The Coca-Cola Company

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Template:Infobox Company

The Coca-Cola Company (Template:Nyse) is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Coca-Cola's headquarters are in Atlanta, Georgia, in the United States of America. It is best known for its flagship product, Coca-Cola. Coca-Cola is one of the largest corporations in the United States, and is a component of the Template:DJIA.

According to the 2005 Annual Report[1], the company sells beverage products in more than 200 countries. The report further states that of the more than 50 billion beverage servings of all types consumed worldwide every day, beverages bearing the trademarks owned by or licensed to Coca-Cola account for approximately 1.3 billion. Of these, beverages bearing the trademark "Coca-Cola" or "Coke" accounted for approximately 55% of the Company's total gallon sales.

Also according to the 2005 Annual Report, Coca-Cola had gallon sales distributed as follows:

  • 27% in the United States
  • 27% in Mexico, Brazil, Japan and China
  • 46% in spread throughout the world

Contents

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Bottlers

In general, The Coca-Cola Company (TCCC) only produces syrup concentrate which is then sold to various bottlers throughout the world who hold a Coca-Cola franchise. Coca-Cola bottlers, who hold territorially exclusive contracts with the company, produce finished product in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers then sell, distribute and merchandise the resulting Coca-Cola product to retail stores, vending machines, restaurants and food service distributors.

One notable exception to this general relationship between TCCC and bottlers is fountain syrups in the United States, where TCCC bypasses bottlers and is responsible for the manufacture and sale of fountain syrups directly to authorized fountain wholesalers and some fountain retailers.

In 2005, Coca-Cola had equity positions in 51 unconsolidated bottling, canning and distribution operations which produced approximately 58% of volume. Significant investees include:

  • 36% of Coca-Cola Enterprises which produces (by population) for 78% of USA, 98% of Canada and 100% of Great Britain, continental France and the Netherlands, Luxembourg, Belgium and Monaco.
  • 40% of Coca-Cola FEMSA, S.A. de C.V. which produces (by population) for 48% of Mexico, 16% of Brazil, 98% of Colombia, 47% of Guatemala, 100% of Costa Rica, Nicaragua, Panama and Venezuela, and 30% of Argentina.
  • 24% of Coca-Cola Hellenic Bottling Company S.A. which produces (by population) for 67% of Italy and 100% of Armenia, Austria, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Former Yugoslavian Republic of Macedonia, Greece, Hungary, Lativa, Lithuania, Moldova, Nigeria, Northern Ireland, Poland, Republic of Ireland, Romania, Russia, Serbia and Montenegro, Slovakia, Slovenia, Switzerland and Ukraine.
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Products and brands

Image:Diet Coke.jpg

Main article: Coca-Cola brands

The company produces many other soft drinks, including other varieties of Coca-Cola such as Diet Coke (introduced in 1982), which uses aspartame, a synthetic phenylalanine-based sweetener, to eliminate the sugar content of the drink; Caffeine-free Coke; Cherry Coke (1985); Diet Cherry Coke (1986); Coke with Lemon (2001); Diet Coke with Lemon (2001); Vanilla Coke (2002); Diet Vanilla Coke (2002); Coca-Cola C2 (2004); Coke with Lime (2004); Diet Coke with Lime (2004); Diet Coke with Splenda (2005), Coca-Cola Zero (2005), Coca-Cola Black Cherry Vanilla (2006), and Diet Coca-Cola Black Cherry Vanilla (2006)

Tab was Coca-Cola's first attempt to develop a diet soft drink, using saccharine as a sugar substitute. Introduced in 1963, the product is still sold today, however its sales have dwindled since the introduction of Diet Coke.

The Coca-Cola Company also produces a number of other soft drinks including Fanta (introduced circa 1942 or 1943) and Sprite. Fanta's origins date back to World War II when Max Keith, who managed Coca-Cola's operations in Germany during the war, ran out of the ingredients for Coke, which could be supplied only from the United States. Keith resorted to producing a different soft drink, Fanta, which proved to be a hit, and when Coke took over again after the war, it adopted the Fanta brand as well.

