"The LaCroix brand has gone from bad, to worse, to disastrous in a relatively short period of time," says one analyst.
Things sure aren’t sparkling.
La Croix's parent company National Beverages facing a new lawsuit after new allegations that the company's president considered falsely claiming its drink containers were free of the toxic chemical BPA. The chemical is said to affect neurological development in children. Shares of National Beverage fell to a multiyear low on Wednesday on the news of a lawsuit against the company.
The lawsuit alleges that a former employee was dismissed after objecting to the plan. The former employee, Albert Dewjeski, a former vice president at the company, said in the lawsuit that the company wanted to prematurely declare that La Croix can were free of BPA. Dejewski alleges that he was fired over the phone a day after he raised the complaint to other senior leadership. “As of April 2019, all cans produced for LaCroix’s products were produced without BPA liners" LaCroix said in a statement. The company also said it began converting to BPA-free liners two years ago. The lawsuit was filed in New Jersey.
Before working for National Beverage Dewjeski worked for Pepsico and Chobani. The lawsuit is requesting damages due to his lost salary as well as damage to his reputation. National Beverage responded to the lawsuit saying in part "False statements were made in litigation brought by a former employee seeking to extract a monetary recovery from the company. We intend to vigorously defend our company and our brands against false claims brought by this disgruntled former employee.”
La Croix has been no stranger to controversy over the last year. The company is "effectively in a free fall" according to a research note from Guggenheim Securities. “The LaCroix brand has gone from bad, to worse, to disastrous in a relatively short period of time following negative media attention regarding the ‘natural’ claim of the brand’s flavoring ingredients that surfaced in October of last year,” according to analyst Laurent Grandet.
Last year a Chicago law firm filed a class action lawsuit. The suit alleged that La Croix misled consumers by labeling La Croix as "all natural" in which the lawsuit says the product is "manufactured using non-natural flavorings and synthetic compounds. The class action lawsuit also claims that the chemicals used "include limonene, which can cause kidney toxicity and tumors; linalool propionate, which is used to treat cancer; and linalool, which is used in cockroach insecticide." The company said in response to that the allegations in the lawsuit are "false, defamatory and intended to intentionally damage National Beverage and its shareholders."
Although it can be misleading to consumers, "The term natural has escaped an enforceable definition by the Food and Drug Administration" according to Nicole Negowetti of The Harvard Law School Food Law and Policy Clinic.
In January, a similar class action lawsuit was filed in New York. In this lawsuit it was a third party study into La Croix content from the University of Georgia, Center for Applied Isotope Studies which found between 36% and 98% synthetic ingredients.
In addition to the growing list of controversies LaCroix has been also facing rising competition from Coca Cola which acquired Topo Chico in 2017 for $220 Million and Pepsico's acquisition of Sodastream last year.
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