The Costco CPG Label Compliance Guide for FDA 2026: Healthy Claims, Front-of-Pack Rules and What Must Change on Your Packaging

One undeclared allergen or one misleading sustainability claim can trigger a domino effect of recalls, lawsuits, and irreparable damage to consumer trust. In 2026, getting your label right is fundamental.

For CPG brands in the Costco channel, this statement carries an additional dimension that general label compliance guidance does not address: the Costco-specific intersection of FDA regulatory compliance and the FRS (Floor Ready Standards) packaging requirements that the Costco buying team enforces independently of regulatory agency requirements.

A label that passes FDA regulatory review may still fail the Costco FRS review — if the allergen declaration is present but formatted incorrectly for the 4-foot viewing distance standard, if the new "healthy" claim language has been updated for FDA compliance but the front-panel space allocation has not been recalibrated for the club-pack format, or if the front-of-package labeling proposed rule's Low/Med/High rating has not been factored into the principal display panel design.

The 2025-2026 period is the most significant label compliance update cycle for CPG food brands since the Nutrition Facts Panel modernization in 2020. The FDA's final rule redefining "healthy" as a nutrient content claim (effective February 25, 2025), the proposed front-of-package labeling rule with its industry-wide $3.2 billion implementation cost estimate, and the sesame allergen addition under the FASTER Act have created a label compliance environment where brands that are not actively monitoring and updating their packaging are accumulating compliance exposure that Costco's quality assurance team will identify during the vendor approval or FRS review process.

This guide covers the complete Costco CPG label compliance picture for 2026 — the specific FDA regulatory changes that affect Costco vendor packaging, the Costco FRS intersection that adds channel-specific requirements on top of regulatory requirements, the claim categories that are most commonly problematic, and the label compliance review protocol that ensures the packaging submitted for Costco FRS review passes both regulatory and FRS requirements.

The FDA "Healthy" Claim: The Most Commercially Significant Label Change of 2025

The Old Definition and Why It Failed

The FDA's prior definition of "healthy" as a nutrient content claim had not been updated since 1994 — and it had become increasingly disconnected from contemporary nutrition science. The 1994 definition disqualified avocados, salmon, almonds, and nuts from a "healthy" label because they were too high in total fat — a conclusion that reflected the fat-focused nutrition science of the early 1990s rather than the nuanced understanding of dietary fat that has emerged since.

Many CPG brands in the health and wellness category had been using "healthy" on their packaging for years without realizing the claim was technically non-compliant with the 1994 definition — a compliance gap that FDA enforcement action brought into sharp focus through the KIND bar enforcement letter and subsequent industry reckoning.

The New Definition (Effective February 25, 2025)

The FDA's final rule updating the definition of "healthy" as a nutrient content claim took effect February 25, 2025. The new definition scraps the fat-focused approach entirely and replaces it with:

Food group contribution requirements: the product must contribute meaningfully to a food group that is encouraged by the Dietary Guidelines for Americans (vegetables, fruits, grains, dairy, protein foods).

Nutrient limits: limits on added sugars, sodium, and saturated fat that vary by food category.

The specific limits are category-dependent — a snack food has different sodium and added sugar thresholds than a dairy product or a grain-based food.

The Safe Harbor Window

Products that qualified under the prior "healthy" criteria can continue using the claim during a safe harbor period through February 2028. The safe harbor provides a transition window — but brands should plan their label transition now. The safe harbor does not mean the old criteria still apply indefinitely, and new products launched after February 25, 2025 must comply with the new definition to use the "healthy" claim.

The Costco-Specific Implication

For CPG brands pursuing Costco authorization with a "healthy" claim on the club-pack label:

New products submitted for Costco FRS review after February 25, 2025 must comply with the new "healthy" definition if the claim appears on the label. A new product submission with a "healthy" claim that was valid under the 1994 definition but does not meet the 2025 criteria is submitting a non-compliant label to Costco's review — creating the compliance question that the Costco quality assurance team will flag.

Existing products in the Costco assortment that have used "healthy" under the old definition are in the safe harbor through February 2028. But the packaging redesign cycle that most brands undergo every two to three years is the natural timing for incorporating the new definition's compliance into the label — and brands approaching a packaging refresh should ensure the new "healthy" criteria are met rather than relying on the safe harbor window's end to force compliance.

The opportunity dimension: the new "healthy" definition removes the total fat barrier that disqualified salmon, avocados, nuts, and olive oil from "healthy" positioning. For brands in these categories — particularly the high-protein, omega-3-rich, or plant-based fat food brands whose products are genuinely aligned with the Dietary Guidelines but whose old fat content exceeded the 1994 threshold — the new definition opens a "healthy" claim that was previously unavailable. This is a labeling opportunity, not just a compliance update.

