March 29, 2023

Suit Claims Monster Beverage Markets to Children

The city attorney of San Francisco sued Monster Beverage Corporation, the nation’s biggest maker of highly caffeinated energy drinks, claiming Monday that it was marketing its products to children who might suffer ill effects from them.

In a statement, Dennis J. Herrera, the city attorney, said he had acted because Monster Beverage, unlike some competitors, specifically marketed its products to children and younger teenagers.

“Monster Energy is unique among energy drink makers for the extent to which it targets children and youth in its marketing, despite the known risks its products pose to young people’s health and safety,” Mr. Herrera said on Monday.

The lawsuit, filed in San Francisco Superior Court, aims to restrict the way the company markets its drinks, and seeks civil penalties.

It follows a recent lawsuit against Mr. Herrera by Monster Beverage that seeks to block an inquiry into the company by his office, arguing that he lacks authority to regulate it.

Michael Sitrick, a spokesman for Monster Beverage, called the allegations in the suit filed Monday “demonstrably false,” and said the company, which is based in Corona, Calif., had repeatedly stated that it did not market to children.

Beverage makers typically define children as younger than 12 years old.

Monday’s lawsuit is the latest of several brought against the energy drink industry by public officials and others. The Food and Drug Administration recently said that it would investigate potential risks to teenagers from excessive caffeine in energy drinks and other products to which companies are adding the stimulant, like chewing gum and snacks.

Monster Beverage and other energy drink producers have defended themselves by pointing out that the level of caffeine in a cup of coffee sold by chains like Starbucks is often higher than in a similarly sized can of an energy drink.

Some officials, however, like Mr. Herrera, said that they were particularly concerned that Monster Beverage was aiming its marketing at younger teenagers, a group more sensitive to caffeine’s effects than adults.

In his lawsuit, Mr. Herrera said the company ran marketing programs like the “Monster Energy Drink Player of the Game,” which showed photographs of high school athletes holding the beverage.

“As the industry’s worst offender, Monster Energy should reform its irresponsible and illegal marketing practices before they’re forced to by regulators or courts,” Mr. Herrera said in his statement.

Until early this year, Monster Beverage and another energy drink producer, Rockstar Inc., marketed their products as dietary supplements. But both companies have told the F.D.A. that they are now marketing them as beverages, a category of products governed by a different set regulations than dietary supplements.

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Sunday Routine | Jeffrey Sachs: On Sundays, Jeffrey Sachs Revels in the Rites of the City

ON GLOBAL TIME I get up very early even on Sundays. Five o’clock would be normal — sometimes earlier. A lot of my colleagues and work are in Europe and in Asia, so inevitably when I get up there’s lots of e-mail traffic, some Skype, some phone calls.

THINGS TO BE DONE The work tends to be seven days a week just by its nature. The days are pretty much indistinguishable from that point of view, though the pace at home is, of course, gentler on Sundays. I make a cup of coffee, sit down to my bowl of cereal and do my e-mail and Skype. Then the newspaper tends to come around 6:30 or 7, and that’s the next hour.

MOVING OUT At this point it’s time to get ready to go out for a walk. If I can lure Hannah with me, I do that. She often is up early with a lot of schoolwork. Usually around 8:30 or 9, we can get moving to go outside.

Chester Higgins Jr./The New York Times

THE ROUTE Pretty much every Sunday that I’m here it’s a walk down Columbus more or less to Columbus Circle, then a walk up Broadway to key points along the way — Fairway, Zabar’s, Barnes Noble, a Starbucks, the farmers’ market outside the natural history museum. One of the wonderful things, and for me the biggest surprise as a new New Yorker 10 years ago, is that it is like taking a walk through your village, because you know a lot of people along the way by now.

NAVIGATING ZABAR’S You have to start with the olives, go to the nut section, the fish counter. They have the best, freshest fish, produced by the most skilled artisans. I watch them. The sculpture work is phenomenal to me — the joy of watching a nova being cut by these artisans.

Chester Higgins Jr./The New York Times

QUIET TIMES THREE Sunday afternoon is generally quiet writing, reading and thinking about a nice family dinner out in the evening. I’m working on a book right now, in the final stretches, about John Kennedy’s speeches in 1963, so the 50th anniversary of his great speech on peace. The household’s usually pretty quiet with the three of us sitting around just a few feet apart, my daughter doing her homework, my wife doing her work and e-mails and writing.

FAMILY GATHERING Starting around 5, we start to fantasize about food. My mother lives on Broadway and 68th, my sister on 72nd, our older daughter on Broadway and 70th, so we’re all in the neighborhood. And typically we have some version of a family dinner, almost always at a restaurant. Ocean Grill may be our deluxe pleasure, and we have a favorite trattoria on Columbus and 90th, Trattoria Pesce and Pasta.

