Bourbon & Cola drink not the real thing

Kentucky Rebel Bourbon & Cola drink not the real thing: Indio Beverages fined $28,000

Indio Beverages NZ Limited, a subsidiary of Lion Nathan Limited (Australia), was fined $28,000 plus costs in the Auckland District Court yesterday for breaching the Fair Trading Act in relation to its Kentucky Rebel Bourbon & Cola ready to drink product.

The Commerce Commission laid charges against Indio Beverages following an investigation into alleged misleading labelling of Kentucky Rebel Bourbon & Cola, which failed to disclose that the product contained as much as 50% neutral spirit, in addition to the bourbon and cola content.

While the formula of the product has since been changed to include 100% bourbon, the Commission's investigation revealed that nearly 25,000 case lots of the misleading product were sold to customers from when it was launched in July 2001 until July 2002.

Last year, competitor Independent Liquor (NZ) Limited commenced civil proceedings against Indio Beverages under the Fair Trading Act, alleging that Indio Beverages was undermining its market share by selling Kentucky Rebel Bourbon & Cola at a cheaper price than its own 'Woodstock' bourbon and cola product, while representing that it contained 100% bourbon. The case was settled out of court, and included a payment of $250,000 to Independent Liquor and an undertaking by Indio Beverages to withdraw from retail trade all stock that did not contain 100% bourbon.

Director of Fair Trading Deborah Battell said that the Commission took the case because Indio Beverages' conduct affected a large number of consumers. "Consumers had no way of knowing that the bourbon was diluted with a neutral spirit. In addition, this was the third time that a Lion Nathan company had come to the attention of the Commission for misleading the public through claims made on its labels.

"Indio Beverages included a neutral spirit so that it could achieve a cost advantage over its competitors. It then used misleading labelling to market the product as though it contained 100% bourbon giving the impression that it was a superior product," Ms Battell added.

In sentencing, Judge Gittos commented that at the time of the launch of Kentucky Rebel, Indio's parent company was having difficulty with the Commission in relation to its Mac's product, and Speight's was an ongoing investigation. "Whether awareness filtered down or not, it should have done," he said.

Background

In a settlement with the Commission in November 2001, another of Lion Nathan's subsidiary companies, New Zealand Breweries Limited acknowledged that wording on its 330ml bottles, cans, and packaging of Speight's Gold Medal Ale beer was in breach of the Fair Trading Act. New Zealand Breweries admitted the labels, which stated "Traditionally brewed at Speight's Brewery Dunedin since 1876" were liable to mislead consumers into believing that the beer was brewed in Dunedin when the beer was in fact also brewed in Christchurch or Auckland.

As part of the settlement, New Zealand Breweries was required to implement changes to its labelling and to publish corrective newspaper advertising and point of sale notices.

The settlement followed an earlier Commission warning to New Zealand Breweries that the labels on its Mac's Beers product (which incorrectly represented that an independent, family-owned brewery produced the beer) were liable to mislead.

See Media Release 2001/115 New Zealand Breweries admits breach of Fair Trading Act over Speight's beer labels at http://www.comcom.govt.nz/publications/display_mr.cfm?mr_id=889

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