Mingchi Choo's Blog

What do the following have in common: Maqui berries, pomegranates, mangosteens, and now pitayas? They’re known as “superfruits.”

Enter Eric Helms, founder and CEO of Juice Generation. Five years ago, he began marketing mangosteens as an innovative, new superfruit. However, after a problem with the supplier led to many unsatisfied customers, he has now returned with exclusive import rights to a Nicaraguan fruit called pitaya.

Interestingly, there isn’t a clear definition of what requirements need to be met before being considered a superfruit.  In fact, almost any fruit, including those seen on everyday grocery store shelves, could be considered one thanks  to their various, unique nutritional properties. In other words, it’s a marketing term designed to appeal to consumers.

Helms, along with others in the juicing business, have found a point of parity with this term. Companies often claim that their fruits have miraculous properties like curing cancer (mangosteens, pomegranates) or weight loss (goji, acai) — yet upon further inspection, disclaimers say things such as “no clinical proof.”

Therefore, in this growing industry, marketing is the key to establishing points of difference, and we’ll have to wait and see how Helms’ new business venture turns out.

Related Links:

Bloomberg Businessweek: Pitaya: The Selling of a Superfruit

Abuse of insider connections, a debt of half a billion dollars owed by companies which no longer exist, and artificial inflation of assets and revenue. These are only some of the operations this company has been accused of. If the allegations put forth by the OSC are true, then Sino-Forest Corp., a Chinese company that was once the largest publicly traded forestry firm in Canada, is guilty of extremely unethical practices.

In June 2011, Muddy Waters Research, a short seller, raised the first allegations of fraud against Sino-Forest. That was followed by a series of investigations by forces including the RCMP and Ontario Securities Commission. Since then, the accused company has filed for bankruptcy protection and its shares have been delisted from the TSX. Additionally, the co-founder Allen Chan has resigned as CEO, and the entire senior executive team was replaced since all of them had been implicated in some way.

So, what is the main ethical issue here? The false inflation of income and revenue is at the center of this issue. To boost their stock prices, Sino-Forest circulated money through companies that were owned or otherwise connected to them, with Yuda Wood being a prime example. Yuda Wood was one of Sino-Forest’s largest suppliers, yet upon closer investigation, it was revealed that the company was controlled by the senior executives of Sino-Forest. However, these insider relations were never disclosed. Lying to shareholders to create an illusion of prosperity is highly unethical, and if proven to be true, this may result in one of the largest frauds in Canada.

To deny the charges of fraud, Sino-Forest has launched a private investigation with PwC. The results are expected to be released at the end of the year, having been delayed due to “data-collection challenges.”

Related Links:

Yahoo! Finance: Securities commission accuses Sino-Forest of fraud

Bloomberg: Sino-Forest Engaged in ‘Fraudulant Scheme,’ OSC Alleges

The Wall Street Journal: Sino-Forest Investigation Extended

The Globe and Mail: Sino-Forest says it is owed millions by companies that no longer exist

Sino-Forest’s Website