Investigation and pending class action against Dannon alleging that Dannon systematically made knowingly false claims during Dannon's s enormously successful marketing campaign promoting the supposed health benefits of "probiotic" yogurt products such as Activia and DanActive, selling hundreds of millions of dollars worth of yogurt in recent years.
The class action complaint asserts that while spending more than $100 million to falsely claim that Activia and DanActive have "clinically" and "scientifically" "proven" health benefits not available in other yogurts, Dannon's own studies flatly disproved the Company's deceptive boasts. For instance, in its advertisements and on its label for Activia, Dannon continues to falsely claim that it is "proven" to improve one's "intestinal rhythm" and "regulate your digestive system." Similarly, the label and ads for Dannon's DanActive incorrectly state that it "has been clinically proven to help naturally strengthen the body's defenses" and to improve the body's "immune system."
As a result of the massively deceptive advertising campaign, Dannon is able to charge consumers a 30% premium for its Activia yogurt. In fact, Dannon's marketing for yogurts containing "probiotics" led to one of the most successful product launches in recent food-industry history. Dannon spent more than $100 million on what is described as a "360-degree marketing plan" to falsely promote its probiotic yogurts. As a result, Dannon sold $128 million of Activia in 2006 and is estimated to have sold approximately $300 million last year.
However, Dannon itself knew that numerous scientific studies failed to support the health benefits touted in the ads. In fact, a study conducted by leading microbiologists and funded by Dannon determined in 2006 that there was "no conclusive evidence" of probiotics providing health benefits. The report, entitled "Probiotic Microbes: The Scientific Basis," was prepared by the American Academy of Microbiology, a leadership group of the American Society of Microbiology. Even Franck Riboud, the current Chairman and CEO of Dannon's France-based parent company Groupe Danone (OTC:GDNNY), admitted that Activia's success was based solely on the product's fraudulent marketing, saying, "The success of Activia is not coming from the product itself. The probiotic, everybody knows now about probiotic all over the world. The success is coming from the way you launch the product, how do you enrich the product, the marketing."
The class action, filed on behalf of tens of thousand of consumers who paid a premium for the products because of the deception, seeks redress for consumers who purchased the products based on the bogus claims, and asks Dannon to replace the misleading marketing with honest ads that correct the record.
Name (Stock Symbol)
Dannon Company, Inc., The
The Dannon Company, Inc., sells and produces yogurt.
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