OMilk LLC argued successfully that its cashew and almond milk beverages aren’t melloream (a milk-like vegetable oil blend) and thus don’t have to comply with dairy regulations, but the ordeal serves as a warning for all plant-based food and beverage manufacturers to know the standard of identity for their products based on what they call them.
“I think it’s not just for nut milk manufacturers, but anybody making product that is a plant-based alternative to a dairy or meat product has to be really careful about understanding the rules that apply to them,” said Lauren Handel, partner at agricultural and food law firm Foscolo & Handel PLLC, which handled OMilk’s case. “People need to go in with their eyes open understanding what standard of identity is for ‘milk’ or ‘cheese’ or whatever the product has to be. People are in the marketplace calling their products by those terms and there has been some litigation.”
OMilk LLC produces almond and cashew beverages by blending shelled, peeled nuts and water into a slurry, and then straining out the liquid before adding agave and spices for flavor. The beverages are high pressure processed (HPP), a cold-pasteurization technique, to ensure freshness.
Nut milk treated just like soymilk
When it began operations in January 2012, OMilk was granted a regular food processors permit by the Department of Agriculture and Markets. But two years later, a department inspector told the manufacturer its products were classified as “melloream” under the New York Dairy Products Law, and therefore the company must be licensed by the Division of Milk Control and Dairy Services, and comply with the dairy regulations, including pasteurization.
“In fairness to (the Department), there’s a conceivable reading of the statute that applies,” Handel said. “Mostly they were confronted with a product that was new to them or that they hadn’t really thought about. And they are used to treating soymilk as melloream, so they just thought it was the same thing.”
The legislation, which dates to the early 1960s, sought to prevent manufacturers using technological advancement to produce dairy-like products with cheaper vegetable oil instead of milk fat (like coffee whitener) from unfairly competing with the highly regulated dairy industry.
What made the legislation unusual, Handel said, is that it went beyond consumer deception labeling concerns to make sure that the regulatory costs were the same for a company making a non-dairy alternative product as they would be for a dairy products manufacturer in order to level the playing field.
“That’s the why the pasteurization issue arose and that’s why it was a problem for my client because they weren’t pasteurizing, their whole brand identity is to have a fresh product,” she said.
OMilk argued that not only do almond milk and cashew milk not contain such ingredients, but they also cost more than dairy products so don’t have an unfair competitive advantage.
‘The OMilk decision isn’t going to change the statute’
Despite the manufacturer’s win against a potentially cost-prohibitive (and unnecessary) regulation, the Department has indicated that it will continue to regulate soy beverages and frozen desserts produced from nut milks as dairy products.
“My own view—and this wasn’t the issue in this case—is that soymilk shouldn’t also be included in the statute, but they apparently believe that it is,” Handel noted. “Their decision with regards to my client isn’t going to change that view.”
Handel thinks the issue may be unique to New York, though in her research she found a similar provision in California regarding “products resembling milk” though she couldn’t confirm whether the law is being enforced in this way.
As products continue to surface that challenge existing rules, Handel said the industry will need a legislative or regulatory fix that acknowledges this new cohort of products that aren’t inferior to animal-based products. “They’re products in their own right and shouldn’t have to be strapped into existing rules,” she said.
And yet, the lack of enforcement regarding standard of identity continues to raise labeling issues, she added.
“The representatives of the dairy industry are not at all happy about it, and I can tell you in my conversations with the people at Department of Agriculture and Markets that they don’t really like it either. Several times they said they don’t think these products should use the term ‘milk’.”