Coke Takes Neutral Stance on Olympic Protests
The Atlanta Journal-Constitution
April 13, 2008

This is probably not the marketing opportunity the Coca-Cola Co. hoped to get for the estimated $75 million to $90 million it paid to be a global sponsor of the Olympics and one of three sponsors of the torch relay. But as the 2008 Beijing Summer Games approach, Coca-Cola has been drawn into a volatile situation.

These Olympics offer a chance to win over 1.3 billion Chinese consumers. But the association with China, with its reputation for human rights abuses, also threatens to tarnish the Coke brand, built for more than a century on an association with positive events big and small.

Coke's reaction to the turmoil has been delivered in carefully worded, politically neutral statements. The company has started a dialogue with human rights groups opposed to China's control over Tibet. Coke also has met privately with human rights groups focused on strife in Darfur, located in an African nation with close ties to China. Last year, before the public protests began, Coke pledged millions of dollars in humanitarian aid for Darfur.

The torch run controversy has sapped Coke's ability to turn the event into a marketing blitz, said John Bevilaqua, a former Coke and Olympic communications executive who's now head of Atlanta-based Creative Marketing Strategies.

"This is a situation that they're not happy about," Bevilaqua said. "But believe me, this is just a temporary storm that they'll have to weather."

Others caution the storm is just forming. Coke is inviting continued attacks if it stays quiet, said Paul Argenti, a corporate communications professor at Dartmouth's Tuck School of Business. At least one major activist group already tagged the Beijing Games the "Genocide Olympics" and said it will picket headquarters of Olympic sponsors if they do not step up pressure on China.

"They're [Coke] setting the bait for an NGO [non-governmental organization] to come in and say, 'Yes, you will take a point of view,'" Argenti said. "You can choose to be apolitical, but then we will paint you as a monster in the court of public opinion."

Coke has been planning its Olympics marketing strategy for years. At an analyst conference earlier this year, president and chief operating officer Muhtar Kent said he was convinced China would become Coke's largest market in the "not too distant future." Nothing is more important to China than the Summer Games, he said.

"We know that the Olympics are going to be a turning point for China, its people, and a catalyst for our connection to these vibrant consumers," Kent said.

Raising the stakes

Coca-Cola, the longest-running Olympic sponsor, has been part of the games since 1928, when it shipped U.S. athletes and 1,000 cases of Coke to the Amsterdam Games.

The stakes for this year's Olympics, though, could be the highest ever. China is Coke's fourth-largest market, behind the United States, Mexico and Brazil, said John Sicher, editor and publisher of Beverage Digest, a trade publication. Coke commands 55 percent of the China soft-drink market to PepsiCo's 27 percent.

Per-capita soda consumption is about 25 times greater in the U.S. than in China, leaving Coke and Pepsi with a potentially huge market. "In terms of future growth, China is very important for both," Sicher said.

Coca-Cola hopes to widen its lead over Pepsi by advertising around the Olympics. The company paid an estimated $70 million to $75 million to be a four-year global Olympic partner, said Jim Andrews, senior vice president of IEG LLC, a Chicago firm that analyzes corporate sponsorships. It also paid an estimated $5 million to $15 million to be one of three sponsors of the torch run, Andrews said.

In addition to these sponsorship fees, Coke typically spends three to four times as much money on Olympic advertising, promotions and tickets for guests, he said.

The big payoff is being tied to a global event and a historic moment for China. "Everybody wants to sell their products in China," Andrews said. "This is a great marketing platform."

Fanning the flames

But the high profile also attracts attention Coke doesn't want. Political and human rights activists are pressuring it and other corporate sponsors on Darfur and Tibet.

China is the top trading partner and a major weapons supplier to the government in Sudan, which experts say has fueled a conflict that has killed some 200,000 people in its Darfur region.

Dream for Darfur, a New York-based group, began asking Olympic sponsors last year to use their influence to stop the violence.

Tibet, invaded by China in 1950, flared up as an issue in March when protests by Buddhist monks in Tibet turned violent. Pro-Tibet and human rights groups have called for Olympic sponsors to pressure Beijing to reopen Tibetan areas to international media and allow an independent investigation on the recent conflict.

