As of early October 2018, two federal lawsuits have been filed against Arizona Beverage Company, the popular producer of iced tea and juice products stocked in gas stations and convenience stores around the U.S. The company is known for its distinct "tall can" beverages, which feature colorful labels for each product in its line-up. While the company's packaging has undoubtedly helped attract and maintain consumers across the country, it's now causing quite a bit of ruckus in the legal system.
The first lawsuit was filed back in September through the U.S. District Court in Central Islip, New York, and claimed that the company's serving-size labeling mislead consumers about the contents of its beverages, as mentioned by an article from Newsday. According to the lawsuit, Arizona used a serving size of 8 fluid ounces on its labels instead of the full size of the container in an effort to obscure the high volume of sugar and calories in its products.
A mid-October report details the second lawsuit, which was brought against Arizona through the U.S. District Court in Manhattan for knowingly deceiving customers by claiming its drinks contain "no preservatives" on the product labels. The lawsuit argues that the company included the phrase "no preservatives" in order to "capitalize on consumer health trends," despite their beverages containing citric and/or ascorbic acid.
The lawsuits' potential impact
Both lawsuits are working toward class-action status and involve more than 21 different beverage products produced by Arizona, including the highly popular Arnold Palmer Half & Half. If the plaintiffs obtain the class certification they're looking for, these lawsuits could lead to major financial consequences for the company.
The cost of removing "no preservatives" from their products and replacing the serving-size chart would be extensive.
Beyond the monetary damages and legal costs, Arizona would likely be served a court order demanding immediate changes to its labeling practices. This would force the company to undertake a massive label review project and may even require a nationwide recall of its products. The cost of removing "no preservatives" from their products and replacing the serving-size chart would be extensive, but first the court needs to determine if the lawsuits meet class-action eligibility.
Believe it or not, this isn't the first time the company has been accused of violating consumer protection statutes. In 2010, a similar lawsuit was filed over the company's deceptive use of the phrase "all natural" despite the clear presence of high fructose corn syrup and citric acid in most of its beverages. This points to a broader debate within the food and beverage industry over the word "natural" as it is used on product labels, though the Food and Drug Administration (FDA) has not yet made a specific ruling on Arizona's usage.
Ethics over marketing
For businesses operating in the food and beverage industry, a product's packaging serves more than one essential function. Labels provide consumers with important information about a product, which is doubly important for food and beverages because of the danger of ingredient allergies and sensitivities. While many companies tend to focus on the marketing potential of packaging and labels, the recent lawsuits against Arizona point to the legal ramifications of putting product sales above transparency.
Small businesses in the food and beverage industry can learn a lot from these lawsuits, as they demonstrate the value of ethical labeling practices and the cost of knowingly misleading consumers. Whether for good or bad, Arizona Beverage Co. is in a financial position to defend its operations and push back against allegations of misconduct, but smaller companies might not be so lucky. Investing in flexible packaging infrastructure is a great way to protect against liability issues like these, but building brand credibility always starts with a blank label.
Food and drink companies can get started on the right foot by visiting the DuraFast U.S. site or Canadian site to find label software, printers and accessories that will help them stay flexible and compliant.