During the 1990s the company responded to the growing consumer interest in healthy beverages by introducing several new non-carbonated beverage brands. These included Minute Maid Juices to Go, Powerade sports beverage, Cool from Nestea (in a joint venture with Nestle), Fruitopia fruit drink and Dasani water, among others.

In 2004, perhaps in response to the burgeoning popularity of low-carbohydrate diets such as the Atkins Diet, Coca-Cola announced its intention to develop and sell a low-carbohydrate alternative to Coke Classic, dubbed C2 Cola. C2 contains a mix of high fructose corn syrup, aspartame, sucralose, and Acesulfame potassium. C2 is designed to more closely emulate the taste of Coca-Cola Classic. Even with less than half of the calories and carbohydrates of standard soft drinks, C2 is not a replacement for zero-calorie soft drinks such as Diet Coke. C2 went on sale in the US on June 11 2004, and in Canada in August 2004. C2's future is uncertain due to disappointing sales.

Coca-Cola is the best-selling soft drink in most countries. Nevertheless, there are some places like Quebec and Prince Edward Island, Canada, where Pepsi is the market leader. In the Middle East, the only region in the world where Coca-Cola is not the number one soda drink, Coca-Cola nonetheless holds almost 25% marketshare (to Pepsi's 75%) and had double-digit growth in 2003.[2] Similarly, in Scotland, where the locally produced Irn-Bru was once more popular, 2005 figures show that both Coca-Cola and Diet Coke now outsell Irn-Bru.[3]

Some claim Coke is less popular in India due to suspicions regarding the health standards of the drink. However, marketshare data does not back this view. Specifically, in 2005, Coca-Cola India's market share was 60.9%.[4]

The Coca-Cola Company owns numerous brands and trademarks. Probably the most well-known besides Coca-Cola, Coke, and their various spin-offs are Sprite, Fanta, Tab, Minute Maid, Fruitopia, Powerade, Dasani, Barq's and Mello Yello (see Coca-Cola brands).

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Brand Portfolio

The company is most commonly associated with its eponymous flagship product Coca-Cola. However, it also manufactures many other widely marketed and consumed products, and bottles and distributes other soft drink brands.

Full List of Coca-Cola brands

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Failures

The company has had several failed branding attempts, including:

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Criticisms

As the largest seller of soft drinks in the world, the Coca-Cola Company has been the subject of various allegations, such as monopolistic practices, and racist employment practices, as well as critiques of the company's products and trade practices. In India, the corporation has provoked a number of boycotts and protests as a result of its perceived low standards of health and hygiene standards and adverse impact on the environment. In Colombia, the company is alleged to be responsible for 179 major human rights violations, including the murder or assassination of nine union members.

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Monopolistic Practices

In 2000, a United States federal judge dismissed an antitrust lawsuit filed by PepsiCo Inc. accusing Coca-Cola Co. of monopolizing the market for fountain-dispensed soft drinks in the United States. [5]

In June 2005, Coca-Cola in Europe formally agreed to end deals with shops and bars to stock its drinks exclusively after a European Union investigation found its business methods stifled competition.[6]

In November 2005, Coca-Cola's Mexican unit - Coca-Cola Export Corporation - and a number of its distributors and bottlers were fined $68m for unfair commercial practices. Coca-Cola is appealing the case.[7]

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Discrimination

In November 2000, Coca-Cola agreed to pay $192.5 million to settle a class-action race-discrimination lawsuit and promised to change the way it manages, promotes and treats minority employees. In 2003, protesters at Coca-Cola's annual meeting claimed that blacks remained underrepresented in top management at the company, paid less than white employees and fired more often.[8] In 2004, Luke Visconti, a co-founder of Diversity Inc., which rates companies on their diversity efforts, said: "Because of the settlement decree, Coca-Cola was forced to put in management practices that have put the company in the top 10 for diversity."[9]

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Ingredients

The notorious discovery of a dead lizard inside a sealed Coca-Cola bottle was widely publicized.[10]

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Coca-Cola in UK

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Food Promotion and Childhood Obesity

