March 11, 2015

Major Donut Chain Reformulates Powdered Sugar Due to Concerns Over Claimed Nanomaterials

A major donut chain has reformulated the powdered sugar used in its donut products to address investor and consumer activist group concerns over the alleged presence of nanomaterials. The move secured the withdrawal of a shareholder proposal requesting that the company assess and reduce the risks of using nanomaterials in its food products. 

Consumer activist group “As You Sow” recently announced that Dunkin’ Brands Group, Inc. will discontinue use of the whitening agent titanium dioxide in its Dunkin’ Donuts powdered sugar donuts. The news came as a result of discussions between Dunkin’ and the consumer activist group. As You Sow claimed to have found titanium dioxide nanoparticles in Dunkin’ Donuts powdered sugar donuts, and argued that there is insufficient information to support the safety of nanoparticles for human consumption. As You Sow had gone so far as to issue a shareholder proposal asking Dunkin’ to assess and reduce the risks of using nanomaterials in its food products.

In statements made to the media, Dunkin’ has maintained that the ingredient used in its powdered sugar donuts does not meet the Food and Drug Administration’s (FDA’s) definition of a “nanomaterial.” Nevertheless, as confirmed in last week’s announcement, Dunkin’ has reformulated the powdered sugar used on its powdered sugar donut products and is finalizing the timeline for transitioning to the reformulated titanium dioxide-free product. In response, As You Sow withdrew its shareholder proposal.

Dunkin’ also committed to continuing its discussions with As You Sow regarding the use of nanomaterials in food products. Dunkin’ Brands chief communications officer Karen Raskopf has said that the reformulation was made largely for the sake of investors, stating: “Dunkin’ Brands understands that investors are increasingly interested in the sustainability of the companies in which they invest.”

Approximately two years ago, As You Sow announced its investigation into the subject of nanomaterials in foods and food packaging with the release of its report titled “Slipping Through the Cracks: An Issue Brief on Nanomaterials in Foods.” In the report, As You Sow claimed that it conducted independent laboratory testing on two commercially available white powdered sugar donut products (including the Dunkin’ Donuts product), and claimed that both donut products tested positive for titanium dioxide particles with a size of 10 nanometers or smaller. The report received media attention from a variety of news outlets, including The New York Times. (For additional information on the report, see our prior client alert.)

In June 2014, the FDA issued its “Final Guidance for Industry – Considering Whether an FDA-Regulated Product Involves the Application of Nanotechnology.” Pursuant to that guidance, an FDA-regulated material or end-product involves the application of nanotechnology if it is engineered to: 1) have at least one external dimension, or an internal or surface structure, in the nanoscale range (approximately 1 nm to 100 nm); or 2) exhibit properties or phenomena, including physical or chemical properties or biological effects, that are attributable to its dimensions, even if these dimensions fall outside the nanoscale range (up to 1,000 nm). This definition is limited only to engineered materials, as opposed to materials that naturally occur in the nanoscale range. The guidance explains that FDA is “particularly interested in the deliberate and purposeful manipulation and control of dimensions to produce specific properties,” as such manipulation “might suggest the need for particular attention to the product by FDA and/or industry for potential implications for safety, effectiveness, public health impact, or regulatory status of the product.”

The issue of nanotechnology in foods and other FDA-regulated products is clearly on the FDA’s radar. Moreover, the growing consumer interest in this subject as well as the involvement of consumer activist groups like As You Sow suggests that this issue may be targeted by plaintiff's lawyers as a basis for consumer class actions claiming misrepresentations in certain food labeling and advertising. The industry has seen a sharp increase in such class actions in recent years.

It is therefore critical for food producers, distributors and packagers to have full knowledge of the ingredients and components of their finished food products and packaging, and whether any of those ingredients or components might meet the FDA’s definition of a product involving the application of nanotechnology. Early awareness and consultation with experienced counsel and consultants can best equip food industry companies to proactively anticipate, evaluate and manage the potential regulatory and litigation risks.