Freshpet Stock Price Plummets on Advertising Claims Ruling

Investing.com – Freshpet Inc. (NASDAQ:FRPT) stock fell 9% on Tuesday after the National Advertising Division (NAD) of the BBB National Programs recommended that the company stop using certain advertisements implying its dog food is “human-grade.”

The ruling was prompted by a fast-track SWIFT challenge filed by competitor The Farmer’s Dog, which argued that three of Freshpet’s video ads contained statements and images suggesting its dog food is suitable for human consumption. Both companies compete in the fresh pet food market.

The NAD found that a social media ad where a dog owner said, “We eat fresh, real food at home as much as possible, so of course, we want Benji to eat the same,” and claimed that Freshpet dog food is “made to the same quality standards I want in my own food,” conveyed the message that the product is human-grade. The division recommended that Freshpet cease using these claims in the videos.

During the challenge, Freshpet permanently revised an earlier ad that claimed, “How does Freshpet make healthy food for dogs? The same way you make healthy food for humans,” removing the second sentence. The NAD determined that the revised version no longer conveyed the message of being suitable for human consumption.

The NAD did find one ad acceptable, ruling that a video depicting food being prepared in a home kitchen and then given to a dog does not communicate that the product is human-grade, as it emphasizes freshness and simple ingredients.

In its advertiser statement, Freshpet said, “We will comply with the NAD’s recommendations.”

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