Coles has been found guilty of making false and misleading claims its bread was baked freshly in store, with the supermarket giant now facing penalties of up to $1.1 million per misrepresentation.
The decision was made by the Federal Court yesterday, although the Australian Competition and Consumer Commission began its proceedings against the company last June, when Coles declared it would “vigorously defend” the accusation.
The ACCC argued Coles had promoted its bread as “Baked Today, Sold Today” and “Freshly Baked In-Store” when the bread was actually partially baked and frozen in Ireland then transported to Coles stores and “finished” in store.
The court found such claims amounted to a misleading representation that the ‘par-baked’ bread products had been baked on the day of sale or baked in a fresh process using fresh not frozen product.
Coles yesterday released a statement which read: “In talking to customers about the ‘par-baked’ bread range we certainly never set out to deliberately mislead anybody but we completely accept that we could have done a better job in explaining how the products are baked.”
“Whether baked from scratch in-store or ‘par baked’ by our suppliers and finished in our ovens, our bread and baked goods are great quality products which taste great and are convenient for customers. They have won a number of awards around the country,” said Coles.
The company said it was already well advanced in changing product packaging and other information.
A hearing will be held in the Federal Court in Melbourne at a later date to determine the relief that will be ordered, with the ACCC seeking penalties, declarations, injunctions, costs and other orders.
The maximum penalty per misrepresentation contravention is $1.1 million.
Tony Smith, executive officer of the Baking Association of Australia, told SmartCompany the association welcomed the finding.
“When someone takes the easy way out and misleads people, then it puts a dent in the industry and a strain on the small businesses that actually get up early in the morning and bake their product from scratch, not just take them out of the packet,” says Smith.
Smith says Coles has numerous apprentice bakers under its wing and the finding leads the industry to wonder what the apprentices are being taught by the supermarket major.
Smith also says its leads him to wonder what ingredients are being used in the frozen products to keep their shelf life.
“It makes you wonder what else is being added. You can’t put a traditional loaf in the fridge like that, it’s a fresh product,” says Smith.
Smith says while consumers may think they’re getting a bargain on bread at the supermarket, they are actually getting inferior frozen products from overseas.
“While people are buying cheap bread, the smaller blokes doing it the genuine way, and employing the mums and dads of Australia, can’t keep their jobs because no one will buy their bread,” says Smith.
Smith says he hopes the ruling will inspire consumers to go back to their local bakery.
Hall & Wilcox partner Sally Scott previously told SmartCompany when making a decision about the branding, packaging and promotional activities, businesses must consider whether or not a claim is misleading.
“This will firstly involve consideration of the overall impression conveyed to consumers and secondly whether that overall impression is misleading,” said Scott.
“Failing to analyse whether there are misleading claims at this time will be fraught with risk. Indeed, it would be a brave or naive business that proceeds with branding, packaging or promotional activities without giving sufficient consideration to whether they are making misleading claims,” she said.