Beech Nut Apple Juice

Founded in 1891 as a meat-packing company, Beech-Nut expanded steadily into a large, diversified food concern, eventually including Life Savers, Table Talk pies, Tetley tea, Martinson's coffee, chewing gum and baby food. In 1969, Beech-Nut was taken over by the Squibb Corporation. Only four years later, a remnant of the old company was spun off and taken private by a group led by a lawyer, Frank C. Nicholas. The company that emerged from the Squibb umbrella sold only baby food. One of its main products was the Beech-Nut apple juice.

In fact, apple juice is not especially nutritious (bottlers often fortify it with extra Vitamin C), but babies love it and find it easy to digest. Parents were pleased to buy a product that says 'no sugar added' – as Beech-Nut advertised – and seemed to regard it as almost as pure and natural as mother's milk.

After an expensive and unsuccessful effort in the mid-1970's to market Beech-Nut as the 'natural' baby food, the imperative to reduce costs became overwhelming. In 1977, when a Bronx-based supplier, who would later take the name Universal Juice, offered Beech-Nut a less-expensive apple-juice concentrate, the company abandoned its longtime supplier for the new source. The savings would never amount to much more than $250,000 a year, out of a $50 million-plus manufacturing budget, but Beech-Nut was under the gun.

No other baby-food company and no large apple-juice manufacturer ever bought significant quantities of concentrate from Universal – whose product had a suspect quality. The low price of the Universal concentrate, which eventually reached 25% below the market, could easily suggest that the product was diluted or adulterated.

The characters

John Lavery
In 1977 Lavery was vice president of operations and manager of the plant in Canajoharie, NJ. After spending his entire career at Beech-Nut, he had risen to a position in which he managed almost 1,000 employees. Lavery was known as a figure of propriety and rectitude. He was a fixtrure in the Methodist church, on the schoolboard and in community organizations.

Niels Hoyvald
In 1979, Beech-Nut's financial condition had become so parlous that Frank Nicholas admitted failure and sold the company to Nestle S.A., the Swiss food giant. In 1981, Hoyvald was appointed chief executive of Beech-Nut. Like Lavery, he was a man with an exemplary background. Born and raised in Denmark, he had relocated to the U.S. and received his MBA degree from the University of Wisconsin. An ambitious man, Hoyvald had hopscotched across five companies before joining Beech-Nut as head of marketing in 1980, with the promise that he would be promoted to president within a year. Throughout his career, Hoyvald's watchword had been 'aggressively marketing top quality products.' He had turned around the faltering Plumrose Inc., a large food company, by emphasizing quality, and he viewed the job at Beech-Nut as a chance to do just that.

Jerome Licari
Like Lavery, LiCari was also every bit the local boy. Born and raised in neighbouring Herkimer County, he had worked in the Beech-Nut plant during summers home from college, and, after 14 years with Beech-Nut, he had achieved his greatest ambitions as head of research and development at Canajoharie factory.

1978
After initial testing indicated the presence of impurities in the new concentrate, Lavery agreed to send two employees to inspect the 'blending facility' that
Universal's owner, Zeev Kaplansky, claimed to operate in New Jersey. The two reported that all they could find was a warehouse containing a few 55-gallon drums. The bizarre field trip aroused further suspicions among executives at the Canajoharie plant, but only one, LiCari, chose to act on them.

LiCari sent samples of the concentrate to an outside laboratory. The tests, he reported to Lavery, indicated that the juice was adulterated, probably with corn syrup. Rather than return the concentrate, or demand