LAST WALK After dinner we walk to the fruit stand at Columbus and 68th and to the Starbucks there for a cup of coffee and to buy fruit for the next day. Then, depending on the next day’s schedule, possibly a late movie. The TV stays off for months at a time. I barely know how to turn it on. That’s literally true, because it’s got too many boxes.

LAST TALK The family has the laptops open as we fade into the night. Very often I give a speech at 10:30 or 11 at night on Sunday for a talk in Asia. I close the door, see the family the next day.

UNPLUGGED Usually the day ends sometime around midnight, and starts again sometime around 4 or 5.

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You’re the Boss Blog: What You Need to Know About Merchant Cash Advances

Joe Maguire: Ami Kassar. Joe Maguire: “I haven’t lost my shirt yet.”

Searching for Capital

A broker assesses the small-business lending market.

Every morning, before I start my day, I stop for a cup of coffee and a bagel near my office. I have to choose between the local Dunkin’ Donuts franchise and Maguire’s, a boutique sandwich shop. Invariably, I pick the sandwich shop. I know the owner, Joe Maguire, and I like to support him. Also, his coffee is great.

Mr. Maguire has owned the shop for almost a year. He knows his customers by name. I often see him at the back of the store loading products onto the shelves after a trip to Costco or helping with a breakfast run.

“How are you doing, Joe?” I ask.

“Hanging tough, Ami,” he replies with a smile. “I’ve almost survived Year 1, and I haven’t lost my shirt yet!”

As I walk to work, I feel good about my choice as a consumer, but I don’t feel great about how our banking system is treating Mr. Maguire and millions of other small-business owners like him. The life of a small retailer is tough these days, and there are few signs that it’s getting easier.

What, for example, are Mr. Maguire’s options if he wants to get a loan to increase or expand his business? What happens if the radiator goes out and needs to be replaced, or if the oven blows up in the back of the kitchen? What happens if there is a bad winter and sales slow unexpectedly?

Mr. Maguire probably cannot turn to a bank. He has two strikes against him: he hasn’t been in business for at least two years, and, unless he is one of the lucky few with equity in their houses, he has no collateral for a loan. The bankers aren’t interested in the coffee urns or the coolers holding Snapple.

If Mr. Maguire is lucky and gets good advice, he may find one of the few banks that still offer unsecured Small Business Administration Express loans up to $50,000. The good news is that if you can get one of these loans, the rates are reasonable. The flip side is that Express can still take a few weeks and lots of paperwork, and Mr. Maguire may not have time to wait.

In this situation, he may well turn to one of the merchant cash advance lenders that are having a field day in today’s economy and that will promise Mr. Maguire unsecured money in just a few days. The lender will review Mr. Maguire’s recent merchant processing statements, bank statements or both, and then make what is often a tempting offer. In Mr. Maguire’s case, the offer might be an immediate $20,000 in exchange for $25,000 of future receipts.

It sounds tempting because the owners figure they can get $20,000 immediately, and it costs only $5,000. Think about it, though. The $5,000 is 25 percent of the amount they’re borrowing, and it’s actually even worse than that. Considering that most of these loans have to be paid back within six months, the actual interest rate may be more than 50 percent. That is a lot for any small-business owner to swallow. The lenders can get away with the high rates because they are careful not to call these transactions loans. They say they are buying a piece of a company’s future revenue.

If you are in the market, here are some things to consider:

Insist on seeing all of the fees upfront, and make sure you understand every one of them.

Make sure you understand the terms. Some of these loans involve a daily fixed amount taken from your account; others take a percentage of your credit card sales every day. A lender, for example, might demand 10 percent of your daily credit card receipts until you have paid back the agreed-upon amount. Don’t focus on the 10 percent figure — that is not the rate you are paying. I had to explain to one client that his effective interest rate was more than 90 percent.

Insist that the cash-advance company provide at least a projected annual percentage rate, or A.P.R., for your loan. This makes it much easier to compare the advance with other options. In addition to an S.B.A. Express loan, there may be business credit cards or equipment leases available to you at better rates.

Shop around. The cash-advance business is competitive. Make sure you’re getting the best possible rate.

The sad reality of today’s credit markets is that many small businesses have no choice but to consider these types of loans. In our work at MultiFunding, we often find that there is no better option. Still, whenever I am forced to put a client into one of these high-rate loans, I think about Mr. Maguire and the struggle he is facing to build his business, as well as his crew of four employees who count on him. Yes, the merchant cash advance lenders and the hedge funds that back many of them are filling a need in today’s market. But there has to be a better way.

Ami Kassar founded MultiFunding, which is based near Philadelphia and helps small businesses find the right sources of financing for their companies.

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Economix Blog: Adding Up Those Coffees at Work

While a weak economy may have driven consumers to cut back, we know that they are still indulging on the little things.