In December 2003, Coca-Cola agreed to remove its branding from vending machines in Scottish schools and replace it with a graphic of an urban scene.[11]

In 2004, the government launched a wide-ranging review into food promotion and childhood obesity. One survey found that Coca-Cola did not broadcast a high proportion of their adverts during children's television.[12]

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Coca-Cola in India

By most accounts, Coca-Cola was India's leading soft drink until 1977 when it left India after a new government ordered the company to turn over its secret formula for Coca-Cola and dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act (FERA).[13] In 1993, the company (along with PepsiCo) returned in pursuance of India's Liberalization policy.[14] In 2005, Coca-Cola and Pepsi together held 95% market share of soft-drink sales in India.[15]

Since its return, Coca-Cola has been accused of unethical practices in India; in response, several non-governmental organizations have launched anti-Coca-Cola campaigns in India.

These controversies are a reminder of "India's sometimes acrimonious relationship with huge multinational companies." Indeed, some argue that Coke and Pepsi have "been major targets in part because they are well-known foreign companies that draw plenty of attention." [16]

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Pesticide use

In 2003, the Centre for Science and Environment (CSE), a non-governmental organisation in New Dehli, said aerated waters produced by soft drinks manufacturers in India, including multinational giants Pepsico and Coca-Cola, contained toxins including lindane, DDT, malathion and chlorpyrifos — pesticides that can contribute to cancer and a breakdown of the immune system. Tested products included Coke, Pepsi, Seven Up, Mirinda, Fanta, Thums Up, Limca, Sprite.

CSE found that the Indian produced Pepsi's soft drink products had 36 times the level of pesticide residues permitted under European Union regulations; Coca-Cola's 30 times. CSE said it had tested the same products in the US and found no such residues.

Coca-Cola and PepsiCo angrily denied allegations that their products manufactured in India contained toxin levels far above the norms permitted in the developed world. But an Indian parliamentary committee in 2004 backed up CSE's findings and a government-appointed committee is now trying to develop the world's first pesticide standards for soft drinks. Coke and PepsiCo oppose the move, arguing that lab tests aren't reliable enough to detect minute traces of pesticides in complex drinks like soda.

Coke's David Cox, Coke's Hong Kong-based communications director for Asia, accuses Sunita Narain, CSE's director, of "brandjacking," using Coke's brand name to draw attention to her campaign against pesticides. Ms. Narain says CSE's study of pesticide residues in soft drinks was a natural follow-up to a previous study it did on bottled water.[17]

Coca-Cola had registered a 15 percent drop in sales after the pesticide allegations were made in 2003.

standards. [18]

As of 2005, Coke and Pepsi together hold 95% market share of soft-drink sales in India.[19]

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Water use

Environmental degradation in the form of depletion of the local ground water table due to the utilization of natural water resources by the company poses a serious threat to many communities.

In March 2004, local officials in Kerala shut down a $16 million Coke bottling plant blamed for a drastic decline in both quantity and quality of water available to local farmers and villagers.[20]

In April 2005, Kerala's highest court rejected water use claims, noting that wells there continued to dry up last summer, months after the local Coke plant stopped operating. Further, a scientific study requested by the court found that while the plant had "aggravated the water scarcity situation," the "most significant factor" was a lack of rainfall. Critics respond that Coke shouldn't be locating bottling plants in drought-stricken areas. [21]

The company has been trying to regain the plant's license, fighting a case that has gone all the way to India's Supreme Court.[22]

Meanwhile, near the holy city of Varanasi in northeastern India, a local water official blames a Coke plant — which has been the scene of many protests by NGOs and local residents — for polluting groundwater by releasing wastewater into surrounding land. A Coke official confirms there had been a drainage problem with treated wastewater several years ago but says the company built a long pipeline to correct it.[23]

The case has been appealed and a decision is pending. Coca-Cola has setup a page to rebut these charges at this site. (See also [24]).

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Coca-Cola bottlers and trade unions

Coca-Cola has been criticized for the behavior of its bottlers world-wide with respect to trade unions, most notably in Colombia.

