|COCA COLA'S GLOBAL IMAGE AND EARNINGS IN TROUBLE|
EUROPE -- Maybe it's good news for Pepsi and other Coca Cola
competitors, but Coca Cola has been plagued by mishaps -- public relations
nightmares (racial discrimination lawsuits and health scares), missed business
opportunities (i.e. Orangina and Cadbury takeovers) and more public health scares
one after another throughout its European foothold. And Coke's earnings reflect
these recent troubles over the past year and a half. Combined with continued economic
problems overseas, Coca-Cola's stock price has dropped more than 30% from an all-time
high of nearly US$89 a share in July 1998 and second-quarter earnings are down.
Worldwide unit case volume will be down 1 - 2% for the quarter, with a decline
of 6 - 7% expected in Coke's Greater Europe Group.
The company announced that a recall of 14 million cases of its products in Europe -- due to contamination problems -- would cost Coca-Cola Enterprises around US$60 million, plus the cost of lost sales.
After more than 2 weeks of recent bans in Belgium, France and Luxembourg, Coca-Cola products are returning to store shelves. Bans were imposed for about 16 days, after authorities linked 249 cases of sickness to contaminated Coke products. Coca-Cola said it hopes to recover volume in Europe through special promotions, including free give-aways.
In Poland, where Coca Cola controls 27% of the soft drink market, the company also announced a recall of all its Bonaqua mineral water drinks sold in 0.33 liter glass bottles (these .33 liter bottles account for 12% of the company's total sales in Poland) due to another outbreak. On the bright side, this mold turned out to be dead and posed no public health risk. Bonaqua, Coca-Cola, Coca-Cola Light, Fanta Orange, Fanta Lemon and Kinley Tonic are all sold in the suspect bottles.
Revamping production plants in Europe will prove to be time-consuming and costly for Coca Cola. For instance, plants in Ghent and Antwerp, Belgium had to completely change production to meet new government-imposed requirements, including thorough cleaning of equipment, a complete change of raw materials and the introduction of stricter security measures. For example, the Antwerp location used substandard carbon dioxide to carbonate bottled drinks and it was noted that a fungicide on wooden pallets at the Dunkirk, France plant may have caused a foul smell on some cans.
While some loyal customers anxiously await the return of Coke, others have switched to competing brands such as Fiesta, Virgin, Kinder and Dr Pepper. And shopkeepers say they can't re-stock shelves fast enough with Coke's competing brands.
Coca Cola executives say they have had worse times than these and are optimistic about the future.
EU WORKS WITH ASIAN COTTON PRODUCERS TO INCREASE ENVIRONMENTALLY-FRIENDLY OUTPUT
Multan, PAKISTAN -- The world's leading cotton production is centered in Asia. China, India and Pakistan account for 46% of the world's total cotton production.
However, in recent times, cotton production has become stagnant, with the world average yield for 1998-99 estimated at 551 kilograms (1,212 lbs) per hectare.
Moreover, cotton output has begun to decline due to growing resistance of pests to insecticides -- and this has caused the price of cotton to climb. As a result, cotton's share of total fiber used worldwide had dropped by 7% during the last 10 years and in 1999 it is expected to account for only 42.4% of total consumption, as the natural fiber faces growing competition from producers of synthetic, less expensive fibers.
The EU has launched a US$12.7 million program with China, India, Pakistan, Bangladesh, the Philippines and Vietnam to increase environmentally-friendly cotton production. That is, to produce cotton with more than 50% less pesticides, while increasing output. (Of course, this reduction will have a great impact on the pesticide industry whose total worldwide sales were US$12 billion in 1995; and, of this, they sold 15% to cotton producers.)
This new EU program is designed to give the Asian countries the resources they need to combat the insecticide troubles, and to increase output and stabilize prices. Moreover, additional programs to increase awareness of natural fibers are needed to help promote cotton usage around the world.
Abidjan, IVORY COAST -- The Ivory Coast's economy relies heavily on chocolate production in Europe. As the world's leading cocoa producer, accounting for 40% of world exports, the Ivory Coast is greatly concerned about the new directive put forth in EU countries to allow chocolate-makers to put less cocoa butter in their products and still call it chocolate. Vegetable fats would be permitted to replace cocoa butter up to a limit of 5% of total weight.
If the directive is approved, it is expected that cocoa prices, which have been declining since October 1998, would continue to fall by another 20%. Authorities project that financial losses could reach a magnitude of US$530 million for the ACP (African, Caribbean and Pacific) countries.
PRUDENTIAL CONTINUES EXPANSION INTO ASIA
TOURISM TO CHINA ON THE RISE AGAIN
Taipei, TAIWAN -- Prudential Corporation, Britain's largest life insurance
company has announced the purchase of Hung Fu Life Insurance Company of Taiwan,
originally founded in 1994. The takeover offer was more than US$102 million ($3.3
billion Taiwan) for a 90% stake in the Taiwanese company. This purchase is part
of Prudential's plans to expand business further throughout Asia, where they are
already doing business in Hong Kong, Singapore, Malaysia, the Philippines, Thailand,
Indonesia and India.
Hung Fu has between 200 - 250,000 customers and 1998 net
assets worth 820,000 British pounds ($42 million Taiwan), and market capitalization of
$4.6 billion Taiwan. Other major insurance companies in Taiwan include Germany's
insurance giant Allianz AG, Aetna Life Insurance and local insurance
carriers including Cathay Life Insurance and Shin Kong Life Insurance.
Beijing, CHINA -- Tourism to China is back on the upswing, with increasing
visitors and revenues -- both up by more than 14% from January through May 1999. During
this period, more than 28 million tourists have traveled to China, from which China
derived an estimated US$5.7 billion in revenues. While US visitorship accounted for
a 10% increase, Indonesian and Thai tourists showed the largest increases (89% and 65%,
respectively), during these first five months. As the Asian economies show continued signs
of improvement, tourists from Japan, South Korea and Malaysia continue to travel in
increasing numbers to China.
Tourism continued to show improvement this year over last, despite anti-NATO
demonstrations in Beijing following the bombing of the Chinese embassy in
Yugoslavia on May 7. Overall, China recorded more than 5.8
million visitors this past May, up 12.9% from last year.
RETAIL INVENTORY/PRODUCTION MANAGEMENT TO BECOME MORE COLLABORATIVE
DIGITAL TV RECOGNIZES GROWING IMPORTANCE OF HISPANIC VIEWERS IN US MARKET
Newton, MA - USA -- The advent of internet technology combined with traditional
pen/paper and fax-based communications have caused the retail industry to take a fresh look
at supply chain management. With new capabilities available to re-engineer the
process of communications, forecasting and logistics/transportation, we can expect
to see greater competition among retailers as they implement better integrated
retailer-manufacturer systems. A recent study released by Retail Systems Alert
Group, noted that retailers with aging systems have an immediate demand for this. For
more information, see www.retailsystems.com.
New York, USA -- Recognizing the growing importance of the US Hispanic market,
Univision Communications Inc. and DIRECTV, Inc. announced an
agreement to add Univision Television Network, the country's leading
Spanish-language television broadcast company and Galavision, the
nation's leading Spanish-language cable network to its lineup later this month.
These Spanish language services will reach more than 5 million DIRECTV customers
at no additional cost to subscribers. And the goal is to attract new Hispanic
customers to the digital TV franchise.
DIRECTV is the leading provider of digital television
in the US with more than 7 million subscribers who have access to more
than 210 channels of programming.
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