Coke has communicated with some pro-Tibet groups and has plans to meet with at least one group. It would not comment about China's role in Tibet, but issued a general statement: "The Coca-Cola Co. joins others in expressing deep concern for the situation on the ground in Tibet. We know that all parties involved hope for a peaceful resolution.

"While it would be an inappropriate role for sponsors to comment on the political situation of individual nations, as the longest-standing sponsor of the Olympic movement, we firmly believe that the Olympics are a force for good."

On Darfur, Coke said in an e-mail response that it has met with several organizations, including Dream for Darfur, Human Rights Watch and Amnesty International, to "listen, share our on-the-ground activities in Darfur and to explain what we feel is our appropriate role as a sponsor."

The company said it has committed more than $7 million over the next three years for humanitarian efforts in Sudan. It also said it is working with the United Nations and the International Business Leaders Forum to arrange a series of meetings in Sudan between "civil society, business, local and national government bodies focused on doing business in zones of conflict."

"The Coca-Cola Co. shares concern about the on-going violence and tragic situation in Sudan," Coke said in a statement. "We appreciate efforts to move the international community forward on the issue of Darfur."

Actress and activist Mia Farrow is chairwoman of the Dream for Darfur advisory committee. Farrow, who has met with Coke and several corporate sponsors, said Coke has an obligation to act.

"What about morality?" Farrow asked. "Do they not have more feel-good slogans and songs than any other company? ... They cannot claim to have any moral standing whatsoever if they don't take some sort of moral stand."

Split strategy

The dilemma has left Coca-Cola with two marketing strategies: keeping a low profile for its sponsorship of the European and U.S. torch runs, while trumpeting the ties in China.

Four years ago, en route to the 2004 Athens Olympics, the torch made its way through Atlanta, starting at Coke's North Avenue headquarters and ending at Centennial Park. Former heavyweight boxing champ Evander Holyfield and more than 100 others carried the torch in an elaborate public display.

This year, the torch traveled through London, Paris and San Francisco with little Coke-related fanfare.

But in China, Coke has carried out a massive Olympic advertising campaign. The day after China won the right to host the Olympics in 2001, the company flooded the market with limited-edition celebratory soda cans. More recently, Coke released an original song titled "Red Around the World" that touts the Olympic torch relay, promoted an online "torch relay" where people can win Coke souvenirs and advertised with national TV spots featuring the torch.

It is Coke's largest-ever promotion around an Olympics "because China has the world's biggest population and China is one of the most important markets for Coke," said Zhai Mei, a company spokesperson in Beijing.

Meanwhile, Coke has given no indication it plans to make statements about Chinese government policies.

Argenti, the Dartmouth professor, said Coke has to get in front of the issues. The company should find a way to collaborate with human rights groups, he said.

In the environmental movement, Coke has helped diffuse criticism about its water usage by forming a partnership with the World Wildlife Fund that included a $20 million commitment.

Human rights groups already are planning more ways to pressure Olympic sponsors as the games approach, Argenti said.

"This is a very significant issue, and it's a world platform," he said. "What better stage?"

Dream for Darfur said it might picket outside the headquarters of sponsors if they do not take action. Farrow also plans to broadcast streaming video over the Web from Darfur during the first week of the games.

Arvind Ganesan of New York-based Human Rights Watch said if corporations don't make "categorical statements [pushing for change on how Beijing is handling unrest in Tibet], we will probably be more public in our dialogue.

"Part of the reason people sponsor the Games is because of the feel-good feeling it brings," he said. "If that is now going to be damaged by the host government jailing people and committing other abuses, that's certainly not an image people would want to pay for."

Bevilaqua, the former Coke and Olympic marketing exec, said Coke should stick with "no comment" on the political issues and keep a low-profile in areas likely to draw protests.

Maybe, he suggested, Coke and its bottlers should send employees to support the torch run, but have them blend in with the crowd.

"What you don't want to see is someone in a Coke blazer with their head broken open on the street or some protestor throwing an egg at them," Bevilaqua said. "You don't walk away from the event, but you try to diminish the opportunity for a negative photograph to appear."

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