Energy drinks marketer Celsius Holdings Inc. has agreed to pay $7.8 million to settle a class-action lawsuit alleging it falsely advertised its products as having no preservatives -- even though they contain the widely used preservative citric acid.
The litigation began in California in 2019 and was consolidated with a subsequent class action filed in U.S. District Court in New York—where a proposed settlement was reached this month.
Plaintiffs contended that Celsius products were deceptively labeled as containing “No Preservatives” while Celsius countered that citric acid was present only to add flavor to its liquid and powdered beverages.
Founded in 2005, Celsius touts such healthy ingredients as ginger, guarana, green tea and seven essential vitamins while being gluten- and sugar-free, kosher and non-GMO.
According to the plaintiffs, they would not have paid a premium price for Celsius drinks had they known they contained a preservative.
Plaintiffs’ attorneys at the Clarkson Law Firm, P.C. said the U.S. District Court did not rule in favor of either side but that the parties have agreed to a settlement “to avoid the expense and risks of the lawsuit.”
If approved, the settlement would require Celsius to modify its advertising and labeling, including removal of the "No Preservatives" claim.
Anyone who purchased Celsius between Jan. 1 of 2015 and Nov. 23 of this year would be eligible for compensation.
Public notification of the settlement would be achieved via banner ads on social media and thousands of other websites—with a goal of serving an estimated 88 million impressions.
The target audience for the notifications skews 60% male, and the largest age cohort is 18-24.
Final approval hearing on the settlement is scheduled for March 31.
In August, PepsiCo Inc. paid $550 million for just under 10% ownership of Celsius, whose beverages gained entry to the PepsiCo distribution network on Oct. 1.