Country of origin labelling can have a big effect on sales. For quality, prestige or loyalty reasons, consumers often consider country of origin when making purchasing decisions.
New Zealand country of origin labelling is no different. New Zealand is known for quality products produced in a clean green environment under fair working conditions.
So what actually determines if a product can be called ‘New Zealand Made’?
The Commerce Commission, responsible for administering the Fair Trading Act, says this:
“If the product is produced in New Zealand from virtually all New Zealand components then there is little risk in claiming that such a product is 'New Zealand made'. However, if important components are imported or if part of the manufacturing process is undertaken offshore, then a 'New Zealand made' claim risks breaching the Act. However, depending on the product or the nature of the manufacturing process some such products may be legitimately described as 'Made in New Zealand'.”
This can be confusing for manufacturer and customer alike – what does it mean?
Key ingredients or components must originate in New Zealand
A recent Court case held that key ingredients of the product must have originated in New Zealand.
In this case, a New Zealand firm making goats’-milk based dietary supplement labelled its product ‘100% New Zealand made’.
But all the active ingredients, including the goats’ milk powder, had been imported. Blended here in New Zealand with other ingredients, the imported ingredients were then turned into the tablet supplement.
The Court said the labels were misleading, as a reasonable person would believe the tablets had not only been processed in New Zealand but had been made from New Zealand goats’ milk powder.
The decision shows that labelling a dietary supplement as ‘New Zealand Made’ may be misleading if the key ingredients do not come from New Zealand - even if they are packaged or turned into tablets here.
Blending imported ingredients to a formula created in New Zealand is not enough to allow the product to be labelled ‘New Zealand Made’.
Substantial transformation must occur in New Zealand
The Court also said that where products involve a manufacturing process, the substantial transformation (when something different has been created or manufactured) must occur in New Zealand.
Goods are substantially transformed if they undergo a fundamental change in in form, appearance or nature, resulting in new and different goods.
In the goats’ milk case, the Court held that substantial transformation occurred when the goats’ milk was converted into powder – and this occurred overseas, not in New Zealand, meaning the product should not have been labelled ‘New Zealand Made’.
Guidance for food and dietary supplement manufacturers
For most food and dietary supplement products the issue of ‘Made in New Zealand’ can be resolved by considering:
- Key ingredients or components - If all ingredients are from New Zealand, the product can be labelled New Zealand-made. If there are a few minor imported ingredients such as herbs and spices, this will generally not affect the New Zealand-made claim provided the packaging states ‘New Zealand-made using imported herbs’. Then it’s clear to the consumer. But labelling products ‘New Zealand-made from local and imported ingredients’ is often not a good idea because the consumer can’t tell whether the key ingredients are local or imported.
- Substantial transformation – In addition to the key ingredients being sourced from New Zealand, if a food or dietary supplement item has been ‘substantially transformed’ in New Zealand (i.e. the key manufacturing process that created the product occurred in New Zealand), the product can be labelled New Zealand-made.
- Fair Trading Act - Food manufacturers considering using the kiwi trademark to promote a product as New Zealand-made must first make sure its use is compliant with the Fair Trading Act. That way, costly label or packaging reprinting is avoided. More information about the Act can be found here
Easy to use guides can be found here.