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Starbucks facing lawsuit over refresher fruit drinks

Starbucks (SBUX) is facing a lawsuit over its refresher fruit beverages and whether they contain real fruit or not. The lawsuit makes claims of misleading or false advertising, with Starbucks representatives responding that "the allegations in the complaint are inaccurate and without merit."

Yahoo Finance's Brooke DiPalma, Josh Schafer, and Pras Subramanian discuss the allegations. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video transcript

BROOKE DIPALMA: I'm taking a closer look at shares of Starbucks today after the coffee giant is now facing a lawsuit. Now this lawsuit claims that consumers-- in the claim rather, claiming-- everyone's claiming here-- that several of the coffee giant's refreshers are not containing one ingredient, and that is fruit. As you can see here, these strawberry acai refreshers have become largely popular as their cold business continues to bulk up with the majority of US sales coming from cold.


Now these consumers claiming that in Starbucks mango dragon-- dragonfruit, mango dragon lemonade, pineapple passion fruit, pineapple passion fruit lemonade, strawberry acai, and strawberry acai lemonade, they were missing the fruit. Now Starbucks did tell Yahoo Finance that the allegations in the complaint are inaccurate and without merit. And we look forward to defending ourselves against these claims.

Now, this is not something that's new to the food business. We've seen this happen many times before with consumers sort of saying, hey, wait a second, this looks smaller, or this is missing something in particular.

JOSH SCHAFER: And this is just those people that probably buy a lot of these products and wait to find a mistake, right? That's how I always read these. Who is the burger chain? Was it Wendy's or--

BROOKE DIPALMA: With where's the beef?

JOSH SCHAFER: Yeah. It's just like, you feel like, is there a chance maybe there wasn't fruit in some of these drinks? Sure. Starbucks is a busy place. There's actually maybe a legitimate chance that there was no fruit or not enough fruit or that's kind of how the service industry works, I think, from a consumer standpoint. If you're going all the time and you're not getting what you want, maybe go to a different restaurant. I don't really-- sometimes I feel like some of this gets a little bit blown out of proportion, I guess.

PRAS SUBRAMANIAN: So I mean, I guess, we're kind of echoing the thing like shocker Starbucks doesn't put real fruit in their drinks, right? But I guess the difference is that mango acai dragonfruit whatever had no dragonfruit or acai in it, right?


PRAS SUBRAMANIAN: So the judge said, quote, that he rejected dismissal of the court of the case before, going to trial saying, "A significant portion of reasonable consumers would expect their drinks to contain the fruit mentioned in their names."


PRAS SUBRAMANIAN: So I think that's true. But I think we're also in that point like, I buy Fruit Loops. Am I going to get fruit in the Fruit Loops? I mean, you know--

BROOKE DIPALMA: Yeah. How far can this go?

PRAS SUBRAMANIAN: There's like this whole like, what's the flavor like, as opposed to what's really in it. So they didn't say 100% dragonfruit, did they? So I see this going either way.

JOSH SCHAFER: And those refreshers are pretty good, let's be honest. But do you--

BROOKE DIPALMA: The dried fruit in them, always.

JOSH SCHAFER: But do you buy them for the dried fruit? No, you buy it because it tastes like dragon fruit or something like or passion fruit or whatever it is. I don't even want the fruit.

PRAS SUBRAMANIAN: I think you made a good point about how the cold beverage business is huge for them. So this is kind of a problem, right?

BROOKE DIPALMA: Yeah. And also, too, I was speaking to our legal reporter Alexis Keenan about this. And she said that maybe here they could have a real case if they say that there's fruit within the beverage or they advertise it as a strawberry acai beverage, there was no fruit. There was-- maybe there is a case here.

PRAS SUBRAMANIAN: It's strawberry but not dragon fruit.

BROOKE DIPALMA: And Alexis also got into two other lawsuits that Starbucks has found themselves in years ago. She was telling me that there was-- they used a coloring from a beetle. And so that's what made their strawberry frappuccinos red and pink, right? And it was FDA-approved and legal to use. But that also got into a bit of a taboo with the people who necessarily were vegans or perhaps, obviously, did not want this coloring.

JOSH SCHAFER: Brooke, you know my easy solution here. What's my Starbucks drink?

BROOKE DIPALMA: Black coffee.

JOSH SCHAFER: If you just drink black coffee, you won't have this problem. That's my advice.

BROOKE DIPALMA: I love a good strawberry acai.

JOSH SCHAFER: Yeah. Even iced. You know, you can put it on ice, that's fine. Then you're going to get ice and black coffee. Nothing will be mixed up.