The legal battles behind food innovations

As technological development accelerates, it’s inevitable that big tech companies would turn to look at innovating food. But with new foods being made with new methods, it can be hard to grapple with the legal and safety battles currently raging. On this week’s EXTRA episode, we hope to put some of these questions to bed by speaking to Stuart Pape, head of FDA practice at Polsinelli; Gene Grabowski, partner at kglobal; and Richard Levick, founder and CEO of LEVICK.

ABERMAN: Seems like there’s a war brewing over plant based alternative meats. Let’s talk some about that.

PAPE: Well, I think you’re right. There’s a long history in the food industry of innovation bumping up against entrenched interests. In the late 19th century, when margarine first came to market, the dairy guys went bananas and had laws passed in several states that required margarine to be colored pink in order to make it look unpalatable to consumers. What you’re now seeing with the meat and dairy interests fighting plant based beverages, plant based burgers, and things of that sort, is really just another chapter in a long book.

GRABOWSKI: But doesn’t the history also show, though, Stuart, that inevitably the progress can’t be denied? It may go slow, and the other interest on the other side may try to retard the progress, or try to hold onto what they have, but inevitably, it moves forward, and they reach a compromise at some point, and then the old ways erode.

ABERMAN: I mean, is that true, because pharmaceuticals, food, there are regulations. So isn’t it an inevitability that, when a new food source is introduced, that it would it would succeed in the market?

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PAPE: Some of those rules and some of the laws are intended to protect entrenched interests. But I don’t disagree with Gene that ultimately, typically, the innovative products find a way to make it in the market. Much of the arguing really isn’t about whether the products should be on the market, but it’s about what you get to call them. So the dairy industry for example, at the moment, is objecting in lots of different places, at FDA, and the Congress and the courts, over the use of the word milk in connection with, take your pick: almond milk, cashew milk, oat milk, rice milk, soy milk.

You know, they originally started out making the argument that consumers were misled, and there were a number of judges who sort of burst out laughing when that argument was made, because it’s sort of a hard argument. If you bought a container of soy milk, did you think it came from the soy cow, or some other exotic animal? I mean there’s really not any misapprehension as to what the nature of the product is. So now they’ve shifted their argument a little bit. But much of the argument is about naming.

ABERMAN: Interesting. I think there’s something more to it than that. Let’s come back to that. Richard, is this a branding thing, or is there something bigger going on here?

LEVICK: I think there’s a spectrum here, there’s a continuum, and that is on the one hand, there is there are clearly things that are not healthy, but there are also economic interests. Such as, is there really confusion over a soy based product versus homogenized milk? And then there’s also the other side of the spectrum. There are professional plaintiffs, and the plaintiff’s firm, and Gene and I know this from many years of working together, when it comes to food recalls.

There are many plaintiff law firms that not only have professional plaintiffs, but also optimize the web so that they’re controlling the narrative. And from that becomes all the social conversation on the web about something being healthy or unhealthy. So I think it becomes very confusing as to what we’re supposed to put in our bodies. And not many years ago, when we went to nutritional labels, I think there was the thought that we could somehow become more educated about what we consume. But it is it’s an increasing challenge. And sometimes hypocritical for us.

ABERMAN: Let’s try to differentiate here between what I would call sort of a food innovation. I mean, margarine that’s blue for example might be a food innovation for people who like blue food. But with respect to what’s going on with plant based meat, or cellular growth, it seems like there’s a fundamental difference in that.

GRABOWSKI: There is, but it all comes down, as it always does, to what the consumer wants, what the consumer will accept. It’s going to take some time for consumers to get used to these products. We may have, in the next 50 or 60 years, products that are very different from what we have now. These pioneering products that are made out of plant based proteins, or what they’re experimenting with in the lab from stem cells. We don’t know. But what we do know is if the consumers start to appreciate it, and have a desire for it, the processors then will change. The supermarkets will change. And thus, the manufacturers and the farmers will have to change. It doesn’t start from the top down. It starts from the bottom up. It’s what the consumers perceive that they want.