Leah Nash for The New York Times

As we’ve been told over and over, those indulgences add up. According to a new survey, half of all American workers buy coffee regularly during work hours, spending more than $20 a week on java, or about $1,000 a year. (Workers 18 to 34 years old spend about twice as much, on average, as workers over 45.) Two-thirds of workers buy lunch instead of bringing something from home, and spend an average of $37 a week. That translates into nearly $2,000 a year — the price of a new piece of furniture or a vacation.

The survey, which Braun Research conducted for Accounting Principals, a staffing firm that is a unit of the Adecco Group, has a margin of sampling error of 3.1 percent.

Many workers simply do not budget for lunch or coffee, said Jodi Chavez, a senior vice president of Accounting Principals.

“They budget in new furniture or their commute, but not a coffee here or there,” Ms. Chavez said. “So over the course of a week or month people don’t realize what this expense is.”

Ms. Chavez said that a “$3 cup of coffee is a little way to reward yourself and it’s a nice little pick-me-up and a guilty pleasure,” and added: “People tend to have an easier time dismissing those small expenses as a means to reward themselves. It’s a little easier to hide the evidence of a cup of coffee than a big shoebox in the closet.”

Then again, it’s not so easy to hide the credit card balance. When those polled were asked what kinds of financial changes they planned this year, 43 percent responded that they would “pay down my credit card debt or other outstanding bills.” Just over a third said they would bring lunch instead of buying it. They were not asked about coffee.

As for me, I’ve brought in a new thermos and bought a box of teabags on the way into work today.

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Strategies: A Starbucks Price Increase, to a Not-So-Round Final Number

On Jan. 3, my first working day of the year, I got a jolt all right. So did hundreds of other Starbucks customers in Manhattan.

Until that morning, a “tall” cup of coffee — 12 ounces of joe — cost less than $2. In that blissful, prelapsarian time, you would hand over two $1 bills and get back coffee and some small change — 9 cents, actually, but it seemed inconsequential. I usually dropped the coins into the tip jar, not so much out of generosity but selfishness. Why carry those annoying coins in my pocket?

That was so naïve.

Now Starbucks is making a certain class of New Yorkers count pennies. On Jan. 3, without warning, it set the net price of a tall cup of coffee in Manhattan at precisely $2.01, including tax.

Starbucks menu boards list the new price as $1.85. But when it’s time to pay, and when local taxes are added to the bill, a tall cup of coffee comes to $2.01.

Libby Schmais, a novelist who works part-time as a researcher at JPMorgan Chase, confronted the new price at the cash register of a Starbucks on Park Avenue near 48th Street.

“I didn’t have the penny,” she said. The barista reached into the tip jar — into which Ms. Schmais had intended to put her change — took out a penny, and put it in the cash register. This also happened to me when I offered the barista an extra dollar in Times Square. She wouldn’t take it, and dipped into her tip jar instead — a practice that would cut the baristas’ income, if it continued.

Ms. Schmais wasn’t especially irked by the price increase, which comes to 10 cents for a tall cup. But that orphaned penny had her fuming.

“It’s the stupidity of it,” she said, “It’s what I’d call ‘the annoyance factor.’ It’s ridiculous. Why the extra penny? Who has pennies? Didn’t anyone think this through? Couldn’t they round down or even up? Why leave it at a penny?”

When David Turnbull presented two $1 bills for coffee at the Starbucks on Astor Place, he met the same problem. He wasn’t carrying any pennies. “I can’t believe it,” he said. “Now I need to walk around with pennies? Who could possibly think a price of $2.01 makes sense?”

Ari Melber, a Seattle native who writes for The Nation, was forced to fumble for change at a Starbucks on the Lower East Side — and the new price tag also struck him as puzzling.

“Growing up in Seattle, I feel I know the company well,” he said. “This is a scientific company that studies everything it does very carefully. They tend to know what they’re doing. So I wonder, how could this absurd price happen? Is it an oversight, or a really smart, invasive strategy to encourage people to carry change — or maybe shift to plastic?”

I tried to find out.

In a cordial telephone conversation, Jim Olson, Starbucks’ vice president for global corporate communications, said the company’s prices vary from place to place, but for competitive reasons it chooses not to list them. He assured me that Starbucks “thinks holistically about prices and about the total value it provides its customers,” and said it certainly was aware that it was raising the tall coffee price in Manhattan to $2.01. “It wasn’t an accident,” he said.

While he wouldn’t provide numbers, he said that only a small proportion of customers buy just a tall coffee when they visit a Starbucks, and that an even smaller proportion pay in cash.

“If you bought a coffee and, say, a bagel, you might not notice the price so much,” he said. People who pay with credit and debit cards, or with Starbucks prepaid cards or iPhone apps or reward cards are likewise insulated from the penny shock. And many popular items — including larger coffees, as well as lattes and Frappuccinos — haven’t gone up in price, he said.

Moreover, prices didn’t go up nationwide, only in Starbucks stores in the Northeast and much of the Sun Belt. And as it turns out, the $2.01 price for a cup of coffee may not exist anywhere but Manhattan. Mr. Olson wouldn’t say.

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