What happened

Shares of LaCroix maker National Beverage (FIZZ 1.44%) fell 20.7% in October 2018, according to data from S&P Global Market Intelligence. The company has been battling lawsuits and public perception over the LaCroix product line's commitment to "natural ingredients," and the conflict came to a head at the end of the month as analyst firm Susquehanna expressed the financial damage the controversy is causing to this company.

So what

According to Susquehanna analyst Pablo Zuanic's market checks, something like 11% of the LaCroix drink's customer base are drinking less of it due to the possibility that National Beverage might have added synthetic ingredients somewhere along the production process. Some 30% of LaCroix drinkers say that they choose it due to the oft-advertised lack of additives, and 40% of that market segment aren't convinced that this selling point holds (gently flavored) water right now.

Two cans of LaCroix resting on a bed of ice cubes.

Image source: Anders Bylund.

Now what

National Beverage disagrees with the criticism, of course. In a public statement, CEO Nick Caporella waxed downright poetic about LaCroix's purity.

"Naturally Essenced is not a marketing ploy, but rather a core product element! Our marketing, as is the case with all that we do, is centered on profoundness, innovation and creativity," Caporella wrote. "Our Cult, our Consumer, our Love and our LaCroix are... Genuinely Natural! Our Way is Tastefully... Sparkling!!"

The court of public opinion may settle the matter before the legal system ever does. Meanwhile, National Beverage's stock trades at a fizzy 35 times free cash flows. I wouldn't be surprised to see share prices fall a bit further, especially if the company's next earnings report (due in early December) confirms Susquehanna's analysis and/or National Beverage loses its "natural ingredients" label by legal edict.