Coke triggers orange-juice investigation

The beverage giant notified federal regulators that it detected a fungicide in some of its and a competitor's products.

By Kim Peterson Jan 12, 2012 2:05AM
Image: Parents and children eating at table © Maria Teijeiro/Digital Vision/Getty ImagesCoca-Cola (KO) and PepsiCo (PEP) control nearly two-thirds of the U.S. orange-juice market. And both companies are in the spotlight this week over concerns that a fungicide has contaminated some of their juice.

It all started Dec. 28, when the Food and Drug Administration got notice that one of the major juice companies found low levels of a pesticide, carbendazim, in its and a competitor's juice products.

At first, Coke refused to admit that it was the company. ("Why does that matter?" a spokesman asked Dow Jones.) But later, Coke said it did in fact notify the FDA. Coke has not said which of its competitor's products also contained the fungicide. Pepsi isn't saying whether its juices contain the chemical.

Coke makes Simply Orange and Minute Maid, and Pepsi makes the Tropicana and Dole brands. Coke shares fell nearly 2% Wednesday, and Pepsi shares fell 1%.

The U.S. has stopped shipments of imported orange juice from all countries while it tests for carbendazim. The fungicide is linked to a risk of liver tumors in animals, Bloomberg reported.

Most of the orange juice in the U.S. comes from Florida, but about one in six glasses consumed here is produced in Brazil, Bloomberg reported. The Brazilian juice is the focus of this investigation, since some Brazilian growers reportedly use the fungicide on their trees. Carbendazim is not approved for oranges grown in the U.S., but other countries allow it.

Orange juice futures have gone bonkers this week, soaring as the drama unfolded on Tuesday and then falling 10% on Wednesday. If the FDA cracks down on orange juice as a result of its investigation, juice futures could jump again. The FDA is expected to have more information by the end of the week.

The orange juice futures market rose to fame in the 1983 movie "Trading Places," but carbendazim was not part of the plot.

Tags: KOPEP

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