provide the consumer additional clarity around the origin of the ingredient used. 2. Situations where packaging is shared with other countries will also increase costs and complexity. 3. Finally, a lack of clarity within the Bill which means that it is unclear to which foods the provisions of the Bill are to be applied. 1. Labelling single component packaged foods Our primary concern with the Bill relates to the complexity and cost of providing this information on single component packaged foods. It is difficult to assess the general cost and feasibility of providing a label that details the country of origin of the ingredient or ingredients, as this is highly dependent on the individual product and the complexity of the supply chain for that product. Nestlé in Oceania does not buy ingredients directly from farmers, so we depend on origin information provided by our direct suppliers. For example: Uncle Tobys Oats are all grown in Australia, and processed at a factory in Australia; therefore labelling this as Australian is generally straightforward and carries no additional cost. Existing
Consumers Right to Know (Country of Origin of Food) Bill Page 3 packaging for these products, which is common to Australia and New Zealand, already says that the oats are grown in Australia. This sourcing has been consistent over some years; however it is worth noting that from time to time we have needed to source oats from outside Australia due to climatic events affecting the availability of Australian oats, eg severe drought. This would require urgent label changes. Nescafé Blend 43 is a single component product containing coffee beans, however, the beans include both Robusta and Arabica beans and may come from up to 20 countries. Selecting the beans depends on availability and grading, and the blend is selected by batch to result in a consistent taste regardless of the origins of the beans we employ tasters to do this work. Labelling every country to reflect this level of variability is not viable. This approach is consistent across almost all our instant coffee products, and to a lesser extent, our cocoa products. We note that the general policy statement on the Bill says Point of sale labelling or signage is cheap and easy to provide, so there would be little or no additional cost in requiring labels or signs to be displayed for single component foods. Our experience of firstly, establishing food traceability back to farm and secondly, changing food packaging is that the costs of this can be very considerable for packaged foods as highlighted through our coffee example above. Establishing countries of origin will be highly challenging. It is likely that there will be instances where as a manufacturer we will need to track through several tiers of the supply chain every time we purchase an ingredient, and it is likely that there will be instances where this information is either unavailable or unclear, particularly for globally traded ingredients such as cocoa and coffee. We have little confidence that we will be able to consistently get the correct information required to ensure compliant labelling. Even assuming establishing the country of origin to be always possible, requiring countries to be listed on pack would have significant implications for the cost of packaging, and the cost of planning and administering packaging for packaged foods. In addition, for blended products the list of countries may occupy significant label space on already small packs. At present, packaging is changed rarely, and is planned several months in advance. This is because packaging changes carry significant costs such as compliance review, artwork changes, printing set up changes, costs in managing changeover of packaging and so on. Any change goes through a rigorous internal review process to ensure that it is correct and compliant. As well, Nestlé purchases packaging in bulk in order to benefit from efficiencies and minimise cost; typically, we might buy enough needed for several months. Changing this to a system that required different packaging per batch would require much smaller runs, consistently buying at short notice, and more frequent changes. It is also likely to generate more waste packaging at factory level. This would add considerably to costs and administration. It is our view that providing this level of detailed ingredient origin and keeping it current on pack is not viable. The work required to track, monitor, label and update the origins of ingredients where they change frequently poses an extraordinarily high compliance burden.
