Beech-Nut Nutrition

ACCORDING TO JAMES S. BENSON, former Deputy Commissioner of the Food and Drug Administration (FDA), the FDA works hard to ensure that the “companies that produce the products under the agency's jurisdiction comply with the federal Food, Drug, and Cosmetic Act and other statutes enforced by the FDA.” When the FDA began studying the possibility that manufacturers of fruit juice products were misleading consumers in 1982, Beech-Nut ranked as the second-largest baby food company.

The baby food industry was dominated by Gerber Products owning 70 percent of the jarred baby food market for 40 years; Beech-Nut and H.J. Heinz each had 14 percent of the market. Financial World reports that Beech-Nut began, in 1977, trying to gain a greater market share by selling a “cheaper adulterated product.”

Steven Kindel reported, “Sales of that product brought Beech-Nut an estimated $60 million between [Page 88]1977 and 1982, while reducing material costs about $250,000 annually.”

When confronted by the FDA, Beech-Nut denied knowledge of any fraudulent conduct and refused to provide its records while sending FDA investigators on scavenger hunts to empty warehouses. When the company was finally forced to admit that its 100-percent apple juice was just sugar water, it claimed that the drink was still safe and should not be recalled; Beech-Nut agreed not to ship more bogus juice, but, in fact, continued to ship it. Beech-Nut stone-walled the FDA investigators long enough to sell an additional 700,000 cases of bogus juice and thus they were forced to destroy only 20,000 cases according to a report to the Nestlé Corporation which acquired Beech-Nut during the protracted cover up.

FDA investigators found that Beech-Nut had substituted colored water for apple juice over a period of years (1977–82). The 470-count indictment of the company and some of its officers charged them with conspiracy, mail fraud, and marketing flavored sugar water as apple juice with the intention of defrauding and misleading consumers. Beech-Nut pleaded guilty to 215 felony violations of the Food, Drug and Cosmetic Act and paid fines and costs of nearly $2.2 million.

The Beech-Nut vice president for operations, John Lavery, was tried, convicted, and sentenced to one year and one day in jail. The president of Beech-Nut, Neils Hoyvald, was sentenced to six months of community service. Each man also paid a $100,000 fine. In addition, the five companies that supplied the raw materials plea-bargained their way to lesser sentences.

Beech-Nut lost millions in “slumping sales because of the negative publicity generated by the case,” Joseph A. Raelin explains, and goes on to assert that Beech-Nut (and Nestlé) could have escaped much of the scandal if they had listened to their own director of research and development, Jerome LiCari, who had produced evidence that their supplier was adulterating its juice concentrate. If the company had followed LiCari's advice, Beech-Nut would have been absolved of further liability. Li-Cari blew the whistle and resigned when his recommendations were ignored.