Sugar Liabilities for Publicly Traded Companies

Coca-Cola's 10-K Report
Sugar Risk Warning
-- Also Chocolate Industry's Risk

Coca-Cola sued in January 2017 for hurting consumers with added sugar in its sodas

In January 2017, the Coca-Cola Company and the American Beverage Association were sued in California state courts by two public health groups for hurting and deceiving consumers with the added sugar in their beverage products. This should be a huge worry to the chocolate industry, because to the extent that Coca-Cola is found to have hurt consumers and must pay damages, the chocolate industry can be argued to be half as guilty (and pay half as much in damages). Keep in mind that while a 12-ounce can of Coca-Cola has 39 grams of sugar, a Hershey Chocolate Bar has 27 grams of sugar. Here is one of the complaints made against Coca-Cola that can equally be made against chocolate companies:

133. By virtue of their affirmative misconduct, Defendants had a duty to disclose that the scientific consensus is that: a) sugar-sweetened beverages [& chocolate ???] are linked to obesity, type 2 diabetes, and cardiovascular disease; b) activity does not "balance" away, or negate the link between sugar-sweetened beverages [& chocolate ???] and obesity-related chronic diseases; and c) hydration with sugar-sweetened beverages [& chocolate milk ???] is not healthful or "essential" to the human body. They also had a duty to disclose all other material facts about the potential health hazards of sugar-sweetened beverage [& chocolate ???] consumption of which they had notice.
Lawsuit complaint at: www.kukaxoco.org/DOCUMENTS/CocaColaSuedJan2017.pdf


How much financial risk do publicly traded chocolate product companies face?

Evidence that the chocolate industry will be forced to start getting rid of the sugar in the coming years (and artificially sweetened sodas and chocolates, let's admit it, suck, so that is not an alternative) can be see in the following risk factor paragraph from Coca-Cola's 2015 10-K Annual Report (top of page 12):

La evidencia de que la industria del chocolate se verá obligada a empezar a deshacerse del azúcar en los próximos años (y el chocolates y gaseosas endulzados artificialmente, admitámoslo, apesta, por lo que no es una alternativa) se puede ver en el siguiente párrafo de factor de reisgo del Reporte Anual 10-K 2014 de Coca Cola (la parte superior de la página 12):

Consumers and public health and government officials are highly concerned about the public health consequences of obesity, particularly among young people. In addition, some researchers, health advocates, and dietary guidelines are suggesting that consumption of sugar-sweetened beverages is a primary cause of increased obesity rates and are encouraging consumers to reduce or eliminate consumption of such [sugar-sweetened] products. Increasing public concern about obesity and additional governmental regulations concerning the marketing, labeling, packaging, or sale of sugar-sweetened beverages may reduce demand for or increase the cost of our sugar-sweetened beverages. .... Limitations on our ability to provide any of these types of products or otherwise satisfy changing consumer preferences relating to nonalcoholic beverages could adversely affect our financial results.

Los consumidores y los funcionarios públicos y gubernamentales de salud están muy preocupados por las consecuencias a la salud pública de la obesidad, particularmente entre los jóvenes. Además, algunos investigadores, defensores de la salud, y las directrices dietéticas, sugieren que el consumo de bebidas endulzadas con azúcar es la causa principal del aumento de las tasas de obesidad y están animando a los consumidores a reducir o eliminar el consumo de estos productos [endulzados con azúcar]. El aumento de la preocupación pública sobre la obesidad y las regulaciones gubernamentales adicionales relativas a la comercialización, etiquetado, embalaje, o la venta de bebidas endulzadas con azúcar pueden reducir la demanda o aumentar el costo de nuestras bebidas endulzadas con azúcar ... Limitaciones en nuestra capacidad de proporcionar cualquiera de estos tipos de productos o satisfacer el cambio de preferencias de los consumidores en relación a las bebidas sin alcohol, podría afectar adversamente nuestros resultados financieros.

The 2015 Annual Report risk section (SEC Edgar download - top of page 11):
"Obesity concerns may reduce demand for some of our products.
There is growing concern among consumers, public health professionals and government agencies about the health problems associated with obesity. In addition, some researchers, health advocates and dietary guidelines are suggesting that consumption of sugar-sweetened beverages, including those sweetened with [High Fructose Corn Syrup] or other nutritive sweeteners, is a primary cause of increased obesity rates and are encouraging consumers to reduce or eliminate consumption of such [sugar-sweetened] products. Increasing public concern about obesity; possible new or increased taxes on sugar-sweetened beverages by government entities to reduce consumption or to raise revenue; additional governmental regulations concerning the marketing, labeling, packaging or sale of our sugar-sweetened beverages; and negative publicity resulting from actual or threatened legal actions against us or other companies in our industry relating to the marketing, labeling or sale of sugar-sweetened beverages may reduce demand for or increase the cost of our sugar-sweetened beverages, which could adversely affect our profitability.

NOTE: curious that Coca-Cola doesn't mention potential legal/financial risks of this added sugar's reported role (in medical journals) of contributing to diabetes, fatty liver disease and other medical ailments more damaging to health than obesity.

Now, keep in mind that while a 12-ounce can of Coca-Cola has 39 grams of sugar (more than the total recommended daily intake of sugar by the American Heart Association), a Hershey Chocolate Bar has 27 grams of sugar (more than the total recommended taily intake of sugar for women). Should Hershey be including a similar risk factor paragram in its annual 10-K report (their 2014 10-K doesn't have such a paragraph)? That is, is sugar becoming enough of a "public nuisance" (tort lawyer language) to create a huge future risk for the Coca-Colas and the Hersheys? And do large, health-product related companies, such as CVS, face similar risks, and must include similar risk statements in their 10-K report, because of the large profits they earn from selling large quantities of added-sugar foods - such as chocolate?

Ahora, tenga en cuenta que mientras que una lata de 12 onzas de Coca-Cola tiene 39 gramos de azúcar (más que el total de la ingesta diaria recomendada de azúcar por la American Heart Association), una barra de chocolate Hershey tiene 27 gramos de azúcar (más de la ingesta total diaria de azúcar recomendada para las mujeres). ¿Debería Hershey incluir un parágrafo de factor de riesgo similar, en su informe anual 10-K? (Su informe 10-K del 2014 no tiene tal parágrafo). Es decir, se está convirtiendo el azúcar suficientemente en un asunto de "alteración del orden público" (en lenguaje legal) para crear un futuro gran riesgo para la Coca-Colas y Hershey´s? Y las grandes empresas relacionadas con productos para la salud, tales como CVS, se enfrentan a riesgos similares, y ¿deben incluir declaraciones de riesgo similares en su informe 10-K, debido a los grandes beneficios que obtienen de la venta de grandes cantidades de alimentos sin azúcar añadido - como el chocolate?



In short, it is time that the chocolate industry eliminates all uses of sugars and artificial sweeteners (which have their health dangers as well).

Contact KukaXoco via email or 415-981-0441 (U.S.)