International News: August 2006

Cola trade secrets: Coca-Cola and PepsiCo unite with the FBI to foil an attempt to sell insider information on new products

When pepsico received a letter from a Coca-Cola employee offering to sell trade secrets, including details of a new product, the rival company chose to inform Coca-Cola. After notifying the FBI, and a subsequent investigation, three suspects were arrested at the end of June for stealing and selling trade secrets.

Joya Williams, allegedly the source of the information, worked as a secretary at Coca-Cola. Two ex-convicts, who are believed to have arranged to sell the information, were arrested with her. Williams apparently stole confidential documents, as well as a product sample, from the company’s Atlanta headquarters.

After the FBI were informed, an undercover agent met with Ibrahim Dimson, who gave him 14 pages of classified and confidential documents and apparently requested US$10,000. They reportedly met again, with the agent paying part of the further US$75,000 for more documents and the confidential sample of a new Coca-Cola project. A further US$1.5 million was offered, after which Dimson and the other accused, Edmund Duhaney, apparently opened a bank account to deposit the money, using their own names.

A PepsiCo spokesperson, Dave DeCecco, commenting on his company’s role in uncovering the crime, was quoted as saying that “competition can sometimes be fierce, but also must be fair and legal.”

According to Coca-Cola, the secret formula for its original drink remained safe throughout.

Truce in Cava wars
Ten years of trade war between the two giants of Cava production is apparently over.
The two major players in Spain’s sparkling wine market, Codorníu and Freixenet, have agreed to a truce, after years of legal battles, according to La Vanguardia.

The lawsuits have been withdrawn, and there will apparently be some form of economic compensation, although details of this are not available. The lawsuits concerned allegations of fraudulent trade practices. The first was in 1996, with Codorníu’s accusation that Freixenet was not meeting the requirement of minimum nine months ageing for its cavas.

Freixenet responded with allegations that Codorníu’s white frosted bottles were an imitation of its Carta Nevada bottle. This resulted in a trademark lawsuit.

The truce between these two companies is likely to benefit the cava market in general, as well as helping to address the current Cava boycott in Spain.

As a response to an attempt by Catalonian separatists to sabotage Madrid’s application to host the 2012 Olympic games, a boycott was called by other Spaniards on Catalan products, including Cava. This has had a noticeable effect on sales, with other sparkling wine and Champagne benefiting.

Wine for wildlife
South African wine brand Kumala has partnered with The American Zoo & Aquarium Association (AZA) to promote wildlife conservation. Continuing until the end of August, the three-month campaign is set to raise up to US$20,000 through retail promotions. Constellation-owned Kumala will donate proceeds from every bottle sold, as well as providing discount coupons in some parts of the US. The activity is also supported by in-store literature to emphasise the importance of partnerships in wildlife conservation.

The AZA is involved in both wildlife and environment habitat conservation programmes. Founded in 1924, the association has 210 accredited members in the US, Bermuda and Hong Kong. Accreditation assures visitors that a facility provides excellent care for animals.

Kumala, made in the Western Cape in South Africa, currently has the largest market share (25%, according to ACNielsen) of the South African wine market in the US. Kumala’s association with conservation stems from the diversity and richness of natural treasures in South Africa, boasting more species of plants than the tropical rainforests, as well as a 300-year-old winemaking tradition.

Santa Rita expands
Chilean winery Viña Santa Rita looks set to become the  second largest wine-producer in the country, following the acquisition of 1,600 hectares of land in Limari and Pumanque. The purchase brings Santa Rita’s total land holdings to 3,600ha. Planting has started at the new sites and the first commercial vintage will be available in 2009.  Santa Rita’s head oenologist, Andrés Ilabaca, will jointly oversee all new plantings with newly appointed wine consultant Patrick Valette.

According to Ilabaca all of the new vines will be planted using grafted rootstocks, to prevent disease and guarantee consistency of quality. “We believe this is the first time that grafting has been used on such a large scale in Chile,” he added.

Santa Rita has acquired a total of 470ha in Limari, which is located 400km north of Santiago.  Of this, 65ha are already planted with Cabernet Sauvignon, Shiraz, Carmenère and Chardonnay. The remaining land will be planted over the next five years primarily with Chardonnay and Shiraz.

Pumanque, a vast growing area with many sub-regions situated around 30km west of Apalta, currently has no other vineyard plantings due to a lack of irrigation. Santa Rita has created a local reservoir and installed a 10km water pipeline to allow plantings and Ilabaca now plans to experiment with several different varieties in the area.

Duboeuf decides not to appeal
In France, Georges Duboeuf’s company has been fined E30,000 after a wine-tampering court case.
The site manager responsible for mixing grape varieties from several appellations was dismissed last year. The incident was discovered before the wine was bottled, and Duboeuf claimed that the incorrect blending was accidental.

The public prosecutor requested a much higher fine of E130,000, and Duboeuf has decided not to appeal against the ruling.
A release from the company noted, “We have decided to turn the page, rather than trying to fight against rules whose legal,
social and moral purpose is beyond us.”

The charge against the winery was “fraud and attempted fraud concerning the origin and quality of wines”, a violation in terms of France’s appellation contrôlée system. The irregularity concerned 300,000 bottles after a variable vintage in 2004.
Best known as the “King of Beaujolas”, 72-year-old Duboeuf was tried in the French town of Villefranche sur Saône.

UK distributors Berkmann Wine Cellars last month announced their ongoing support for Duboeuf. “We would like to reassure customers that they can continue to put the utmost faith in Georges Duboeuf’s integrity,” said the company.

New US underdog
The Wine Group has formed Underdog Wine Merchants, specialising in “millennial” wines. The new business will be an autonomous organisation within the San Francisco-based company, and will be involved in producing, marketing and selling premium wines to a growing market of young adult wine drinkers in the US.

Underdog’s portfolio includes unusual brands from around the world such as Pinot Evil (France), Herding Cats (South Africa), Tempra Tantrum (Spain), Angel Juice (Italy) and Devil’s Marbles (Australia), as well as some locals, including Grizzly Flat from Lodi in California.

Adam Richardson, estate winemaker at Concannon Vineyard in Livermore, California, (acquired by The Wine Group in 2002), has been named international winemaker for Underdog. Fritz Lance, with 20 years of experience at Gallo, will be the company’s president.

Heineken takes flight
A three-year contract was signed last month between British Airways and Heineken. All of the airline’s worldwide flights will now serve Heineken, a first on British Airways for the global beer brand, despite listings with 50 other airlines worldwide.

The brand’s renewed image in the UK was apparently a major motivation for choosing Heineken. The genuinely imported beer is not only achieving strong growth in the UK, but is well matched to the profile of British Airways’ international passengers.

Heineken’s global status was an important factor for Pascal van Ham of Heineken International. “Heineken is seen as the most international beer brand with a strong and premium position in all British Airways’ destinations,” he explained.

In addition to serving the beer during flights, there is apparently potential for further marketing activities such as the Rugby World Cup and the UEFA Champions League. “British Airways is a premium exposure window to 35 million international passengers per year,” van Ham added.

Product placement cut down to size
An innovative on-product publisher, iLove, is awaiting a global patent and looking to expand into other markets after the  successful launch of a magazine on a bottle of water in Australia earlier this year.

The magazine already has a distribution of over 100,000 a week –  2% of the Australian bottled water market. It is targeted at 18–25-year-old women, major consumers of bottled water.

© db August 2006