LaCroix maker’s CEO blames poor sales on ‘injustice’

editorial

SAN ANSELMO, CALIFORNIA - MARCH 08: LaCroix sparkling water is displayed on a shelf at a Safeway store on March 08, 2019 in San Anselmo, California. LaCroix sparkling water maker National Beverage Corp. had its first quarterly sales decline in 5 years and a 39 percent decline in profits from one year ago. The company reported earnings of $220.9 million. (Photo by Justin Sullivan/Getty Images)

FORT LAUDERDALE, Fla. — The company that makes the popular flavored sparkling water LaCroix reported a drop in sales and profit in its latest quarter. And the CEO is quite angry about it, saying that “much of this was the result of injustice!”

National Beverage chairman and CEO Nick Caporella, who typically writes the company’s earnings releases as an off-the-cuff letter to shareholders, made the comment in the company’s report after the closing bell Thursday.

Shares of National Beverage plunged more than 20% Friday on the poor results. But Caporella was defiant.

Although he began the report with an apology for the weak numbers, the headline on the press release was “‘We Just Love Our LaCroix’ Consumers Chant.”

“We are truly sorry for these results stated above. Negligence nor mismanagement nor woeful acts of God were not the reasons — much of this was the result of injustice!” Caporella wrote.

He made an unusual comparison between LaCroix and people who are physically disabled, adding that managing a brand is similar to “caring for someone who becomes handicapped.”

“Brands do not see or hear, so they are at the mercy of their owners or care providers who must preserve the dignity and special character that the brand exemplifies,” he wrote. National Beverage and LaCroix “will remain the preeminent innovator that adds zest and authenticity to the ‘sparkling water’ phenomenon in North America,” he concluded.

This appears to be a jab at a class action lawsuit that was filed against the company in October by a customer named Lenora Rice.

In the lawsuit, Rice said she started to drink LaCroix in 2016 because she thought it had all natural ingredients. But Rice now alleges that LaCroix has several synthetic compounds in it, including a chemical used to kill cockroaches, and she claims the company is misleading customers by claiming that LaCroix is 100% natural.

National Beverage has issued numerous statements refuting the allegations since the lawsuit was filed.

But the company is facing other challenges besides the lawsuit. LaCroix’s popularity has attracted competition from much larger companies in the beverage and retail sector.

Coca-Cola bought Mexican sparkling water maker Topo Chico in 2017. PepsiCo has recently introduced the Bubly brand of sparkling water as well and advertised it during this year’s Super Bowl with a commercial starring singer Michael Bublé.

Costco has also gotten into the sparkling water business. The warehouse giant launched zero-calorie flavored drinks under its private label Kirkland Signature brand last summer.

But Caporella had something to say about the competition as well.

“One can be induced to purchase by cheapening price or giving away a product, but falling in love with a feeling of joy is the result of contentment,” he wrote. “Just ask any LaCroix consumer … Would you trade away that LaLa feeling?”

National Beverage’s Caporella was also sued by two former pilots who claimed that Caporella improperly touched them. The company denied the allegations and both cases were eventually dropped after National Beverage and the pilots settled out of court.

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