In 2002, two Coca-Cola shareholders, the Christian Brothers, presented a resolution at the shareholders' meeting that called for Coca-Cola to adopt a code of conduct on bottling practices and employee relations. Problems in Colombia were cited, but the resolution called for "clear standards for its suppliers, vendors and bottlers." The resolution received support from Coca-Cola unions in Colombia, Guatemala, Zimbabwe, the Philippines, and the United States.[25]

However, Coca Cola's board of directors recommended rejecting the proposal, noting in the proxy: "We believe that the Company's existing policies address substantially all of the concerns raised in this proposal, and that the proposal is therefore unnecessary... For example, both our policy and the Principles specifically provide that we (i) will not condone the exploitation of children, physical punishment or involuntary servitude; and (ii) will pay wages that enable our employees to meet their basic needs."[26]

Ultimately, shareholders rejected the resolution.

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Colombia

Panamerican Beverages (Panamco), Coca-Cola's main bottler in Latin America, has been criticized for its relationship with unions. In Colombia, it has been alleged that the bottling company hired paramilitary mercenaries to assassinate union leaders. These charges have resulted in several court cases and boycott actions against The Coca-Cola Company.

In July 2001, the United Steelworkers of America and the International Labor Rights Fund filed suit in US court against Coca-Cola and some bottlers in Colombia on behalf of their workers [27]. According to the plaintiffs, the companies "hired, contracted with or otherwise directed paramilitary security forces". The companies denied the charges. In April 2003 District Judge Jose E Martinez in Miami excluded The Coca-Cola Company and its Colombian unit because its bottling agreement did not give it "explicit control" over labor issues in Colombia. Panamco and Colombian bottler Bebidas y Alimentos now face a trial.[28]

In Summer 2003, the SINALTRAINAL trade union, which represents the majority of workers at Coca-Cola bottling plants in Colombia, called for an international boycott of Coca-Cola products. In October of that year, the Students' Union in University College, Dublin, the largest university in Ireland, controversially decided to ban the sale of Coca-Cola products (in the Student Union shops; Coca-Cola is still available from vending machines and other non-SU controlled outlets on campus) as a result. A later attempt to reverse the ban at UCD failed, and the boycott has spread to other colleges in Ireland, most notably Trinity College, Dublin and the National College of Art and Design, as well as a number of bars and restaurants. Motions in support of the boycott have been passed by the Union of Students in Ireland, which represents the 250,000 students on the island of Ireland, as well as the Teachers' Union of Ireland and the Irish National Teachers Organization and a number of other trade unions and political organizations. The boycott is opposed by some branches in the SIPTU trade union (who represent the majority of Coca-Cola workers in Ireland) and by the Coca-Cola Company themselves.

In January 2004, the New York City Fact-Finding Delegation on Coca-Cola in Colombia [29] [30] confirmed the workers' allegations. They found:

To date, there have been a total of 179 major human rights violations of Coca-Cola's workers, including nine murders. Family members of union activists have been abducted and tortured. Union members have been fired for attending union meetings. The company has pressured workers to resign their union membership and contractual rights, and fired workers who refused to do so.
Most troubling to the delegation were the persistent allegations that paramilitary violence against workers was done with the knowledge of and likely under the direction of company managers. The physical access that paramilitaries have had to Coca-Cola bottling plants is impossible without company knowledge and/or tacit approval....

The bottler and The Coca-Cola Company deny these allegations. Specifically, The Coca-Cola Company stated in its 2004 proxy [31]

Two different independent inquiries in Colombia—a judicial inquiry by a Colombian Court, and an inquiry by the Colombian Attorney General's office—examined the specific issue of whether managers at a bottling plant were complicit in the murder of a trade unionist. They found no evidence to support the allegation. Further, based on internal investigations conducted by our Company and by our bottling partners, we are confident that allegations the bottlers engaged paramilitaries to intimidate trade unionists are false.
The allegations made against us in Colombia are not merely false; they are repugnant to all of us at The Coca-Cola Company. We agree with the proponents that our Company must clearly demonstrate that we and our bottling partners support human and labor rights and oppose all forms of violence. Our desire is for Coca-Cola to be seen as part of the solution to some of the business issues in Colombia today. We are convinced our current approach will allow for that outcome.

