Sprouts Farmers Market 2013 Annual Report Download - page 31

Table of Contents
from our suppliers are compliant with the FDA’
s regulatory requirements. Such inspections may delay the supply of certain products
or result in certain products being unavailable to us for sale in our stores.
DSHEA established that no notification to the FDA is required to market a dietary supplement if it contains only dietary
ingredients that were present in the U.S. food supply prior to DSHEA’s enactment. However, for a dietary ingredient not present in
the food supply prior to DSHEA’s enactment, the manufacturer is required to provide the FDA with information supporting the
conclusion that the ingredient will reasonably be expected to be safe at least 75 days before introducing a new dietary ingredient
into interstate commerce. As required by the FSMA, the FDA issued draft guidance in July 2011, which attempts to clarify when an
ingredient will be considered a “new dietary ingredient,” the evidence needed to document the safety of a new dietary ingredient,
and appropriate methods for establishing the identity of a new dietary ingredient. In particular, the guidance may cause dietary
supplement products available in the market before DSHEA to now be classified to include a new dietary ingredient if the dietary
supplement product was produced using manufacturing processes different from those used in 1994. Accordingly, the adoption of
the draft FDA guidance or similar guidance could materially adversely affect the availability of dietary supplement products.
The FDA has broad authority to enforce the provisions of the FDCA applicable to the safety, labeling, manufacturing and
promotion of foods and dietary supplements, including powers to issue a public warning letter to a company, publicize information
about illegal products, institute an administrative detention of food, request or order a recall of illegal products from the market, and
request the Department of Justice to initiate a seizure action, an injunction action or a criminal prosecution in the U.S. courts.
Pursuant to the FSMA, the FDA also has the power to refuse the import of any food or dietary supplement from a foreign supplier
that is not appropriately verified as in compliance with all FDA laws and regulations. Moreover, the FDA has the authority to
administratively suspend the registration of any facility producing food, including supplements, deemed to present a reasonable
probability of causing serious adverse health consequences.
In connection with the marketing and advertisement of products we sell, we could be the target of claims relating to false or
deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states. Furthermore,
in recent years, the FDA has been aggressive in enforcing its regulations with respect to nutrient content claims ( e.g. , “low fat,”
“good source of,” “calorie free,” etc.), unauthorized “health claims” (claims that characterize the relationship between a food or food
ingredient and a disease or health condition), and other claims that impermissibly suggest therapeutic benefits for certain foods or
food components. These events could interrupt the marketing and sales of products in our stores, including our private label
products, severely damage our brand reputation and public image, increase the cost of products in our stores, result in product
recalls or litigation, and impede our ability to deliver merchandise in sufficient quantities or quality to our stores, which could result
in a material adverse effect on our business, financial condition and results of operations.
We are also subject to laws and regulations more generally applicable to retailers, including labor and employment, taxation,
zoning and land use, environmental protection, workplace safety, public health, community right-to-know and alcoholic beverage
sales. Our stores are subject to unscheduled inspections on a regular basis, which, if violations are found, could result in the
assessment of fines, suspension of one or more needed licenses and, in the case of repeated “critical” violations, closure of the
store until a re-
inspection demonstrates that we have remediated the problem. Further, our new store openings could be delayed or
prevented or our existing stores could be impacted by difficulties or failures in our ability to obtain or maintain required approvals or
licenses. In addition, we are subject to environmental laws pursuant to which we could be held responsible for all of the costs or
liabilities relating to any contamination at our or our predecessors’ past or present facilities and at third-party waste disposal sites,
regardless of our knowledge of, or responsibility for, such contamination.
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