The Front-of-Package Labeling Proposed Rule: The Compliance Planning Window

What the Proposed Rule Would Require

In January 2025, the FDA issued a proposed rule requiring most packaged foods to carry a compact nutrition summary box on the principal display panel — rating saturated fat, sodium, and added sugars as Low, Medium, or High. The proposed rating system would appear prominently on the front of the package, visible to the consumer at the point of purchase without requiring them to flip the package to read the Nutrition Facts panel.

The rule isn't final — but FDA estimated implementation costs at $3.2 billion industry-wide over ten years. CPG brands that track regulatory developments early have the opportunity to design their packaging to accommodate the front-of-package rating without requiring a complete packaging redesign when the rule is finalized.

The Costco FRS Intersection

The Costco club-pack's principal display panel is already subject to the FRS requirements — specific space allocations for the product name, the per-unit value communication, the primary benefit claim, and the GS1-128 barcode. A mandatory front-of-package rating box would compete for principal display panel space with these FRS-required elements.

The brand that designs its club-pack packaging with the front-of-package rating accommodated — allocating principal display panel space for the Low/Med/High box alongside the FRS-required elements — is not redesigning when the rule finalizes. The brand that does not plan for the proposed rule will face a principal display panel conflict between regulatory compliance and FRS compliance when the rule is implemented.

Products that would rate "High"

A final rule would require a mandatory Low/Med/High rating for saturated fat, sodium, and added sugars to appear on the principal display panel of most packaged foods. CPG brands with products that would rate "High" on any of those nutrients face the most significant commercial consequence — a prominent "High" rating on the front of the package is a consumer-visible signal that may reduce purchase conversion.

The brands that should model their front-of-package rating now — before the rule finalizes — are the ones whose specific COGS structure, formulation, and member value proposition would be most affected by a "High" rating. A reformulation that reduces sodium or added sugars to achieve a "Medium" or "Low" rating, implemented before the rule is final, captures both the regulatory compliance benefit and the commercial positioning advantage of the lower rating.

The Sesame Allergen: The 2023 Change That Is Still Creating Compliance Issues in 2026

What the FASTER Act Requires

The FASTER Act added sesame as the ninth major food allergen under U.S. food labeling law, effective January 1, 2023. All foods containing sesame must now declare it as an allergen — either within the ingredient list in bold type or in a "Contains" statement on the label.

Three and a half years after the effective date, sesame allergen non-compliance remains one of the most common FDA label compliance issues for CPG brands — because the supply chain complexity of sesame cross-contact in manufacturing facilities and the ingredient labeling update across a complex multi-SKU portfolio are operationally demanding to implement comprehensively.

The Costco Addendum Sesame Verification

The Costco Version 3.0 Global Food Safety Audit Expectations specifically updates allergen and labeling requirements to include sesame. The Costco Addendum audit now includes sesame allergen management verification — confirming that:

The brand's product labels accurately declare sesame if the product contains sesame as an intentional ingredient.

The co-manufacturing facility's allergen management program addresses sesame cross-contact risk for products manufactured in facilities that also process sesame ingredients.

The allergen declaration format — bold type in the ingredient list or a separate "Contains" statement — meets FDA's specific sesame allergen declaration requirements.

For CPG brands whose products do not contain sesame as an intentional ingredient but whose co-manufacturer processes sesame elsewhere in the facility, the precautionary "may contain sesame" statement is the risk management approach that addresses the cross-contact concern without creating the specific "Contains sesame" declaration that mandatory labeling requires for intentional use.

The FRS allergen declaration review: the Costco FRS review evaluates whether mandatory allergen declarations are present and legible at the 4-foot viewing distance standard. An allergen declaration in 4-point type that passes FDA's minimum legibility standard does not automatically pass the FRS 4-foot legibility requirement — the type size must be sufficient for the allergen declaration to be readable at warehouse floor viewing distance.

The "Natural" and "Clean Label" Claims: The FTC and FDA Dual Jurisdiction

The "Natural" Claim Complexity

"Natural" remains one of the most commercially significant and most legally uncertain claims in food labeling. The FDA has not issued a formal definition of "natural" for food labeling — leaving CPG brands with informal FDA guidance (no artificial ingredients or added color, minimally processed) that is not codified in regulation.

The FTC's jurisdiction over advertising claims that appear on social media, on the brand's website, or in promotional materials adds a second regulatory layer: the FTC requires that all advertised claims be truthful, non-deceptive, and substantiated by competent and reliable evidence. A "natural" claim on the package may be consistent with FDA's informal guidance while still being potentially deceptive under the FTC's substantiation standard if the specific manufacturing process or ingredient sourcing contradicts the consumer's reasonable expectation of "natural."

For Costco specifically: a disease claim on your product detail page is the same violation as a disease claim on the package. Social posts and influencer content are subject to the same rules. The compliance review process needs to include every channel where product claims appear — not just the physical packaging that the FRS review evaluates.

The brand whose Costco club-pack label carries a "natural" claim that is substantiated by ingredient composition, but whose social media influencer content makes disease claims that go beyond the label's structure/function claim framework, has a compliance gap that the Costco quality assurance team may not identify in the packaging review — but that represents material regulatory risk.

