POP GOES CANADA DRY’S ‘REAL GIN­GER’ CLAIM

Soft drink maker re­lents in false ad­ver­tis­ing suit

National Post (Latest Edition) - - CANADA - Joseph Brean

Rather than go to trial to de­fend its gin­ger con­tent, Canada Dry gin­ger ale will no longer claim to be “Made from Real Gin­ger,” as part of a pro­posed set­tle­ment to a se­ries of U.S. class ac­tion law­suits over false ad­ver­tis­ing.

The com­pany that makes the pop­u­lar soft drink, Keurig Dr Pep­per, will also of­fer pay­ments to peo­ple who pur­chased Canada Dry for per­sonal use in the United States since 2013.

Those pay­ments are capped at $5.20 per house­hold with­out proof of pur­chase, and at $40 per house­hold with proof of pur­chase, ac­cord­ing to the pro­posed set­tle­ment, which does not ap­ply to Cana­dian sales.

The com­pany is now try­ing to give broad no­tice to any­one who might qual­ify for these pay­ments, in an­tic­i­pa­tion of fi­nal court ap­proval in April, ac­cord­ing to Van Beck­with, a lawyer for Keurig Dr Pep­per.

That fol­lows the de­ci­sion of a Cal­i­for­nia court last year to let the case pro­ceed to trial, which was slated to be­gin this week. It would have aimed to re­solve sev­eral re­lated law­suits from var­i­ous states, from Mas­sachusetts to Mis­souri.

The New York law­suit, for ex­am­ple, al­leges vi­o­la­tions of state busi­ness law in­clud­ing “com­mon law fraud, de­ceit and/or mis­rep­re­sen­ta­tion, breach of ex­press and im­plied war­ranties and un­just en­rich­ment.”

As a brand, Canada Dry dates to the 1890 open­ing of a car­bon­ated water plant in Toronto by John J. McLaugh­lin. His “Canada Dry” Pale Gin­ger Ale was widely sold in Canada by 1904, and soon ex­panded to New York, where it was a pop­u­lar mix for home brew liquor dur­ing Pro­hi­bi­tion, and glob­ally by the 1930s. New York remains its re­tail “heart­land,” ac­cord­ing to court records.

To­day, Canada Dry is made with car­bon­ated water, high fruc­tose corn syrup, cit­ric acid, preser­va­tives and nat­u­ral flavours, which one of the law­suits claims in­clude only “a mi­nus­cule amount of a gin­ger flavour ex­tract.” Re­search by the New York com­plainant’s lawyer pegs the ac­tual gin­ger com­pound con­tent of Canada Dry at two parts per mil­lion, which is below the thresh­old for hu­man taste, and far lower than any amount that could have health ben­e­fits.

Health ben­e­fits are a key as­pect of the dis­pute. Flat gin­ger ale is a com­mon folk rem­edy for an up­set stom­ach, for ex­am­ple, and lawyers in the New York case have claimed Keurig Dr Pep­per added the “Real Gin­ger” claim to the la­belling to “cul­ti­vate a whole­some and health­ful im­age.” The aim, ac­cord­ing to the law­suit, was to po­si­tion Canada Dry as a “BFY” op­tion, mean­ing “Bet­ter For You.”

This in­cluded a tele­vi­sion ad, “Jack’s Gin­ger Farm,” about a woman tak­ing a gin­ger ale out of a cooler at a pic­nic and find­ing it was con­nected, through the ground, to a hand­some gin­ger farmer.

It ap­pears to have worked. Court records in the New York ac­tion al­lege Keurig Dr Pep­per saw sales in­crease by al­most 9 per cent in just the first six months of adding the “Made from Real Gin­ger” claim to the pack­ag­ing.

The Cal­i­for­nia judge cited in­ter­nal com­pany doc­u­ments that sug­gested 30 per cent of Canada Dry con­sumers who in­creased their con­sump­tion did so be­cause of ex­pected health ben­e­fits from real gin­ger.

“In truth, DPSG’s soft drink is not made from real gin­ger,” reads the claim in New York Dis­trict Court. The claims on pack­ag­ing “de­ceive and mis­lead rea­son­able cus­tomers into be­liev­ing that (Canada Dry is) made us­ing gin­ger root — i.e. the spice made by chop­ping or pow­der­ing the root of the gin­ger plant — and not mi­nus­cule amounts of flavour­ing ‘ex­tracts.’”

This law­suit was brought by Julie Fletcher of Bo­li­var, N.Y., near the bor­der with Penn­syl­va­nia. She claimed to have often bought it for her sick chil­dren, think­ing it was a “health­ier al­ter­na­tive to reg­u­lar so­das.”

Katie Gil­roy, di­rec­tor of cor­po­rate com­mu­ni­ca­tions at Keurig Dr Pep­per, did not re­spond be­fore dead­line to a re­quest for com­ment.

LUKE SHARRETT / BLOOMBERG FILES

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