Is Sugar The New Tobacco?

Pick your poison
Pick your poison
Bertrand Hauger
Servan Peca

LAUSANNE â€" The question has been debated for many years, but is now gaining more attention than ever: Has sugar become the new tobacco? Are there parallels, in other words, between current attempts to curb the use of addictive industrial glucose and the strict regulations applied to the cigarette industry starting in the late 1990s?

Last year, the U.S. bank Morgan Stanley calculated that between 2015 and 2035, exorbitant sugar consumption will take half a percentage point off the world's overall economic growth numbers. There has been a flurry of scientific studies too, along with the launch of anti-sugar health campaigns.

In recent years, authorities in various countries have specifically begun targeting soda. France (2012) and Mexico (2014) introduced a tax on sugar and sugary products. Belgium introduced a soda tax this past January, and the UK is considering doing the same in 2018. Discussions about sugar in Indonesia, India, the Philippines and Singapore have become more heated. In Switzerland, the idea exists and is advancing slowly.

On the opposite extreme is the U.S., where annual per capita soda consumption is 112 liters, according to Beverage Digest. American lobbyists completely block any anti-sugar legislation.

This is the first similarity between the sugar and tobacco industries: Like their tobacco counterparts, Coca-Cola and the other soft-drink giants work behind the scenes to; 1) fend off regulations by accusing governments of using soda taxes, in this case, to disguise other tax hikes, and; 2) question the accuracy of the heath studies used to justify those regulations.

Selling the problem and the solution

Another similarity between the two sectors is that neither market is transparent. The supply chains are complex with a variety of producers, and there are countless intermediaries and disparate regulations. Even the most educated experts concede that it is very difficult to understand the link between the wholesale and retail sugar prices.

Big Tobacco has been able to turn this opacity to its advantage. By coordinating the incorporation of the tax in price hikes, tobacco companies managed to maintain their sales and revenue. Additionally, food giants and tobacco companies like Philip Morris, British American Tobacco (BAT) and Imperial Tobacco gained market shares in developing countries, where health campaigns are not as advanced.

Coca-Cola, PepsiCo, Danone, Nestlé, and other soda, ice cream, and candy manufacturers are very aware that the crackdown on sugar will eventually prove successful. They have therefore adapted their products to include water, fruit juice, and other light products without added sugar. The goal is simple: retrieve their clients the day they change their eating habits.

Fake sweeteners and sugar â€" Photo: Ruaridh Stewart/ZUMA

By focusing more on nutrition, health, and wellness, Nestlé seems to be one step ahead. On the other hand, the company still keeps the candy and sugary brands that made it famous. The Bloomberg financial company describes Nestlé’s strategy this way: "The company will retain its core business of chocolate products and other sweets while expanding its retail pharmacy and hospital networks."

So far, we haven't yet seen cigarette companies invest in anti-smoking patches. But they did jump on the e-cigarette fad pretty quickly. All major cigarette companies have bought at least one company or brand in this relatively new niche.

Studies have not yet proven that e-cigarettes reduce the risk of cancer, but tobacco companies are already heavily investing in them. Tobacco companies, just like Nestlé, are planning on selling both the problem and the solution.

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Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.

Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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