What to Know
- Popular sparkling water company LaCroix is facing a lawsuit that alleges its products include non-natural and synthetic compounds.
- The lawsuit claims that LaCroix contains ethyl butanoate, limonene, linalool and linalool propionate.
- National Beverage, LaCroix's parent company, "categorically denies all allegations" in the lawsuit.
Popular sparkling water company LaCroix is facing a lawsuit that alleges its products are mislabeled as "all-natural," and the allegations are weighing on the shares of its parent company National Beverage.
The lawsuit, filed in a Cook County, Illinois, circuit court, claims that LaCroix contains ethyl butanoate, limonene, linalool and linalool propionate — ingredients it says are non-natural and synthetic compounds. Linalool is an aromatic oil often found in cockroach insecticide, and many of the reports about the suit have touted this fact.
The suit also says limonene is known to cause kidney toxicity and tumors, while linalool propionate is used to treat cancer.
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However, a report in Popular Science raises doubts about the claims that the chemicals technically qualify as synthetic or dangerous. The report says limonene is a "naturally occurring chemical" and a "major component of oil extracted from citrus peels." It is commonly used to give food a lemony flavor and fragrance, according to Popular Science.
Linalool and linalool propionate (also known as linalyl propionate) are also naturally occurring and derived from plants. Although linalool is used in insecticides, that doesn't mean it's poisonous to humans, according to Popular Science. Their report claims the only real risk to humans is a mild skin or eye irritation, mostly from the chemical's use in aerosol forms. Additionally, the report claims that linalool and linalyl propionate may help fight cancer.
Shares of National Beverage, LaCroix's parent company, were trading down nearly 3 percent on Friday.
On Monday, National Beverage posted first-quarter earnings for the 2019 fiscal year, which showed that revenue grew 12.6 percent, largely driven by the growth of LaCroix. The sparkling-water brand has benefited from a consumer shift away from traditional cola drinks to drinks perceived to be more healthy.
The lawsuit was brought on behalf of plaintiff Lenora Rice, by the law firm Beaumont Costales in Chicago. It said, "Thousands of consumers purchase Defendant's water under the mistaken belief that it conforms with the representations made by Defendant on LaCroix's packaging and advertisements, i.e., it is 'all natural' and/or '100% natural.'"
The lawsuit does not explain how the product was tested for the presence of these chemicals.
National Beverage said it "categorically denies all allegations in a lawsuit filed [Monday] without basis in fact or law regarding the natural composition of its LaCroix Sparkling Water."
"Natural flavors in LaCroix 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, those extracted flavors," the company said in a statement.
National Beverage declined our request for further comment. Lawyers at Beaumont Costales couldn't be immediately reached for comment.
This story first appeared on CNBC.com. More from CNBC: