Reality Check for Coca-Cola's Public Relations

by Amit Srivastava
India Resource Center
April 16, 2009

Coca-Cola's shareholder meeting is coming up next week and it just so happens that the meeting is perfectly timed to be on Earth Day - April 22.

Given our experience with Coca-Cola's public relations which has the uncanny ability to make things up, it would not surprise us if the company uses the timing of Earth Day to bolster its green credentials.

For a company seeped in public relations - it spends in excess of $2.5 billion annually in marketing alone - the mantra seems to be that projecting a good image is more important than good practice.

So when the company comes under intense attack for mismanaging water resources in India by locating its plants in drought prone areas, Coca-Cola responds by ramping up its public relations to paint a picture of itself as a global champion in water conservation.

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Never mind that farmers in India are losing their livelihoods and rural women are having to walk kilometers longer to access potable water - courtesy Coca-Cola.

But if you lead with the make up world of public relations, chances are that at some point reality will check in, and check in it has for Coca-Cola.

Busted in Australia

"Coca-Cola Busted for Big Fat Rotten Lies" ran the blunt headline earlier this month in the Sydney Morning Herald, a major news outlet in Australia.

Last October, Coca-Cola placed full-page print ads all across Australia featuring Kerry Armstrong, an Australian actress, with the heading "Kerry Armstrong on Motherhood & Myth-Busting".

Representing Ms. Armstrong as a responsible "mum" who is "often bombarded by conflicting messages on food and drinks", the ad goes on to establish the facts about Coca-Cola by busting myths about Coca-Cola.

The ad busts the myths that Coca-Cola makes you fat, rots your teeth and is packed with caffeine, among others.

The Australian Competition and Consumer Commission (ACCC) was not amused. It found the advertisement to be misleading and deceptive.

"Coke's messages were totally unacceptable, creating an impression which is likely to mislead that Coca-Cola cannot contribute to weight gain, obesity and tooth decay," said the ACCC's chairman, Graeme Samuel.

The ACCC took swift action and on April 2, 2009, the commission issued court enforceable orders to Coca-Cola, including:
  • Publish advertisements correcting the misleading claims made in the "Myth Busting" ad in every publication the original ad was published in and of equal prominence and size
  • Barred Coca-Cola for three years from making the claims that Coca-Cola cannot contribute to weight gain and tooth decay, and that Diet Coca-Cola contains only half the caffeine as a cup of tea, unless these can be substantiated
  • Provide a link to the corrected ad from its corporate social responsibility website

The incident in Australia was a major embarrassment for Coca-Cola, and it had to act to abide by the orders of the commission to correct the misleading ads it had placed.

The corrective advertisement published by Coca-Cola, unfortunately, is yet another public relations maneuver on how not to accept full responsibility for misleading and deceiving the public.

Coca-Cola's misleading and deceptive claims, cooked up mostly by their public relations people, have been taking quite a beating recently.

The Facts

As it is, a good number of scientific studies have confirmed strong linkages between the consumption of soft drinks and obesity and a host of other health problems. To add to this body of evidence, the New England Journal of Medicine has just published an article advocating a 'penny-per-ounce' tax on soft drinks because, "Sugar-sweetened beverages (soda sweetened with sugar, corn syrup, or other caloric sweeteners and other carbonated and uncarbonated drinks, such as sports and energy drinks) may be the single largest driver of the obesity epidemic."

$650,000 Consumer Fraud Settlement

In February 2009, Coca-Cola, Nestle and Beverage Partnership Worldwide were rapped for their claims that consuming Enviga - a carbonated green tea product - will lead to weight loss by burning more calories than it contains.

In a settlement reached with 27 states in the US, the companies agreed to pay $650,000 to the states and agreed to "disclaim weight loss benefits and make clear that weight loss is only possible through diet and exercise."

The states questioned the company's studies behind the claim, calling them "scientifically weightless - unsupported by solid evidence."

"Consumers are bombarded with ads for diet and weight-loss products that make all kinds of wild claims about results they can expect," said Chris Koster, Attorney General of Missouri. "Consumers can rest assured that those of us who enforce consumer fraud laws will be watching for misleading ads like these and not allow them to continue."

No Plus in Denmark

In January 2009, Coca-Cola Light Plus - marketed as sugar free enriched with vitamins and minerals - was pulled from the shelves of two of Denmark's largest supermarket chains, COOP and Dansk Supermarked, just a week after it was launched in Denmark.

The supermarkets were skeptical to Coca-Cola's suggestion that Coca-Cola Light Plus promotes good health.

According to the Copenhagen Post, Jens Juul Nielsen, a spokesman for COOP Denmark, said it was against company policy to sell an unhealthy food product as if it were healthy. "We don't want to give the impression to the consumer that soft drinks are a healthy thing."

US Food and Drug Administration Warns Coca-Cola

In December 2008, the US Food and Drug Administration (FDA) raised objections to the marketing of Coca-Cola Diet Plus.

Questioning Coca-Cola's use of the term "Plus" to suggest nutritional benefits, the FDA found Coca-Cola Diet Plus to be in "violation of the Federal Food, Drug, and Cosmetic Act" and noted that "Diet Coke Plus product is misbranded……….because the product makes a nutrient content claim but does not meet the criteria to make the claim."

Sued for Fraudulent Claims on Obesity and VitaminWater

In January 2009, the Center for Science in the Public Interest (CSPI) filed a class action lawsuit against Coca-Cola, accusing the company of "deceptive and unsubstantiated claims on its VitaminWater line of beverages."

CSPI has been watching Coca-Cola's products and marketing for some time, and has also sued the company in 2007 for making false claims on Enviga - separately from the 27 state, $650,000 settlement announced in February.

CSPI's researchers found 33 grams of sugar in each bottle of VitaminWater, leading them to conclude that VitaminWater does "more to promote obesity, diabetes and other health problems than the vitamins in the drinks do to perform the advertised benefits listed on the bottles."

Pepsico Sues Coca-Cola for False Advertising

And as if the major actions against Coca-Cola's fraudulent practices just in the last few months were not enough, its main competitor, Pepsico, has joined the fray.

On April 13, 2009, Pepsico filed a lawsuit against Coca-Cola accusing the company of false advertising.

Pepsico is upset that Coca-Cola has denigrated its sports drink, Gatorade, in advertisements by labeling it as incomplete because it lacks two electrolytes - calcium and magnesium.

Downplaying the absence of these electrolytes in their product, Pepsico said, "More calcium and magnesium are found in most tap water" than in Coca-Cola's sports drink.

In other words, we think, we may be better off drinking tap water than any one of these companies' sports drinks.

Declining Sales, Increasing Deception

Coca-Cola is the master of spin, and it is constantly testing ethical boundaries in its public relations. It got caught for its misleading and deceptive ways in Australia and the US, and that is surely welcome.

What is troublesome is that Coca-Cola continues to get away with such misleading and deceptive claims in many other parts of the world, particularly in countries where the regulatory mechanisms are generally not as strong as in Australia or the US.

And it is in the developing world, and the emerging economies such as India, Brazil, Russia and China, where the Coca-Cola company has high hopes because sales of its products are falling in industrialized countries as consumers become savvy to the adverse health impacts of high sugar carbonated products.

Coca-Cola soft drinks volume in the US fell 3.1% in 2008, and soft drinks volume fell 6% in the last four years - a trend confirming the rejection of unhealthy beverages by consumers in the US.

California, for example, has banned the sale of unhealthy soft drinks in its schools. Countries like the UK, Latvia, France, Greece and Japan have also significantly restricted the presence of high sugar drinks in schools. Norway is considering an "obesity" tax on high sugar products to ostensibly pay for the associated public health costs.

As Coca-Cola finds its products increasingly ostracized in industrialized countries, it is actively looking to expand to new markets around the world. And an aggressive public relations strategy - based on misleading and deceptive claims that they have been busted for - figures prominently in their expansion plans in the developing and emerging economies.

If the science in the industrialized countries has established strong correlations between soft drink consumption and public health problems, shouldn't the same correlation be also applicable to the consumers in the developing world?

If a product is unhealthy for consumers in the industrialized countries, is it not equally unhealthy for consumers in the developing countries?

A rationally thinking person would most likely agree.

But we are talking about Coca-Cola and its public relations, a process where the reality does not matter, it is all about the image.

Amit Srivastava is the Director of India Resource Center, an international campaigning organization based in San Francisco, USA.

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