Coca-Cola, Inc. (NYSE: KO)

Coca-Cola = The Can-Do American Spirit! On the back cover of the December 1942 National Geographic magazine there is Santa Claus, ruddy red cheeks and full beard, in his familiar red and white costume, holding a Coke – “That Extra Something…You can spot it every time,” the headline reads.  Mom, Dad and two kids are putting up their Christmas tree (with green Coke bottles in hand).  Some experts say these Coca-Cola illustrations, ad copy and distinctive graphics helped to create our modern image of the Christmas season and of Santa Claus.

By February 1943 Coke was also at war – wherever during WW II the American GI or sailor or airman was, there also was the familiar Coke bottle.  On the back cover that month, the National Geographic ad featured a snappy PFC in uniform and two other GI’s saying: “No matter where fighting men get together, at home or abroad, it won’t be long before they connect with Cokes…”

And so Coca-Cola went along with millions of U.S. Armed Services personnel to every continent and many countries (more than 130 by war’s end), a symbol of the American can-do spirit, the everyman’s pick-me-up/feel-good carbonated cola. Along with very few other icons of the 20^th Century, embracing Cokes -- no matter where you were -- brought you closer to the storied American Dream, or so it seemed to hundreds of millions of people around the globe.  Coca-Cola was America! 

Even today, in Business Week’s “The 100 Top Brands” annual feature, Coca-Cola ranks #1 (as determined by Interbrand mythology). (Web Link: http://bwnt.businessweek.com/brand/2006/ )  “Flagging appetite for soda has cut demand for Coke,” BW observed, “but the beverage giant has a raft of new products in the pipeline that could reverse its recent slide.”  Some observers posit that much more than new products (alone) is needed to restore the luster to the Company itself, #1 brand or not.  (Rankings in BW issue of August 7, 2006. Rival Pepsi is ranked #22.)

“Killer Coke?”  We can understand the attitude of critics toward cigarette companies that continue to market slender white sticks of paper and tobacco that are really delivery systems for addictive nicotine – they harm your health, most everyone agrees.  But disliking the familiar, tasty Coke?  And calling it “killer?”  “The Campaign to Stop Killer Coke” ( Web Link: http://www.killercoke.org/ )has targeted the Coca-Cola Company and its bottlers around the world for behaviors that the organizers say is literally killing people. 

Behaviors such as opening a new plant in Darfur in 2002 (“ignoring the genocide by exploiting a loophole in U.S. sanctions, a plant that props up the Sudan economy and government of President Hassan al-Bashir, the campaign claims.)  The loophole allowed importation of food and medicine around the U.S. trade embargo, and the $140 million plant “churns out 100,000 bottles of Coke, Sprite and Fanta per hour…” coalition activists assert.  

It’s not just social activists targeting Coca-Cola Company; Fortune magazine (May 15, 2006) in a headline story (“Coke Gets a Jolt”) [Web Link]  Betsy Morris writes that the soft drink giant has done business the same way for 120 years and now the [new] CEO Neville Isdell wants it to face the future.   CEO Isdell – a former social worker! -- came out of retirement to take over Coke…”a company that had utterly lost faith in itself, governed by a board that could not leave it alone…” writer Morris stated.

The Company would not diversify away from beverages, but would create an expanding portfolio to meet consumer needs.  Trouble is, many target consumers are unhappy with the Company itself – on such college campuses as Harvard, University of Pennsylvania, Carleton (Canada), Swarthmore, Michigan State, Indiana U., and others, student activists are campaigning vigorously to prevent sales of Coke on campus.  They are protesting such behaviors as condoning violence in Colombia allegedly related to KO’s bottling partners there. (Activists claim that anti-labor tactics are alleged to include the murder of union organizers by right wing paramilitaries in the pay of the bottlers; others protest the alleged diversion of potable water supplies in India by others in the global network of bottlers.) Web Link Campus activities )

A recent example: Swarthmore College (Pennsylvania) scheduled a “day of action” which turned out media.  The administration sent a letter to KO headquarters demanding “change,” and if demands were not met by November 2006, the college would end its contract with Coke. There was a kick-the-can contest, and signatures were gathered to keep pressure on the college administration (not to buckle). (Web Link: http://www.swarthmore.edu/x8347.xml )

Losing this generation of emerging consumers – grade school, high school and even college students establishing their brand loyalties for a range of consumer products – could be disastrous for Coca-Cola Company and its many bottling partners over the coming years.  (Hey, there’s also the competition from Red Bull, Starbucks and other drinks moving in on Coke’s space.)

