Olay is getting a facelift, though not entirely of its own
accord.
Procter & Gamble Co. will change the packaging of some Olay
skin-care products as part of a settlement with California
prosecutors, who had accused the company of misleading consumers by
selling jars of face cream in packaging that was at times much
larger than the contents. The company also agreed to pay $850,000
in civil penalties and costs.
The civil protection lawsuit stems from an investigation that
commenced in 2012, according to a spokesman for the district
attorney's office in California's Riverside County, which was one
of four counties that handled the case. Inspections of Olay
containers and packages led to allegations that P&G was
violating the state's so-called "slack fill" law, which prohibits
the use of oversized packaging to make products appear larger.
Olay is one of P&G's biggest beauty brands, with sales of
more than $2 billion globally. In the U.S., different variations of
Olay facial moisturizers sell in a variety of box sizes at a range
of price points. A 1.7-ounce jar of higher-end moisturizer Olay
Regenerist Luminous, for example, retails for around $35 and comes
in a box that's more than twice the size of the box containing a
2-ounce jar of Olay Active Hydrating cream, which retails for
around $10.
"There was never any intention to misrepresent the size of our
products," P&G spokesman Bryan McCleary said. Mr. McCleary said
the company has already made some changes to Olay's packaging but
maintains that the packaging "has been and will be fully compliant
with all laws and regulations." P&G decided to settle the case
with the California counties to put the matter behind it, he
said.
State district attorneys and plaintiff attorneys around the
country have been bringing lawsuits against companies that sell
everything from cosmetics and deodorant to pepper and snacks,
alleging that the manufacturers included too much dead space inside
their containers or packaging.
The complaints are based on state and federal guidelines on
slack-fill, the technical term for the air inside packages.
Companies are allowed to provide some room in their containers if
it is needed to protect the product during transport, or if the
space is a result of limitations of their manufacturing equipment.
But slack fill practices that serve no legitimate purpose can run
afoul of various laws.
Packaged consumer goods makers including ConAgra Foods Inc. and
Unilever PLC have faced private lawsuits that allege consumers were
deceived by improper packaging. P&G last year settled a private
lawsuit that alleged its Old Spice deodorant sticks contained too
much dead space, according to an attorney representing consumers
who had sued the company.
Some companies, meanwhile, have used slack fill as a way to push
through price increases. McCormick & Co. increased the price of
some ground black pepper by keeping its containers the same size
while reducing the amount of product inside.
In the recent case against P&G and its Olay brand,
California prosecutors said the products were encased in packages
that contained "false sidewalls, false bottoms, false lids or
coverings" or a "void space" that allegedly deceived consumers
about the actual size of the products within, according to a copy
of the complaint.
Under the settlement, P&G, which didn't admit or deny
wrongdoing, will make the Olay packaging changes by the start of
2018. While the settlement involves just products sold in
California that violate slack-fill rules, P&G said it is making
changes across the U.S. and Canada.
Once one of the company's fastest growing beauty brands, sales
of Olay skin creams have declined at about a 2% average rate over
the past five years even as the broader market for beauty products
has picked up. P&G is working to revive the brand's fortunes as
it rethinks its entire beauty line.
California prosecutors have won settlements from other companies
that it alleged violated slack-fill laws. Last year, CVS Health
Corp agreed to a $225,000 fine and said it would redesign the
packaging of certain hair and skin products sold under the
drugstore chain's in-house brand. In April C&F Foods Inc., a
food distributor and packaging company, agreed to pay a smaller
fine and to stop selling some private-label rice products packaged
in cardboard boxes that also had substantial empty space
within.
In 2013, the U.S. arm of beauty products company L'Oré al SA
paid $509,700 to settle a case with California that made similar
claims to the case involving Olay. L'Oreal also agreed to change
its packaging to comply with the law. Earlier this year Johnson
& Johnson also paid $506,000 to settle a similar case
concerning the packaging of its Neutrogena and J&J health and
beauty products.
Paul Ziobro contributed to this article.
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