Critics argue that, whatever their source, these assassinations seem to have been helpful to Coca-Cola in eliminating troublemakers from their bottling plants.

The boycott example started in Ireland has continued to spread across the world, with the National Union of Students in Britain voting to support the boycott in April 2005. UNISON, the largest trade union in the UK, also voted to support the boycott at its 2004 National Delegate Conference. ECOSY, the European Young Socialists, a federation of youth wings of all the mainstream socialist and social democratic parties in the EU, voted to support the boycott in March 2005 following a motion from the Irish Labour Youth delegation. Campuses and labor and trade unions in the United States, Italy, France and Canada, amongst others, are also campaigning for the boycott to spread.

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Guatemala

In the 1970s, a Coca-Cola franchised bottling plant in Guatemala suffered a spate of mysterious murders of union-affiliated employees leading to the non-renewal the bottling plant's license in 1981. "Coca-Cola found a new owner, and following repair work and construction on the plant, work resumed at the Guatemala bottling plant on March 1, 1985."[32] The Company's decisions were made after pressure from several groups, including a shareholders resolution filed in 1979.[33] The Company argued that "it had no right to interfere in labor disputes between independent parties and asserting that such an intrusion would be improper."[34]

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World War II and Nazism

Coca-Cola had a controversial relationship with Nazism before and during World War II. The company continued to operate in Germany during a period when the Nazis' practiced eugenics and anti-Semitism. An investigation commissioned by Coca-Cola found that the top executive during the war, Max Keith, had never been a Nazi, even though he'd been repeatedly pressured to become one and indeed had endured hardships because of his refusal.[35]

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Implications of doing business in Israel/Palestine

A common belief is that Coca-Cola supports Israel, or Palestine, depending on the proclivities of the urban mythologist. For example, a controversy arose in Egypt when a consumer mistook an Ethiopian inscription on a Coca-Cola bottle for Hebrew, sparking anger amongst Arab consumers of the drink. Coke's Egyptian manager reassured the press that the company would never open a bottling plant in Israel, thereby immediately escalating a local controversy almost to the status of an international incident.

In truth, Coca-Cola had attempted to open a plant in Israel in 1949, but the Israeli government refused the permit, and the company did not push the issue further. A boycott began in the United States, leading to Coke's announcement that they would open a plant in Tel Aviv, which they did in April 1966. This caused fury amongst Arab consumers of Coca-Cola, who in turn—led by the Arab League (with the exception of Egypt, whose boycott only lasted till 1979)—boycotted Coke until 1991.

Pepsi also suffered from boycotts in America after intentionally avoiding Israel. This controversy eventually subsided when Pepsi entered the Israeli market in 1992. [36]

In the wake of the September 11, 2001 attacks, rumors abounded that Coke supported Israel with donations. Although they turned out to be false, numerous calls were made for a boycott against Coca-Cola in the Middle East. However, as a substantial amount of Coca-Cola is produced in a plant in Ramallah, some believe that such boycotts would likely hinder rather than help the Palestinian cause. [37]

Along with McDonald's, Coca-Cola has become an international symbol of American culture, and especially of American consumerism. While the company still enjoys widespread popularity, some backlash has occurred, mostly in the form of boycotts in the Middle East. In Fall 2002, a French Tunisian, Tawfiq Mathlouthi, launched a new brand of cola drink, dubbed Mecca-Cola, to protest American foreign policy in the Middle East. Yet by 2004, Mecca-Cola fizzled: in France, its biggest market, sales dropped about 10%[38]. The company donates 10% of its profits to Palestinian charities.

