Has Coke Become the New McDonald's?
The muffled phone line made the voice in Lagos sound small and distant
but there was no mistaking the sense of determination. Ebun-Olu Adegboruwa,
a Nigerian lawyer, was explaining how he intended to take on Coca-Cola,
the world's largest soft drinks company. He claims to be acting for
some 4,000 people in the port area of Apapa, many of them poor and
illiterate, who believe that a local bottling plant has stolen their
livelihoods. A lawsuit is planned accusing the company of polluting
a lagoon by pumping untreated waste into the water and killing fish.
"Like many multinational companies operating in Africa, Coca-Cola
is guilty of double standards," he said. "They do what they are unable
to do in America and Europe. We feel cheated. People are roaming the
streets with no means of making a living."
Welcome to the Coke side of life. The planned legal action is just
the latest in a litany of alleged human rights and environmental abuses
in developing markets that has made Coca-Cola a cause celebre. When
self-described anarchists interrupted the carrier of the Olympic torch
on route to Turin ahead of this year's winter games, it was not the
athlete's running shoes they objected to, it was the presence of Coca-Cola,
which had spent $66m (£35m) to become the main sponsor. Coke is the
The latest issue to hobble the company is the renewed allegation that
its flagship drink in India contains 27 times the maximum permitted
amount of pesticides. A study published by an agency of the UK's Department
for Environment, Food and Rural Affairs this week said it detected
none of the toxins found by a New Delhi organisation. Nevertheless,
a quarter of India's states have imposed partial or total bans so
far. Coke's defenders claim the bans are politically driven.
Long-simmering claims of ignoring labour abuses in Colombia are still
the biggest piece of mud sticking to Coca-Cola, as well as environmental
issues in India. A hunger strike was reported last month outside a
Coca-Cola plant in Mehdiganj, Uttar Pradesh, which ended when the
state government agreed to study charges of pollution and exhaustion
of water supplies.
It faces further allegations of union-busting in Pakistan, Guatemala
and Nicaragua, and exhausting water resources in El Salvador. In Turkey
last year a suit was filed alleging that Coke ignored the intimidation
and beating of union activists. Over the summer Coke has faced legal
action of a different kind from a disgruntled former business partner
in Uzbekistan, who accused the company of shady dealings with the
country's authoritarian government. All allegations are denied.
At the very least, Coca-Cola has an image problem. Students in about
10 US universities have banned Coca-Cola drinks, many stirred up by
the veteran labour activist Ray Rogers and his Killer Coke campaign.
He has targeted universities in a strategy of whipping up anxiety
about the firm's human rights and environmental record. An individual
boycott "may pale in comparison to the revenues they still generate
but students in particular are important," he said. "If a student
gets hooked on a product, they've hooked a consumer for the next 40
or 50 years."
New York University is the most prominent to sever ties with Coke
- its 40,000 students voted in December to remove vending machines
and clear cafeteria shelves of all its products. "There's a segment
of the student population who felt very strongly about it," said Josh
Taylor, an NYU spokesman. "We've taken Coke out of all our dining
halls." Protests have also reached Europe and Canada, although the
UK's National Union of Students recently voted down a similar ban.
But the campaign against Coke has spread beyond students. Postal workers
in the US have urged the removal of vending machines from post offices,
and teachers' unions in New York and California have passed resolutions
calling for Coke's removal from schools.
In Britain, Coke has been promoting the launch of its latest brand
extension, Coke Zero, a sugar-free version for men apparently too
manly to buy something with Diet in the name. The company will hope
the brand will perform a little better than its last big launch in
the US: C2, a low-carbohydrate version of Coke that came on to the
market just as the low-carb trend was beginning to wane.
Coca-Cola has drifted in the past decade, suffering from under-investment,
heavy job cuts and management upheaval. It has lost almost a third
of its market value since 2000 and was, symbolically, overtaken by
PepsiCo in terms of market capitalisation in December.
The company has been wrong-footed by consumer trends after years of
being the world's best-selling soft drink. Fizzy drinks sales are
stagnant in developed markets but while its arch-rival Pepsi was launching
energy drinks, bottled water and fruit juices to appeal to a new health-conscious
consumer, Coke fell behind. The firm still relies on carbonated drinks
for 85% of its sales. Success in developing markets - Coke claims
it is sold in more than 200 countries - is crucial for growth.