PAPE: One of the things that is quite interesting here is the amount of money in Silicon Valley that, having disrupted many other industries, is now investing in food. There is just an enormous amount of investment in new food, and it’s often brought with a sort of broader social perspective. Because if you look at one of the arguments for plant based foods and cellular based meats, replicating hamburger and chicken and fish without the animals, without having to raise and slaughter animals, or environmental, climate, and social benefits.

So, you’re seeing, in some respects, I think that’s a bit different than the historical innovation in the food industry. Which, Gene is absolutely correct. There’s always been that. You know, you go back to the beginnings of time. People have figured out, hey, if I keep that cold, then I can eat it in a week from now. As opposed to it being bad when I just leave it at that. That’s an innovation. I mean, people have been innovating as long as we’ve been eating, but with this layering of social issues, it’s a bit different.

LEVICK: Well I think it’s really hard for the food industry. Gene, you talk about how ultimately the consumers get what they want, but consumers don’t know what they want. What is natural? Well, it sounds good, but tobacco is natural. What’s organic? Undefined. What’s local? It gets increasingly hard to define. We also want convenience, but in order to get convenient tomatoes, we have to use the tomato harvester, which you know, patented by Stan Reece from Michigan State, hardly the same kind of tomato that you grow in your backyard. We want low fat, but we also want it to taste good, and we want it to be filling. So, I think it’s a very hard path for industry to follow, and it constantly changes. And then you know for consumers, I think at the end of the day, at least for a whole generation of consumers, what we want, ultimately, from our food is immortality.

We don’t want anything to be unhealthy. We don’t want anything to be toxic. We don’t want anything to put on weight. But we also don’t want it to be animals. And so, part of the challenge for the food industry is exactly what Stuart is saying, in terms of self-interest, and sometimes throwing out arguments that only make it more challenging. But also part of it is the challenge of what consumers want. You know, when it comes to chocolate, and there’s the challenge of cocoa, for centuries, which has been driven largely by child forced labor, and consumers don’t want that to happen. But there’s also a limit to what they’re willing to pay for a chocolate bar. So, it puts cocoa companies in this vise of, we want to do the right thing. But you’re also telling us you’re only willing to pay so much.

PAPE: The history of innovation and development of new foods really intersects with the development of civilization. And so the challenge that food companies face today is really the same challenge they’ve always faced, except maybe the pace of change is accelerated. It’s figuring out, what is society, what is it going to be like five and ten years from now? How are people going to be living? How are they going to be moving from place to place? I mean if you had said, I don’t know, 20 years ago, that some person would knock on your door at 7 o’clock and hand you a bag with your dinner in it, how many of us would have said yes, oh absolutely. I see that happening. Where I live, my next door neighbors are an older couple. One hundred percent of the time, they get their food delivered.

GRABOWSKI: Part of that though, Stuart, is that it’s more bottom up now. There’s more stakeholders involved. In the 1950s, 60s, when I was growing up, you saw the cereal commercials, sugar on your cereal was no big deal. Nobody cared, it was top down. Whatever the marketers put out there and advertised, the public literally ate up. But now because of social media, the internet, people are far more informed, there are more stakeholders involved. There are more concerns about the environment. There are concerns about nutrition. It’s more of a bottom up experience. So food companies have to be more reactive, and as you say Stuart, it’s happening so fast now. It used to take decades for things to evolve. Now it’s a couple of years and you have to make adjustments in your formulation.

PAPE: Great point. And it’s why I think you see most of the innovation coming from smaller food companies, because by definition, they’re more nimble. You actually see the same thing in the pharmaceutical side. Most of the innovation and the cutting edge new drugs are found and created by small companies, and often wind up getting bought by bigger pharmaceutical companies who have the sort of marketing and promotion ability, but the innovation comes from small places, not big places.

GRABOWSKI: Absolutely. You see that in food, organics for example. The small organic companies in a couple of years, their business model is to be bought by Kellogg, or by ConAgra, somebody after a few years.

ABERMAN: That’s exactly right. And it’s also, frankly, the way our industrial cycle works now for creating new innovations. Different technologies to help feed the world. Huge regulatory problems there, right?

