- Consumers in Illinois dropped a class action lawsuit accusing LaCroix sparkling water maker National Beverage Corp. of false advertising for claiming its drinks are "100% Natural."
- Plaintiff Lenora Rice and her law firm withdrew the claims against National Beverage this week, according to a signed letter posted by the company. In the retraction of the lawsuit filed in Cook County Chancery Court, Rice said the laboratory that tested LaCroix has since said it could not determine whether the ingredients were synthetic. Rice and her lawyers said they received no payment for withdrawing the suit.
- "This dismissal confirms our promise to demonstrate that these allegations had absolutely no merit and reaffirms that the company delivers a pure and innocent product," a company spokesperson said. "This is a vindication of National Beverage and confirms the assurances we gave to our loyal following of LaCroix consumers, our customers and our shareholders that this lawsuit was baseless."
After this lawsuit was filed, LaCroix suffered. Filed on Oct. 1, 2018, the complaint said the product contained synthetic chemical compounds including ethyl butanoate, limonene, linalool and linalool propionate. Linalool is used in cockroach insecticide, and the lawsuit claims limonene is toxic and linalool propionate is used to treat cancer.
As soon as the complaint was filed, LaCroix said it planned to fight the accusations and pleaded with its consumers on Twitter to "please stand with us as we defend our beloved LaCroix." But that wasn't enough.
Despite the company strongly defending its beverage, the case cast the brand in a negative light. National Beverage's stock dropped 44% between last February and July. Last May, an analyst said LaCroix's sales were "effectively in a free fall." When the cult brand's sales dropped in the third quarter last year, National Beverage's CEO Nick Caporella blamed the legal troubles.
"We are truly sorry for these results," he said in a statement in March. "Negligence nor mismanagement nor woeful acts of God were not the reasons — much of this was the result of injustice!"
The company's aggressive campaign against these claims may have helped in its effort to get the case dropped. Since the original plaintiff is now "unequivocally" retracting the claims, this move could help LaCroix get some consumers back.
It does seem unusual for the plaintiff to withdraw and recant her complaint so publicly after more than a year of back and forth in court, however. Although Rice and her lawyers said they received no payment for withdrawing the suit, there were several settlement conferences last month and several motions have been sealed, according to court documents.
"We'll probably never know all the terms of the agreement in this case," Ryan Kaiser, managing partner at law firm Kaiser IP, LLC, told Food Navigator. "What the public gets to see is often just a small portion of what actually went on behind closed doors in the litigation."
But this isn't the end of National Beverage's legal troubles. A similar lawsuit was filed in federal court in New York just a few months after this one, also claiming LaCroix contained synthetic ingredients. That lawsuit is ongoing.
Since the Illinois case was withdrawn, no legal precedent has been set. National Beverage has said the ingredients in LaCroix are "derived from the natural essence oils from the fruit used in each of the flavors" and certified to be "100% natural." This could be considered a win for LaCroix and other companies using the term "natural" on beverages.
In the three years before this case was filed, there were reportedly about 300 lawsuits over the use of the word "natural" on food products, according to CBS News. These claims about synthetic ingredients have become more common and have seen mixed results in court. In 2018, General Mills was pushed to drop the term "100% natural" from granola bar packaging, so it does largely depend on the individual case. In 2015, FDA opened a docket to solicit comments to redefine the term "natural," but the agency has not yet published a new definition for the nebulous label claim.
Overall, it may be too late for LaCroix to gain back lost consumers who turned away when the lawsuits were filed. Analysts cited limited innovation and inexperience as reasons why National Beverage Corp. saw its stock reach a 52-week low last summer.
LaCroix is also seeing increased competition as more companies launch beverages in the sparkling water space. Pepsi's bubly brand has been successful in chipping away at LaCroix’s market share. And that trend could continue when Coca-Cola releases its new sparkling water brand Aha in March.
Although the "vindication" from this case could help LaCroix in the short term, in the long run, the brand isn't out of the woods yet. It still needs to deal with increasing competition, another lawsuit and skeptical consumers.