Poppi’s $8.9 million gut health settlement: the lesson for functional beverage brands

For any founder building a functional product, the case is worth understanding, not because Poppi did something unusually reckless, but because it did something very ordinary. It positioned a product around a health benefit, and the marketing moved faster than the evidence.

The problem was never the product. It was the promise.

Poppi is a soft drink marketed around gut health, built on a few grams of prebiotic fibre and a splash of apple cider vinegar. Its whole identity was “gut healthy.”

The issue was dose. Each can contained roughly two grams of prebiotic fibre. The class action argued that it wasn’t enough to deliver the benefit the branding implied, and that to get a meaningful effect, you’d need to drink several cans a day, at which point the sugar load starts working against you.

In the regulatory research I do, the fibre dose associated with a genuine, measurable gut-health benefit is usually well above what is found in a single functional drink. On the science, the claim was shaky.

In fairness to Poppi, most people don’t get enough fibre to begin with. Is a little extra better than none? Probably. The category isn’t worthless, and that was never really the question.

The question was narrower, and it’s the one that matters for every brand in this space: did the marketing promise more than the science could back up?

The moment you position around a benefit, you’re making a claim

Here’s the part founders miss. The moment you position a product around gut health, satiety, immunity, or any functional benefit, you are making a claim. A claim has to be substantiated. This is one of the easiest places for a functional product to overstep, and in Australia, the rules are arguably stricter than the ones Poppi was tested against.

The Poppi case ran on US consumer law. In Australia, a “gut healthy” message runs straight into the Food Standards Code, and specifically Standard 1.2.7, which governs nutrition content claims and health claims.

The distinction between those two is where brands trip.

A nutrition content claim is about how much of a nutrient is in the food. “Source of fibre” is permitted when a serving contains at least 2 grams of dietary fibre; “good source of fibre” needs at least 4 grams. No approval required.

A health claim is different. Anything that links the food to a health effect, “supports digestive health,” or “for a healthy gut” is a health claim, and it carries a much higher bar.

In Australia, a sugary soda may never clear the first gate

The first gate for any health claim is the Nutrient Profiling Scoring Criterion, the NPSC. Under Standard 1.2.7, a food cannot make any health claim unless it meets the NPSC. For beverages, the threshold is the strictest in the Code: the nutrient profiling score has to be below 1.

A sugar-sweetened drink will, in most cases, score well above that. Which means the gut-health claim isn’t permitted at all, no matter how strong the evidence behind the fibre is. The product simply never clears the first gate.

Clear it, and there are two ways to make a general-level health claim. You can use a pre-approved food-health relationship already listed in the Code. Or you can self-substantiate: establish the relationship through a systematic review, then notify FSANZ. It’s worth being precise about that second pathway because it’s widely misunderstood.  FSANZ does not assess or validate a self-substantiated claim. The onus sits entirely with the business to hold the evidence and the records, and to produce them if a regulator asks.

Sitting over the top of all of it is the Australian Consumer Law. Even a claim that looks compliant on the label can still be misleading or deceptive in the way it’s marketed, and that’s the ground the ACCC acts on. The Poppi settlement was, at its heart, a consumer-protection case, not a food-standards one. The same exposure exists here.

The cheapest place to get it right

None of this means functional beverages can’t make claims. It means the claim has to be earned, sized to the dose, matched to the evidence, and built to clear the gates before the product launches, not after a complaint lands.

That’s the cheapest place to get it right: before the can is ever on the shelf.

Sizing a functional claim to the dose, the evidence and the Code – before it becomes a liability is the work I do with food and beverage brands every day. We’re currently booked out with client projects for the next few months, but if you’d like your gut-health, satiety or immunity claims reviewed before they reach the shelf, get on the waitlist here: https://nprconsulting.com.au/contact/