PAPE: Yes. Regulation in this area is a mix of things that protect traditional products from quote unquote unfair competition, and rules that are designed to allow innovative products to enter the market. So, we alluded to this a little bit in the first segment. If I make a product that is a beverage that is refrigerated, and it’s made from a plant or something like that, can I call it milk? Well there’s a standard of identity for milk, which is a type of law that came about, type of provision that came about in 1938, when the modern food industry first occurred. Because before that, people didn’t buy things in grocery stores, they made them at home. So if you wanted mayonnaise, you made it in your kitchen. You made ketchup in your kitchen.

And then when the modern food industry developed, you went to a grocery store and something was labeled mayonnaise. And so Congress enacted a law that basically said to the FDA: define what mayonnaise is. So that, when the consumer goes to the grocery store and they grab a bottle that says mayonnaise, it will have a reasonable relationship to what they would have made in their kitchen. Fast forward, the standard of identity for mayonnaise requires eggs. Somebody comes along and says, I can make a mayonnaise, functions, behaves, tastes like mayonnaise. Miracle Whip. Well then, there you get the intersection between innovation and the regulations which are designed to protect the naming of these traditional foods. And that’s sort of the battle. I mean it’s a fair question of whether those old standards of identity really should be kept around anymore, because do we really need regulations that protect mayonnaise from competition as long as the products are fairly labeled?

LEVICK: Let’s go back to 1938, and what drove that, and that’s largely Heinz, who created ketchup out of tomatoes, heretofore, that were never used. And he ends up having to, once his bottle became famous, and he had really the first national distribution of a produced food that people used to either produce at home or buy from stores, that had no resemblance to today’s tomatoes, he had to do two things. One was to buy up all of those glass bottles that looked like that, to the point where he ended up burying a lot at sea in the river, so that competitors couldn’t get it. And two, he wanted it to be clearly labeled as a specific product to make it more difficult for competitors to challenge.

ABERMAN: But let’s separate using a name or a magic word to denote the component parts, you know mayonnaise had eggs in it, ketchup had tomatoes in it, and now being used as, effectively, a protective mechanism. Let’s separate that from the food safety attributes of it or just generally, how you deal with this in industry. Gene, I know you spent a lot of time helping companies deal with the regulation from the sort of the back end. Are we forgetting that ultimately, there needs to be a safety aspect to this conversation?

GRABOWSKI: I don’t think it’s forgotten at all. I do think though, that one of the things people don’t fully realize is that, USDA for example, which regulates meat and dairy, is basically an agricultural services exporting product around the world. They’re a sales organization more than anything else. But in addition to being a regulatory safety body. FDA actually, I would argue that food safety right now is as good or better than it’s ever been, partly because of the Food Safety Modernization Act, which has been put in place since 2011 in segments. It’s still a work in progress, and it probably always will be. But there’s a food safety culture now. Companies are far more aware of the safety, of the importance of safety.

And it’s partly because the FDA has focused more on, because of the Food Safety Modernization Act, on prevention more than just reacting. And I think that that’s made a lot of companies aware. The companies that I work with have to have now safety recall programs in place, safety communications as well as the logistics. Before FSMA, there was nothing like that in place. So there’s a greater awareness, there’s a food safety culture now in most food companies. So I don’t think it’s been lost at all. But I do think that Stuart’s point is so important. Now with technology, and now with the sharing of information on the Internet so freely, we have a confluence of forces that we never had before. And it’s going to be chaotic for awhile. But I don’t think food safety has been forgotten.

LEVICK: And Gene, you know the irony of your comment is that food is safer than ever before. But we now have zero tolerance. You have one death, or an isolated illness, and it becomes national news instantaneously, largely driven, as Gene spoke about earlier, from the grassroots. Few years ago there’s a peanut recall, but we all think it’s a peanut butter recall, because a two person plaintiff’s law firm in California has a video that goes viral within 24 hours of the announcement, and it controls the narrative. So we’re all afraid to buy peanut butter when in fact it was initially an isolated incident. Zero tolerance.

PAPE: Not to be too much of a contrarian, but I don’t think it unreasonable that when you sit down for a meal that you should assume that you’ll be able to get up afterward, and still be breathing.

