The company is owned by Frozen Yoghurt, whose sole director is Taewoon Son.
The charges were made under the 1986 Fair Trading Act.
They were to do with promoting frozen yoghurt products which didn’t actually contain yoghurt, and for making misleading claims about the product’s health benefits.
The misleading claims included: That Yoghurt Story’s products increased people’s immune system, lowered the risk of subsequent heart disease and diabetes and it prevented infections such as colds and fevers.
Its product description on its website in December last year read: “Frozen yoghurt is not simply yoghurt that is frozen! Yoghurt Story yoghurt is carefully developed to contain beneficial bacteria for better digestion and overall good health – with Yoghurt Story probiotic yoghurt your stomach will thank you.”
The Food Standards Australia New Zealand (FSANZ) code states that fermented milk drinks and yoghurt products must contain at least a million live bacteria per gram.
Since January, companies have needed to notify the FSANZ about yoghurt claims with evidence, such as human studies, to back them up.
The judge in the case, David Sharp, sided with the Commission on Yoghurt Story’s product not being a yoghurt.
He called the claims a “significant departure from the truth.”
“The defendants’ conduct was a cynical attempt to take advantage of consumers’ desire to make healthier food choices. The defendants themselves considered the product to be more akin to an ice cream product, yet they decided to call their stores ‘Yoghurt Story’ because it was more attractive to consumers than calling it ‘Ice Cream Story,’” Sharp said.
He also agreed that it didn’t have the specific health benefits that were claimed, and wasn’t a probiotic product as it claimed.
“The product simply was not yoghurt. The samples taken showed the product provided rarely met with its description.”
Yoghurt Story was part of a wave of frozen yoghurt chains that rapidly expanded across New Zealand from 2012.
KiwiYo was the first to open in Mission Bay, and regularly had queues out the door.
At one point during the frozen yoghurt boom, it was planning on increasing its store count to 26. Today, eight stores remain.
Yoghurt Story was destined to the same fate and went into liquidation from August this year.
Ith ad around 22 frozen stores operating across New Zealand when the Commerce Commission began investigating it. Now, 10 are left.
In a column on frozen yoghurt retailers, RCG’s Paul Keane touched on the issue of fads versus success stories.
He said, “What you often see in the early growth stages, especially for franchised businesses, is some very over-optimistic claims about how much the business or store network is going to grow.”
Due to both Yoghurt Story and Frozen Yoghurt Limited being in liquidation, the judge in charge of the case reduced the fine of $270,000 to $35,000 each.
Commissioner Anna Rawlings said consumers rely on the information companies provide to them when making a decision about what products to buy.
“Where health claims or claims about product composition are made, customers rely on these claims to be accurate because they are not in a position to test the claims themselves,” she says.
“In this case the health claims made by the companies were not supported by scientific justification and the product was not what it was marketed to be.
“Where any trader makes claims about the health benefits of a product, we expect they will have appropriate research to justify the claim.”