EOC week 3: Beech Nut Apple Juice Scandal

“Beech-Nut sought to market its line as the natural baby food, but would ultimately cave to pressures to reduce costs. In an effort to save money the Beech-Nut Corporation switched to a new juice concentrate supplier, who provided a less expensive apple juice concentrate. The new supplier would eventually become known as Universal Juice. The disproportion between Beech-Nut’s 1977 manufacturing budget of over $50 million a year and the meager $250,000 saved per year due to the decision to switch suppliers may seem extreme, but the repercussions that followed this executive decision would serve as a major turning point in the world of white-collar crime.” (http://socyberty.com/crime/the-beech-nut-apple-juice-scandal/#ixzz1TFBxJ4cD) In 1982 an investigation revealed that some companies were omitting apples from their apple juice concentrate all together. Employees were suspicious of the concentrate that Beech-Nut had started using. “ That suspicion grew when company inspectors touring Universal Juice were denied access to the apple-processing area. By 1981, Beech-Nut’s Director of Research, Jerome LiCari, was so worried the apple juice might be unsafe that he quit when his bosses ignored his concerns. The controversy only got worse when the federal government’s Food and Drug Administration got involved. According to the FDA, tests in 1982 revealed that Beech-Nut’s “100 per cent apple juice” actually contained “beet sugar, malic acid, apple flavor, carmel color, corn syrup and sugar cane — but no apple juice.” Essentially, the mixture was sugar water and a blend of chemicals designed to look and taste like apple juice. Beech-Nut executives first claimed they didn’t know their supplier’s juice was not genuine. But instead of recalling the product, they stalled the FDA and scrambled to move as much “apple juice” as possible to the Caribbean where they sold it off, fast. By the time the government forced a recall, Beech-Nut only had to destroy 20,000was no big deal if the apple juice wasn’t apple juice, ‘Who were we hurting?’ he asked.” (http://www.clarksons.org/CrossCurrent/cc3206%20Pure%20Lies.htm) “The company itself had pleaded guilty the previous fall to 215 counts of violating Federal food and drug laws, and had agreed to pay a $2 million fine, by far the largest ever imposed in the 50-year history of the Food, Drug and Cosmetic Act. Beech-Nut had confessed in a press release that it had broken a ‘sacred trust.’” (http://www.nytimes.com/1988/07/24/magazine/into-the-mouths-of-babes.html?pagewanted=2&src=pm) The scandal made consumers distrust the company that they had been using to feed their children and they stopped buying the product. The profits fell and it has taken the company years to recover consumer loyalty and to regain their trust. The brand was never looked at in the same light and has taken years to repair the damage they did to their name.