Coke's critics are largely a ragtag bunch but the company has been
unable to drown out the background noise, despite an annual marketing
budget of $2bn. It began a campaign to counter what it dismisses as
rumour, slander and urban myth. But it probably does not help that
Coca-Cola is a symbol of America just as the superpower's role in
the world has come under increasing scrutiny.
Ed Potter, Coke's head of labour relations, said: "We are probably
the best-known brand in the world and so therefore we become a target
... It has less to do with our practices than to make the point of
an individual. If you ask why don't they do the same thing with Pepsi,
it is because it has no cachet. The well-known examples of Colombia
and Turkey fit into that category. There is no substance to the claims
being made but the urban myth is more attractive than wanting to know
what the facts are."
He said the company had "engaged more actively" with students, including
a Washington DC summit last year, and was trying to respond more quickly
to issues around the world when they do arise. It has put out its
second social responsibility report.
In an effort to silence the drumbeat of criticism, Coke has engaged
the International Labour Organisation to assess its practices in Colombia.
It has also commissioned a study of its business in India, by a nonprofit
organisation, the Energy and Resources Institute. It has taken out
advertising in the US student press and signed up to the UN Global
Compact in March - the world's largest voluntary corporate responsibility
initiative. "The student campaign has stalled," said Potter. "There
are not that many individuals involved - but they make a lot of noise."
Jeff Seabright, Coca-Cola's vice-president for environment and water
resources, said he had been to Kerala twice this year, over a factory
that notoriously closed two years ago after claims that it had depleted
the local water table. "The high court in Kerala appointed a panel
that found the cause was severe drought and that Coke had not been
the cause," he said. "In fact, we have invested in rainwater harvesting."
The issue, he insists, is one of perception.
He said Coca-Cola's volume had grown by 35% since 2000 but that more
efficient processes had cut net water usage by 1%. He said it was
unclear what had polluted the lagoon in Lagos but said the company
would build a waste-water treatment plant as soon as the government
Activists are critical of Coke's counter-PR campaign and unlikely
to be silenced soon. War on Want's Joe Zacune has catalogued alleged
abuses in Coca-Cola: The Alternative Report and went to India last
year to examine the claims. Of Kaladera, Rajasthan, he said: "The
people are very, very angry. Farmers took me to their wells to show
me how water levels had fallen. They are so fearful of their livelihood
and kept using the term 'dark zone' and said we'll end up abandoning
Local people took him to see equipment that Coke installed to collect
water and replenish aquifers. "There was one in the grounds of a college.
They said Coke had set it up but there had been no maintenance and
it had broken. The students had ripped it down and the metal girders
were twisted. There is anger, resentment and complete frustration.
This isn't stuff you can find out unless you visit these remote and
inaccessible places," he said.
Jeremy Moon, a professor of corporate social responsibility at Nottingham
University, suggested that Coke was perhaps going through the same
growing pains as other multinationals. "Being a branded company clearly
brings opprobrium," he said. "If you look at Nike or Reebok, probably
they have better practices than anyone else in their supply chains
but because they are branded, they are targeted.
"It's a paradox. In many cases these companies have become leaders
in corporate social responsibility [CSR] ... they come under criticism
and then work to demonstrate that they are doing the right thing.
They come under further criticism and lift standards still further.
Nike's latest CSR report is a revelation for the amount of information
Whether all the negative publicity will really have any impact on
Coca-Cola sales is another question. Rita Clifton, head of the consultancy
Interbrand, is doubtful. She reckons Coke is still the world's most
valuable brand, ahead of Microsoft.
"It depends on how much people love the brand and how serious the
issue is," she says. "If people like a product and it's convenient
then they will probably carry on buying it. People are radical in
research questionnaires and reactionary at the checkout ... People
like to carry on doing what they like doing."
- Drinks firm hit by a hunger strike and college boycotts
- Coca-Cola says it is a target because it is the top brand
Allegations that Coca-Cola killed fish by pumping untreated waste
into a lagoon near Lagos
Protesters disrupt relay of Olympic torch on route to Turin winter
Charges that drinks contain 27 times the permitted levels of pesticides
and water reserves have been depleted
Colombia, Guatemala, Nicaragua
Claims of ignoring anti-union abuses
Universities, postal workers and teachers vote to remove products
Allegations of ignoring intimidation and beatings of union activists
Linked to authoritarian government
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