LaCroix ‘Insecticide’ Lawsuit Caused Its Parent Company’s Stock to Tumble 9% This Week
It’s the kind of news any company dreads: The company that makes LaCroix is being sued for mislabeling the seltzer as “all natural” and allegedly including ingredients used in cockroach insecticide. Since the class-action lawsuit was announced earlier this week, shares of LaCroix’s parent company has lost nearly 9% of its value.
On Monday, law firm Beaumont Costales said it filed a class-action lawsuit in Chicago against National Beverage Corp., which in turn said it “categorically denies all allegations” in the lawsuit. It wasn’t until Friday that news of the litigation went viral. National Beverage’s stock fell 2.3% Friday, but for the entire week, the stock was down 8.8%.
Beaumont Costales claims that National Beverage was “intentionally misleading consumers” by labeling LaCroix as “100% natural” and aimed to “award damages to those who purchased the drink under the assumption that it was all natural.” More concerning were claims that LaCroix included ingredients used to kill cockroaches.
“LaCroix in fact contains ingredients that have been identified by the Food and Drug Administration as synthetic,” the lawsuit said. “These chemicals 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.”
Natural Beverage, for its part, said in a statement that it “categorically denies all allegations.” The flavors of LaCroix, it said, are “derived from the natural essence oils from the named fruit used in each of the flavors. There are no sugars or artificial ingredients contained in, nor added to, these extracted flavors.”
According to Popular Science, the lawsuit is a “stretch.” The chemicals listed in the lawsuit, linalool, as well as limonene and linalool propionate, “don’t exactly qualify as synthetic”—and they’re not as dangerous as the lawsuit argues. But now that the allegations have gone viral, the LaCroix brand could diminish in the eyes of consumers who are too busy to determine whether, say, linalool is a natural ingredient or not.
Founded in 1985, Fort Lauderdale, FL,-based National Beverage sells drinks under several brands, including Shasta, Rip It energy drinks and Mr. Pure juice drinks. LaCroix has been a hit product, helping to push sales up 51% in the past three years to $976 million.