Milkio Foods Limited had descriptions like '100 per cent Pure New Zealand' and 'from the clean green pasture based dairy farms in New Zealand' on its ghee products - despite using butter imported from India.
It also used false and incomplete information to retain approval to use the FernMark logo - a trusted symbol to identify products made in New Zealand.
The Commerce Commission was referred the case by the Ministry for Primary Industries and charged Milkio with 15 breaches of the Fair Trading Act.
The company pleaded guilty to the charges.
When handing down the sentence Judge Thomas Ingram emphasised the significant damage the misrepresentations could do to the New Zealand dairy industry, noting the damage was "not merely to consumers, but also to other producers who rely upon brand New Zealand in connection with sales of dairy products".
Judge Ingram referred to the use of FernMark as the cherry on top of Milkio's brand positioning strategy, intended to provide an additional and unassailable layer of quality assurance to the consumer.
"In this case the claimed level of negligence or carelessness reaches a level that might fairly be described as wilful blindness, perhaps to the point of commercial sleepwalking."
Commerce Commission fair trading general manager Vanessa Horne said it was an important case for the commission to prosecute because of the global value of New Zealand's export brand.
"New Zealand has built an international reputation for high quality dairy products, which underpins the value of our dairy industry and exports.
"Milkio took advantage of this reputation to promote their own products through the use of descriptions like 'from the clean green pasture-based dairy farms in New Zealand', and 'produced and manufactured in pristine New Zealand' despite some of their products using imported butter from India."
She said this conviction should serve as a warning to others who might be looking to falsely claim the New Zealand brand.