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Praises

Coca Cola's positive business contributions include:

Promoting Diversity:

  • Coca-Cola ranked 26th on Fortune magazine's list of the "50 Best Companies for Minorities" in 2004.
  • Coca-Cola Bottling company was named one of "The Top 100 Employers for the Class of 2004" by Black Collegian magazine.
  • Coca-Cola was named one of the "50 Best Companies for Latinas to Work for in the U.S." by Latina Style in 2004.
  • Coca-Cola is among 32 companies that have filed "friend of the court" briefs in support of the University of Michigan's Affirmative action policies.
  • Coca-Cola offers domestic partner health benefits to employees' domestic partners of the same sex.
  • Coca-Cola's non-discrimination policy includes sexual orientation.

HIV / AIDS in Africa

  • In September 2002 Coca-Cola announced it would spend up to $5 million per year to fund HIV/AIDS treatment for Africans who work within the company's bottling system. The company had previously offered treatment to its 1,200 corporate workers in Africa. The company's bottling system is made up of 40 independent companies and employs 58,000 people in Africa.
  • Coca Cola Africa plans to support HIV/AIDS programs as part of a $50 million budget to be granted to African organizations by the end of the decade.

Charitable Giving

  • The Coca-Cola Company and its bottling partners shipped more than 30 million donated 8-oz. servings to Hurricane Katrina Evacuees.
  • Coca-Cola donated $10 million to tsunami relief efforts in Asia. Employees of Coca-Cola in the region are also delivering bottled water, food and other supplies.
  • After the September 11 terrorist attacks on the World Trade Center and the Pentagon, Coca-Cola its affiliates committed to a $12 million financial contribution to disaster relief efforts.

Sources: - Responsible Shopper [39] - Katrina Press Release [40] - CCA Foundation Press Release [41]

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History

Image:Coca-ColaHQ.jpg

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World War II

When the United States entered World War II, The Coca-Cola Company began providing free drinks for soldiers of the United States Army. The United States Army permitted Coca-Cola employees to enter the front lines as "Technical Officers" where they operated Coke's system of providing refreshments for soldiers, who welcomed the beverage as a reminder of home. Coca-Cola set up bottling plants in several locations overseas to assure the drink's availability to soldiers, setting the stage for the company's post-war overseas expansion. The popularity of the drink exploded as American soldiers returned home from the war with a taste for the drink. The beverage had become synonymous with the American way of life.

Before the United States entered World War II, the difficulty of shipping Coca-Cola concentrate to Germany and it's occupied states led to the creation of a new drink by a Coca-Cola employee, Fanta.

In the 1930s, Robert W. Woodruff became president of the Coca-Cola Company, presiding over the drink and its destiny till his death in 1985. Although he eventually stepped down from his post due to stress, he retained control over the company despite holding positions with an ostensibly low profile. His fanatical devotion to Coke was widely reported, and even in his old age, whenever he stopped by a Coke vendor, he would count how many bottles in the trash belonged to Coca-Cola. This almost devout dedication to the product spilled over to other executives in the company. In recent years, Rick Bronson, a truck driver for Coca-Cola, was fired for drinking a Pepsi (some allege it was actually over his involvement with unions). He was reinstated after a high-profile protest.

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Santa Claus

Santa Claus in his current guise (particularly his red and white attire) is commonly thought to have been created by the Coca-Cola Company in the 1930s, but this is false. The modern image of Santa Claus came from a cartoon by Thomas Nast in 1863. The image is from "Harper's Weekly" and depicts Santa providing gifts to Union soldiers. The success of the Santa Claus ads was so great, however, that Santa Claus and Coca-Cola are closely associated to this day, and the "Coca-Cola Santa Claus" appears on company products during Christmas time.

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Corporate Governance

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Current Board of Directors

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Historical List of Chief Executive Officers

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Stock

The Coca-Cola Company is listed on the New York Stock Exchange and is part of the Dow Jones Industrial Average and the S&P 500.

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See also

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Bibliography

  • Pendergrast, Mark: For God, Country, and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company That Makes It. New York: Basic Books, 2000 (second edition; ISBN 0465054684).
  • Zyman, Sergio: The End of Marketing as We Know It. New York: HarperBusiness (1st edition (June 1, 1999) ISBN 0887309860).
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External links

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Critical Perspectives

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