On November 14, 1987, Leonard Buder of The New York Times reported sanctions levied against Beech-Nut Corporation for mislabeling apple juice products. The day before, Beech-Nut pleaded guilty to 215 counts charging that it intentionally mislabeled the product to mislead customers. The settlement resulted in a $2 Million fine ($4.2 Million today); the company also had to pay $140,000 ($300,000 today) in investigative costs to the food and drug administration. The Beech-Nut scandal resulted in the largest fine levied under the food, drug, and cosmetic act up until that point. In addition, Beech Nut had already settled a class act lawsuit in the state of Pennsylvania for $7.5 Million.
These great financial losses occurred after Beech-Nut shipped a product labeled 100 percent apple juice to 20 states, Puerto Rico, The Virgin Islands, and five foreign countries. The inherent problem is that the product contained nearly no apple juice. Instead, the juice was comprised mostly of cane sugar syrup, beet sugar, and other artificial ingredients. The company plead out quickly because the evidence was stacked against them. Two former Beech-Nut executives Niels L. Hoyvald and John F. Lavery pleaded not guilty to charges that they…show more content… However, Beech-Nut happens to be a producer of baby food, and there is nothing more frightening than an angry mother. Thousands of parents realizing that they don’t know what they have been feeding their children will certainly result in a great deal of fallout. Beech-Nut may have been lucky to walk away from the class action lawsuit paying only $7.5 Million ($16 Million today). On a broader scale, the retail industry in itself is very competitive. Customers want to know exactly what they are spending their hard earned money on. Beech-Nut betrayed the trust of its customers, and trust is a very hard thing to