Consumers Right to Know (Country of Origin of Food) Bill Page 4 In addition, while we understand consumers desire to understand the origins of fresh vegetables, fruit, meat, dairy and eggs, we have seen little evidence that this interest extends to packaged foods and are unaware of any relevant research undertaken in New Zealand to suggest this is the case. Based on the enquiries we receive from consumers, we do not think the cost and complexity of providing this information proactively is warranted when compared with the small number of enquiries we receive: since the beginning of 2015 we have received just one enquiry asking about the origin of the coffee we sell in New Zealand. We are not aware of any consumer expectation that packaged goods such as coffee are grown in to New Zealand. 2. Labelling single component packaged food where packaging is shared between multiple countries In some instances, packaging is shared between multiple countries, and the labelling must meet the requirements of multiple regulatory systems. The approach that Nestlé takes to amending labels to meet the requirements of the Bill will depend on the individual product and label. Products manufactured overseas with a label shared with other countries besides New Zealand may either a) print an amended label b) oversticker or c) no longer be viable for sale in New Zealand. a) Print an amended label In many instances, Nestlé products share packaging between New Zealand and Australia, which helps us manage costs and logistics. We would anticipate that in these situations, the label would need to be amended to meet the requirements of the Bill. We note that Australia has recently changed its Country of Origin labelling requirements. We would welcome a view on whether this labelling would be accepted and compliant in New Zealand. b) Oversticker Nespresso pods are an example of a single component product containing coffee beans. In some instances, the beans are single origin; in others, the pod contains a coffee blend from a number of origins. Nespresso pods are sold to retail consumers in boxes of ten pods, with Made in Switzerland on the box representing the place of manufacture. The box is sold into a number of different countries and provides information in a number of languages. Leaving the complexity of identifying the origin of all ingredients for those pods containing blends of beans to one side, it is most likely that Nespresso boxes would need to be overstickered to be compliant with the Bill. Nestlé prefers hand stickering on food and beverage products, and rarely uses machine stickering as we cannot risk obscuring important and mandatory information such as health and safety information and contact details. As an indication, the labour cost of applying the stickers to Nespresso products has been quoted at 11 cents per sticker. This does not include the cost of the stickers, time in managing stickering, or additional transportation costs needed to manage the logistics of overstickering.
Consumers Right to Know (Country of Origin of Food) Bill Page 5 Again, it is our view that this additional logistics and cost that would be incurred is not warranted by the level of consumer demand for this information, particularly given that there is wide acceptance that coffee is grown in a number of countries and that it is not grown in New Zealand in sufficient quantities to meet local needs. 3. Unclear provisions within the Bill The definitions and requirements of the Bill are unclear for packaged food. Areas where clarity is needed include: a) Definition of country of origin in the preliminary provisions s4 Interpretation Country of origin means the country in which the food is grown, harvested or produced It is not clear what produced means in this context; does it refer to country of manufacture? We note that consumer research conducted in Australia confirmed that consumers valued information on the country of manufacture equally as much as the country or origin of the ingredients. As well, it is important to acknowledge that there may be multiple countries of origin for a single component food. b) Definition of single component foods/description of foods to which the Act applies s4 Interpretation single component foods means food or food products, whether packaged or unpackaged, that contain only one vegetable, fruit, meat, seafood, nut, grain, seed, or oil, although these may also contain water, sugar or its substitutes, salt, or other ingredients used in preserving, colouring or flavouring. and s8 Foods to which this Act applies Some single component food categories are not specifically referenced under the definition of Single Component Foods in the Bill, such as dairy, juice, sugar, salt and water. The reason for this is not clear. This definition contradicts s8(e) of the Bill which specifies the Act applies to and any other food, either whole or processed. It is unclear whether the intended definition of single component foods is as per s4 Interpretation or s8. Noting that a single component food can include sugar, salt, water, flavour etc, the definition of a single component food is unclear: there are many packaged foods even within our own range where we are uncertain whether the provisions of the Bill apply. It is not clear where these other substances stop being a simple additive to a single component food and start becoming an integral ingredient of a multi component food. eg While we understand that Traditional Uncle Tobys oats are a single component food and therefore covered by the Bill, however we are uncertain as to whether other Uncle Tobys flavoured oats products, which may contain flavours and sugar, are intended to be included. The Bill does not specify whether the country of origin of water, sugar or its substitutes, salt, or other ingredients used in preserving, colouring or flavouring should be labelled.
Consumers Right to Know (Country of Origin of Food) Bill Page 6 c) Offences (s9) The offences outlined under s9 relate to those who sell the food without appropriate labelling. It is unclear whether this definition of sell is intended to capture both the manufacturer and retailer for packaged foods. It is our view that in the case of packaged foods, liability should be on the manufacturer, not the retailer. The requirement under s9(2) that any statement, word, brand, picture or mark not be false or misleading in relation to the country of origin of the foods or food products, we seek clarity as to how this requirement is intended to interact with the Fair Trading Act 1986. Conclusion Thank you again for the opportunity to provide comment on the Bill. We would welcome the opportunity to discuss this submission further should you wish. Please contact Margaret Stuart on +61 2 8756 2608 or margaret.stuart@au.nestle.com for any enquiries.