LEVICK: Good point. I don’t think we’re arguing the opposite sides, we’re just saying that we have a much more critical public than we did before, and we exist in a world with professional plaintiffs, so they’re taking apart everything. You know, when you say natural, is it really natural? Is there some remnant of something in there that we might be able to prove or is it synthetic?

PAPE: That activity is distasteful, in my view. But most of the risks in food come not from processed food these days, they come from produce. And you know, it’s sort of an interesting intersection. We encourage people to eat healthy, eat more fresh fruits and vegetables. All right. But that is also the place where the risk is greatest, because by definition, fresh fruits and vegetables were grown in fields where there were animals. And so, that’s sort of one of the real challenges there. The safety of processed manufactured food is, as Gene has said, as good as it’s ever been.

GRABOWSKI: While we’re safer than ever before, if you ask people in the street, is food safe, they’ll tell you it isn’t, because they’re seeing all the news about recalls. There’s about 500 publicized recalls in a year, partly because Richard’s right about the public. You know, the publicity around it. But it’s because now we’re able to measure and find listeria and salmonella where we couldn’t 10 or 15 years ago. And then you add on top of that the CDC, the Centers for Disease Control in Atlanta, now plays a role. They’ve put out their own news releases about this, and sometimes actually cross wires with folks at the FDA on this. So there’s a lot more awareness, we can find the foodborne illness now, that we couldn’t find many years ago.

ABERMAN: I would also argue that one of the casualties of our society after 9/11 has been our inability to actually proportionalize risk anymore.

GRABOWSKI: That’s also true. As Richard said, I’ve gotten many many clients who, maybe four people in the country might get sick, or maybe two dozen, which is nothing when you consider we serve a billion meals a day in this in this country. A billion a day. And if a dozen people get sick, it’s national news, let alone somebody die from it, and it can shut down a company for good, and actually cripple a whole industry, like we’ve seen with spinach and romaine lettuce.

ABERMAN: Richard, you deal with crisis communication a lot. Is this ultimately a crisis communication challenge, or is it a broader social issue that we can get ahead of?

LEVICK: Well I think it’s both. And you know, Gene and I worked together for many years, and we’ve both worked with Stuart through the years, and there’s certainly any number of challenges. The professional plaintiff issue that I mentioned earlier, and the litigation over undefined terms, organic, natural, is only going to increase. I think there’s also something that consumers, you know and I say this as someone who, for 40 years, I make my own mayonnaise, my own mustard, my own yogurt and ice cream. I don’t do anything processed. And Stuart, what was that standard you mentioned earlier about being able to get up afterwards?

But the whole issues of GMO, genetically modified organisms, for which almost no one knows what GMO stands for. But in this country now, after 40 years, everyone knows they’re against them. And I find that really troubling, because one of the things that genetically modified foods are able to do is reduce or eliminate hunger and disease, in Uganda, in India. And yet we have this whole movement, and once a movement becomes monetized, when the moment that Cheerios says we’re GMO free, even though there are no GMO oats, or Ben and Jerry’s were GMO free, and uses it a marketing advantage. And it’s a cool company or cool product or cool brand. It’s too late. And people think it must be bad. And yet, what’s happening is, the very people who think it’s bad, are the people who are inhibiting an end to starvation and vitamin A deficiency in Uganda, where 40 percent of the kids have spinal problems, or go blind, or die of hunger. And that’s not right. We need to think a little bit more on our concerns about food safety.

PAPE: I’m going to quickly climb out on a limb here with two professional communicators to my right. The source of that problem are the innovators of GMOs, because they were insufficiently transparent when they started. They were telling their investors what a great innovation this was, at the same time they were telling the regulators that it was no big deal, and it didn’t need to be disclosed or scrutinized. And that intersection produced the consumer mistrust that Richard described.

GRABOWSKI: Yeah, the food industry is still upset over what those those companies did.

LEVICK: Stewart, you absolutely identified it. We have to communicate openly, and transparently. The consumers control that conversation.

ABERMAN: This has been a really wonderful conversation. Thanks for joining us today.

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