These are struggles between Company and critics that seem to be positioned for the long-term; employees, partners, retailers, shareholders, campus administrators, local school administrators (who make deals with KO for on-premises distribution) – all are watching and have stakes in the outcome. 

They are hearing the troubling words of Ray Rogers, Director of the Campaign to Stop Killer Coke/Corporate Campaign Inc. – “We believe that the evidence shows that Coca-Cola and its corporate network are rife with immorality, corruption and complicity in murder.”  (Web Link: http://www.democracynow.org/article.pl?sid=04/04/27/1435213 )

All sides of the continuing saga of KO and its critics are covered in Accountability Central.  We welcome comments on the issues and concerns of Company, its shareholders and employees, and from critics who are trying to address KO behaviors and decisions.

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Footnote:  Today’s global Coca-Cola bottling footprint was said to be the legacy of two key innovators and marketers – attorney Benjamin Franklin Thomas and his younger nephew, George Thomas Hunter.

Mr. Thomas, restless in the practice of law, was searching for an idea, “something” inexpensive that appealed strongly to the general public…”something” that could be used up quickly and then repurchased…like a spool of thread.  When he visited Cuba during the Spanish-American War (1898) he found it:  Cubans were drinking a distinctive carbonated beverage in bottles…at home…on the go!  That was the something: Success would need to have a distinctive flavor and came with a distinctive name; back in America, the popular Coca-Cola was to be it! 

Thomas and a partner (Joseph Brown Whitehead) approached entrepreneur Asa G. Candler, who had recently acquired Coca-Cola and incorporated what is now KO (1892) to try to persuade Mr. Candler to allow them to sell Coke out of bottles (the Company’s success until then was based on soda fountain sales, many at pharmacy counters).  The historic July 1899 agreement (the right to bottle and distribute Coca-Cola in most of the U.S. through the new “Coca-Cola Bottling Company,” based in Chattanooga, Tennessee) changed the fortunes of the young Coca-Cola Company. A nationwide retail distribution system was born just as the huge American middle class was emerging, and millions of new residents (immigrants) reached the nation’s shores.

Today’s publicly-traded Coca-Cola Enterprises derives in large measure from the Thomas operations.  (NYSE: CCE.)

George Hunter had arrived in Tennessee at age 17 in 1904 and by the time he was 28 he was President of the bottling company.  He created the “Benwood Foundation” to help cure the sick, sponsor research and bring education to those who could not afford it.  On his death in 1950, Mr. Hunter’s shares (70% of the total) in the “Thomas” bottling enterprise were given to the Benwood Foundation (which operates today in Chattanooga).

Coca-Cola was invented by a pharmacist – John Pemberton – as the carbonated soft drink industry was taking off in the 1880s.  Asa Candler, also a pharmacist, obtained the rights after the inventor died and created the Atlanta-based Coca-Cola Company.

(Source: “Footprints on the Sands of Time, a History of Two Men and the Fulfillment of a Dream,” by Desales Harrison – The Newcomen Address, October 1969.  Mr. Desales had served the Coca-Cola Company in Atlanta from 1925 to the early 1940s, when he left KO and moved to Chattanooga to become President of the Coca-Cola Bottling [Thomas] Company.)

Information about the Foundation at: http://www.benwood.org/

Also, view our profile on Coca Cola by clicking here

What’s Happening At The Coca-Cola Company

A weekly listing of actions and activities of the Coca-Cola Company in the area of Corporate  Responsibility – updated each Friday.

Web Link: http://www.thecoca-colacompany.com/ourcompany/whatsnew.html

 

 

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