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Organic Consumers Association

Defrauding Consumers with Labels that Say 'Real Kraft Cheese'

If Matt Leli read "Made with Real Kraft Cheese" on a can of Kraft Easy Cheese, he'd think of a block of Wisconsin cheddar.

But only if he hadn't read the list of ingredients on the other side of the can. Easy Cheese, like many Kraft foodstuffs bearing the "Real Kraft Cheese" logo, contains no natural cheese.

Check out our slide show and see if you're a cheese whiz. www.chicagobusiness.com/cgi-bin/gallery.pl?galleryDate=2006-12-25

These products get their flavor from natural and synthetic ingredients that add up to processed cheese ‹ made in a laboratory, not on a dairy farm.

Mr. Leli, a 29-year-old Northwestern University student who was grocery shopping at a South Side Dominick's last week, isn't surprised that his definition of real cheese differs from Kraft's. "Food companies are only as honest as the labeling laws force them to be," he says.

Consumer complaints like that pose a business problem for Kraft as it struggles to increase sales at the same time many Americans are shunning processed foods. Recently, complaints have begun to pose a legal problem as well. In the past three months, Kraft has been sued twice for allegedly putting misleading claims on product labels (see below). In both cases, Northfield-based Kraft agreed to change its labeling.

To be sure, Kraft isn't the only food maker under fire for pushing the limits of truth-in-packaging regulations. Last month, for example, Cadbury-Schweppes PLC agreed to take the "all natural" label off its 7Up soda in response to a lawsuit threat.

But the lawsuits come at a crucial time for Kraft and its new CEO, Irene Rosenfeld. To boost growth at a company whose sales were flat last year at $34.4 billion, Ms. Rosenfeld must regain the trust of consumers like Mr. Leli and respond to a growing appetite for healthier food. The company last week said its sales of natural cheese grew in the fourth quarter, but were offset by a decline in sales of Velveeta processed cheese. "Consumers are eating cheese ‹ they're just not eating enough of our cheese," Ms. Rosenfeld says.

 LIMITS OF LABELING

Terms like "natural" and "real Kraft cheese" appeal to customers seeking healthy food. But in trying to lure consumers to its packaged foods, Kraft, like many food makers, often walks a fine line with its marketing, testing the limits of federal labeling regulations that are often vague or confusing.

Nowhere is that confusion more evident than on products containing Kraft's signature food: cheese. Kraft's offerings include cheese "products" like Velveeta and cheese "snacks" like Easy Cheese. Kraft Macaroni & Cheese Deluxe with Four Cheese Sauce lists cheddar, asiago, Colby and parmesan as ingredients. Kraft Macaroni & Cheese Three Cheese lists no varieties of cheese among its ingredients (a Kraft spokeswoman says the three cheeses are a processed cheddar blend, Monterey Jack and blue cheese), although it does list cheese culture, milk and sodium tripolyphosphate.

I used to think (Kraft's) macaroni and cheese had natural cheddar, but having kids got me to start looking at the ingredient label. I stopped buying macaroni and cheese, and now I make it from scratch. ‹ Tiye Hayes, 45, operating room dispatcher at Rush University Medical Center

If something says it's made with 'Real Kraft Cheese,' I still think it's semiprocessed. ‹ Kevin Dusinski, 28, executive chef at Roy's restaurant

I think it would be great if food companies were forced to be more honest on their packaging, but the food industry is huge and has strong lobbying. ‹ Kali Plomin, 37, stay-at-home mom

What does 'Real Kraft Cheese' mean? I think it's very misleading, but I also think it's the responsibility of consumers to do their own research. ‹ Raynya Simmons, 38, stay-at-home mom

If something says it's made with 'Real Kraft Cheese,' I would have to think (it's) processed cheese. ‹ Jose Ruiz, 34, student at University of Illinois at Chicago Many products with the "Real Kraft Cheese" logo, like Easy Cheese, Oscar Mayer Cheesiest Cheese Dogs and Cheez Whiz dip, don't list any natural cheese as an ingredient. Others, like Kraft Three Cheese Ranch salad dressing, do. In that case, the dressing contains natural cheddar, which is made by adding enzymes, salt and a culture, or bacteria, to milk.

Calling processed-cheese ingredients real cheese is legal, because while the Food and Drug Administration regulates many food-related claims, defining terms like "low-fat" and "organic," it doesn't define other terms, including "natural" and "real." That means manufacturers can use those terms as they see fit, as long as they do so "in a manner that is truthful and not misleading," according to an FDA spokesman.

Kraft says any product with the "Real Kraft Cheese" tag contains "a cheese ingredient that meets the high standards for taste, quality and performance consumers expect when buying a Kraft-branded cheese product."

"It's critical that we have clear consumer communication on our packaging and advertising," Ms. Rosenfeld says.

Certainly, many consumers have long since stopped believing what they read on food packaging. And many are turning to seemingly healthier options. The market for organic food has more than doubled in the last five years to $3.6 billion, according to Mintel International Group Ltd., a London-based market research firm. Three out of eight people interviewed at a downtown Dominick's last week said they've switched to a niche brand, Annie's Macaroni & Cheese, from Kraft's because Annie's is made with natural cheddar. A 6-ounce box of Annie's costs $2.17 at a local grocer, while a 7-ounce box of Kraft's Original Macaroni & Cheese costs 89 cents.

Kraft would love to charge a premium, but to do so it must convince consumers it's selling a premium product.

"Citing certain product attributes allows food companies to increase the perceived value of the product and encourage the consumer to pay more for it," says Kent Grayson, associate marketing professor at Northwestern University's Kellogg School of Management.

The challenge, he says, is to do it without misleading consumers.

'FOOD' OR 'PRODUCTS'?

Kraft has been accused of crossing that line before. In December 2002, the FDA issued Kraft a warning letter saying some versions of Kraft Singles Pasteurized Process Cheese Food and Velveeta spread were misbranded because they were falsely represented as "cheese foods." Those items are now identified as "cheese products."

But other food makers have been cited as well, and even Kraft's critics say the company is no better or worse than its peers.

The Center for Science in the Public Interest (CSPI) has sued or threatened to sue numerous food and beverage makers for making claims it says are misleading. "This kind of label trickery is fairly common," says CSPI Executive Director Michael Jacobson. "I don't know how many suits it's going to take, but we're going to continue to try to get food companies to change their labeling."

If that happens, it will eliminate guesswork for people like Russell Blackburn, who admits he rarely reads product ingredient lists. The 69-year-old Dominick's shopper says, "I tend to believe what they're saying on the front is true."

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