Hot Sauce Maker Sues Manufacturer Over Exploding Bottles and Insurance Dispute

An Iowa-based food brand has filed a product liability and contract dispute that underscores familiar risks for insurers handling food manufacturing and retail supply chain claims. Lola’s Fine Sauces alleges that manufacturing defects in bottled products led to bubbling, fermentation, discoloration, and bottles exploding after purchase. Customer complaints and retailer action followed, resulting in significant financial losses.

According to the complaint, EcoIdeas Innovation Inc., a Canadian manufacturer, was contractually obligated to indemnify Lola’s for losses tied to defects. The dispute escalated after Walmart removed affected products from shelves in 2024 due to improper packaging and labeling. That action triggered a billback of nearly $155,000, a scenario claims adjusters often see tied to recall endorsements, product contamination coverage, or vendor indemnity claims.

In 2025, consumer complaints intensified, with reports of bottles fermenting and exploding post-sale. Lola’s estimates total out-of-pocket losses at approximately $525,000, including retailer chargebacks, damaged inventory, and response costs. The company claims EcoIdeas initially acknowledged a breach and indicated it would assume responsibility, including pursuing insurance coverage.

The case now centers on whether insurance coverage exists and whether the manufacturer must cooperate in presenting a claim. Lola’s alleges EcoIdeas later asserted it had no applicable insurance and failed to provide information necessary to pursue recovery. EcoIdeas disputes liability and argues that insurance coverage issues are irrelevant to the underlying contract claims, a position that may influence discovery and evidentiary rulings.

For claims professionals, the case highlights recurring friction points in food manufacturing losses: scope of indemnity clauses, allocation of recall-related costs, cooperation obligations, and the practical impact when a downstream party lacks or denies coverage. The lawsuit is pending in federal court, with EcoIdeas requesting a jury trial.