Coca-Cola’s product claims land it in hot water

Coca-Cola is having a pretty tough time right now, what with New York mayor Michael Bloomberg deciding that it is now time to do with soft drinks what was done with cigarettes, namely ban them, and the US courts deciding that the soft drinks giant will have to go to court and answer a case relating to its VitaminWater product.

The VitaminWater case relates to a class action brought in 2009. According to an Australian news report, the plaintiffs claimed that the product was loaded with sugar and that its name and statements like “vitamins + water = all you need” and this “combination of zinc and fortifying vitamins can… keep you healthy as a horse”, misled consumers by suggesting that they were making a healthy choice.

In its efforts to have the case dismissed, Coca-Cola apparently argued that no reasonable person would really think that VitaminWater was healthy.

The article goes on to explain that Coca-Cola argued that sometimes companies make statements relating to their products that are so outlandish that no one would actually believe them.

The assumption was that VitaminWater would not mislead consumers because once they actually tasted it, they’d realise it was packed with sugar.

Meanwhile in New York, Coca-Cola has responded to the campaign against “high calorie, sugary, carbohydrate-rich foods” with an advertising campaign that apparently announces, “our products are bad for you, so we’re reducing the packaging size” alongside a slimmed down glass of Coca-Cola instead of the more traditional monstrous size.

The argument by free marketers that there should be no restrictions on Coca-Cola’s rights to sell its products because people are able to chose for themselves, rather overlooks the billions of dollars that the company spends each year to restrict that choice.

Airlines

The high cost of aviation fuel plus the need to reduce pollution from aircraft emissions has caused even the most cash-strapped airlines to buy or lease new generation, more fuel-economic aircraft.

SAA and British Airways franchise holder Comair are already doing so, and the government, as SAA’s sole shareholder, recently agreed to guarantee loans to enable the national carrier to replace its fleet after the airline asked for R5 billion recapitalisation for this purpose.

Miguel Santos, Boeing’s director for sales in Africa, says the increasing prosperity of some countries in the continent, which is attracting international investment and encouraging more air travel, is making banks and other financial institutions more willing to help African airlines.

Ron Glover, the managing director for Africa of Boeing Capital, said Boeing’s sixth round table discussion in Johannesburg had attracted 50 delegates last week compared with only 20 in 2008.

It is unfortunate for low-cost airline 1time that was not the case two years ago, since it is widely agreed in the industry that the mounting debt that caused it to go out of business last year was due to an inability to replace its fuel-guzzling fleet.

According to provisional liquidator Aviva Nyamara, its survival now depends on whether the minister of transport allows London-based low cost airline Fastjet to acquire a controlling shareholding in it.

The Air Licensing Act requires a South African airline to be 75 percent owned by South Africans, but the minister can make an exception.

The founding directors of 1time negotiated to acquire newer Airbus A320s from British low-cost airline Easyjet. But the cash they needed would have come from the transfer of a controlling shareholding to its black economic empowerment shareholders led by Blacky Komani – and the process took too long.

The necessary funding came through too late, when the aircraft had already gone to another bidder.

Lonrho

We are fortunate that London- and JSE-listed Lonrho has such confidence in South Africa, since the steep fall in the value of the rand against the British pound, and the failure of a local company to complete two contracts on time, hit the company hard in the final quarter of last year, according to a trading statement issued this week.

But it still affirms that its operations are “aligned with the strongest growth opportunities in Africa”.

The statement explains that the rand is the reporting currency for more than 40 percent of the group’s revenue and, although revenue for the whole year grew by 44.3 percent to £186.1 million (R1.7 billion), it now expects to report a net operating loss of between £3m and £5m for the year.

This was due partly to delays in the completion of two government contracts in South Africa by eKwikbuild. One was for 418 schools in the Eastern Cape (surely a badly needed project in view of the crisis of education in this country). The other was for 112 victim friendly units, kitchens and offices for the SAPS.

The delays caused a shortfall in revenue of £1.6m. Both contracts, according to the statement, are “expected to be substantially complete” by the end of this quarter.

In addition to this, the integration of Rollex and Lonrho Logistics has led to restructuring costs of £1.3m. Rollex is now focused only on its agri-processing business based at Johannesburg’s OR Tambo International Airport, while Lonrho Logistics now handles all the freight forwarding business of the group.

The final disaster to hit Lonrho’s activities was due to nature and not to a human agency. Unusually small fish caused a shortfall in revenue from Oceanfresh of £6m in November and December.

But the year ended more happily for the company in late December and January, when fish sizes “recovered strongly”, according to the statement.

Edited by Banele Ginindza. With contributions from Ann Crotty and Audrey D’Angelo