Coca-Cola and others agree to $21M settlement for Fairlife animal abuse lawsuits

Dive Brief:

• Coca-Cola and other parties agreed to pay $21 million to settle lawsuits for falsely advertising their Fairlife ultra-filtered milk came from humanely treated cows. The settlement received preliminary approval by an Illinois federal judge on April 27.
• The parties, which include Select Milk Producers, Fair Oaks Farms and Mike and Sue McCloskey (the owners of Fair Oaks and founders of Fairlife), also agreed to take additional steps to implement animal welfare oversight, according to the filing.
• The settlement stems from a 2019 incident in which undercover videos of animal abuse were taken at Fair Oaks, a Fairlife supplier dairy in Indiana, and released by an animal welfare group. This led to lawsuits accusing Cola-Cola and others of consumer fraud and deceptive marketing for claiming the premium products came from humanely treated cows.

Dive Insight:

While the videos and ensuing lawsuits cast negative attention on the Fairlife brand, it has done little to slow its momentum. 

Founded in 2012, the ultra-filtered dairy brand announced earlier this year it surpassed $1 billion in annual retail sales. Coca-Cola, which initially owned a minority position in the Fairlife brand through a joint venture with Select Milk Producers, acquired the remaining stake in 2020. The financial terms of the deal were not disclosed.

In a statement to Food Dive, Fairlife said “animal welfare is and will always be a top priority.” The brand said it has “significantly strengthened our animal care programs and processes since 2019” through camera monitoring, a third-party animal welfare advisory board and increasing the number of unannounced audits at supplying farms. 

Fairlife’s 2021 stewardship report said it spent more than $8 million on supporting animal welfare standards at its suppliers and exploring new methods and technologies to improve animal care. 

Fairlife has not sourced milk from Fair Oaks since the 2019 incident, the brand said. 

As the larger dairy milk category has struggled, premium offerings have largely been a promising growth story. It’s a major reason why Coca-Cola acquired the remainder of Fairlife. Other premium brands, including A2, have been a hit with consumers. One exception is Chobani, which last week said it was ending the production of its Chobani Ultra-Filtered Milk, which launched in February.

Lawsuits are a part of the regular course of business in today’s food and beverage industry. The dairy sector has seen its share of them. A Vermont man filed a complaint three years ago against Unilever’s Ben & Jerry’s arguing that contrary to information on the brand’s website, it doesn’t solely use milk and cream from “happy cows.” The case was dismissed in 2020.

So far, there is no evidence that this kind of accusation creates long-term harm for the brands involved. While some stores stopped carrying Fairlife after the 2019 video, it does not appear to be weighing down the dairy brand today. Still, a 2021 report from the World Animal Protection and Compassion in World Farming found many food companies are not doing enough to prioritize animal welfare.

Further cases of animal abuse could provide momentum for animal-free offerings created by precision fermentation. A report from a series of focus groups done by precision fermentation startup Formo, Fordham University and Mercy For Animals released in February showed consumers are very enthusiastic and curious about animal-free dairy, with animal welfare being the reason they most want to consume it.