The Costco FRS Label Compliance Intersection: The Channel-Specific Requirements That Add to FDA Requirements

The FRS Requirements That Interact With Label Compliance

The Costco FRS requirements add channel-specific label requirements that do not exist in FDA regulations — and that create compliance obligations that are distinct from and additive to the regulatory requirements.

Text sizing: the FRS 4-foot legibility standard requires that all primary claims, the product name, and required label elements be legible at the warehouse floor viewing distance. FDA sets minimum type size requirements for nutrition labeling and ingredient declarations — typically 6-point or larger for most elements — but the FRS 4-foot legibility standard may require larger type than FDA's minimum for specific label elements on a club-pack format.

Per-unit value communication: the FRS requires that the club-pack packaging communicate the per-unit value clearly — the unit count, the individual unit size, and the per-unit cost comparison that demonstrates the institutional value to the member. This per-unit communication requirement does not exist in FDA label regulations — it is a Costco-specific commercial requirement that must be present alongside the regulatory mandatory label elements.

The GS1-128 barcode quiet zone: the GS1-128 barcode's required quiet zone margins may conflict with the label design space that FDA mandatory elements and FRS commercial elements require. The brand that does not design the principal display panel and back panel with the barcode quiet zone specifically reserved will discover the conflict when the GS1-128 barcode verification fails.

The Label Compliance Review Protocol: Before Every FRS Submission

The specific label compliance review protocol that every CPG brand should execute before submitting packaging for Costco FRS review:

Step 1: Regulatory Claim Audit

Review every claim on the club-pack label — "healthy," "natural," "clean label," "high protein," "organic," "non-GMO," structure/function claims — against the current FDA and

FTC regulatory standards. For each claim:

Is the claim FDA-regulated (nutrient content claim, health claim, structure/function claim)?

What is the specific regulatory standard for this claim type?

Does the product meet the current regulatory standard? (For "healthy" — does the product meet the new February 2025 definition?)

Is the claim substantiated by competent and reliable evidence that would meet FTC's standard for the same claim in advertising?

Step 2: Allergen Declaration Verification

Confirm that all major allergens in the product formulation are declared in the required format — bold type in the ingredient list, or a "Contains" statement.

Confirm that sesame is addressed — either declared if intentionally present, or addressed in the allergen management program documentation for cross-contact risk.

Confirm that the allergen declaration type size meets the FRS 4-foot legibility standard, not just FDA's minimum type size requirement.

Step 3: Front-of-Package Readiness Assessment

If the FDA front-of-package proposed rule were finalized tomorrow, where would the

Low/Med/High rating appear on the current principal display panel? Is there sufficient space, or does the current design require significant rework to accommodate the rating?

Identify the rating the product would receive for saturated fat, sodium, and added sugars under the proposed rule's criteria. If any rating would be "High," evaluate whether a reformulation that achieves "Medium" is commercially viable.

Step 4: FRS Requirement Verification

Review the club-pack label against the current Costco FRS checklist — text sizing at 4-foot legibility, per-unit value communication, GS1-128 barcode quiet zone margins, and the ISTA transport testing requirements that affect the packaging structure.

Step 5: GFSI and Addendum Allergen Documentation Alignment

Confirm that the product label's allergen declarations are consistent with the allergen management documentation in the GFSI quality management system — no declared allergen should appear on the label that is not documented in the allergen management plan, and no allergen in the allergen management plan as a cross-contact risk should be absent from the label if the cross-contact risk is sufficient to require a precautionary statement.

At Fractional Brand Managers, we guide CPG brands through the complete label compliance review for Costco channel submissions — FDA claim verification, allergen declaration audit, FRS intersection analysis, and the front-of-package readiness assessment that prepares brands for the regulatory changes that are coming rather than the ones that have already arrived.

Contact us at 732-433-7873 or info@fractionalbrandmanagers.com.

Costco CPG Label Compliance 2026 — Complete Regulatory Update Summary:

Regulatory Change	Effective Date	Costco Intersection	Brand Action Required
New "healthy" definition	Feb 25, 2025	FRS review includes claim verification	Verify products meet new criteria; new products must comply immediately
"Healthy" safe harbor	Through Feb 2028	Applies to existing assortment items	Plan packaging refresh transition for new definition compliance
Sesame allergen (FASTER Act)	Jan 1, 2023	Costco Addendum V3.0 audit includes verification	Confirm sesame declared or cross-contact addressed in allergen plan
Front-of-package proposed rule	Not yet final (proposed Jan 2025)	Will affect principal display panel space allocation	Model FOP rating now; design space accommodation into current packaging refresh
FTC advertising claim scrutiny	Ongoing	All digital claims (Costco.com, social, influencer) subject to same standard as label	Compliance review must cover all channels, not just physical packaging

The five-step pre-FRS submission review:

1. Regulatory claim audit → 2. Allergen declaration verification → 3. FOP readiness assessment → 4. FRS requirement verification → 5. GFSI allergen documentation alignment

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