To celebrate its effort, the company created an “eco-fashion” line of clothing made from recycled plastic; and, of course, it launched a new ad campaign, premiering during American Idol in January 2009. Called “Give It Back,” it featured people tossing Coke bottles into recycling bins, only to see them pop out anew from slots of Coke machines. To drive home the message, Coke began working with parks, zoos, and sports stadiums to prominently display red recycling bins in the shape of Coke’s hourglass bottle.
Despite the happy imagery, the truth about Coke’s recycling efforts was much less impressive. An initial pledge by Coca-Cola Enterprises to use 30 percent recycled PET (rPET) in its bottles in the United States by 2010 was quietly downgraded to a more modest 10 percent “where commercially viable,” creating a loophole big enough to drive a hybrid trailer through. In fact, that goal was even less than what Coke had pledged back in the early 1990s, one in a long line of promises on recycling it had reneged on because of “sustainability issues.” Recycled PET, the company claimed, was just too expensive in the United States to use on any wide scale. In other words, the environment was worth taking into account only when it didn’t cost additional money.
Now with the creation of the Spartanburg plant, the company claimed to have solved the problem, assuring that “the demand for recovered bottles remains strong,” according to Scott Vitters, Coke’s director of sustainable packaging. The problem with PET, however, has never been one of demand, but of supply. Carpet and car part manufacturers have always competed to get their hands on PET for industrial uses. But to get the high-quality PET needed to make into bottles is much more difficult. Unlike other materials, which can be recycled many times without degrading, PET quickly degrades when melted down repeatedly, making clear, transparent PET hard to come by—to say nothing of the additional costs to clean the material to make it “food-grade.”
The only thing that could drive down those costs, then, was a greater availability of PET—especially high-quality PET needed for beverage containers. Coke’s new plant, however, does nothing to address this side of the equation, since it purchases 98 percent of its material from already existing curbside recycling programs (the other 2 percent will come from Coke’s recycling bins at NASCAR races and other events). In fact, according to industry trade sources, Coke’s plant will if anything make the situation worse by driving up the cost for recycled PET with a huge new demand for raw materials.
Meanwhile, Coke has done relatively little to help the supply side of the equation. In addition to its branded recycling bins, it has supported education programs such as Keep America Beautiful, which gives grants to local communities to support curbside programs, and a new program called RecycleBank, which gives consumers coupons for local businesses depending on how much they recycle. Such efforts have increased recycling rates in some municipalities with low rates to begin with, but so far hasn’t succeeded in driving rates above the 30 percent national average—a far cry from Coke’s 100 percent goal.
“It’s a series of building blocks,” says Lisa Manley, a spokeswoman for Coke on sustainability issues. “[We] start with recycled content in our packages, then continue to support community recycling efforts, and with that we’ll be able to drive more material to Spartanburg. It’s a longer journey, but they are the right steps.” Even while Coke urges incrementalism, it has led the fight against the most proven means of increasing recycling rates—state bottle bills that charge a 5 or 10 cent deposit on containers that is redeemable when they are returned. In the eleven states with bottle bills, recycling rates average 70 percent for bottles. The higher the refund rate, the higher the percentage—up to the 10 cent return in Michigan, where the recycling rate is 95 percent.
Coca-Cola and its trade association, the American Beverage Association, have lobbied hard against such legislation, arguing that they unfairly single out bottles from all other packages and compete with curbside recycling efforts. “If you take away the incentive for curbside recycling, which oftentimes happens when you take away the materials with the highest value, oftentimes you see the system itself disappear,” says Lisa Manley. Of course, nothing of the sort has happened in the states that do have bottle bills, where public support for them averages around 80 percent.
Sometimes, too, the largesse from the company comes with an implicit threat. Coke entered into a recycling partnership with the city of Miami to provide recycling bins in public places—until the mayor of Miami publicly supported the Council of Mayors resolution to ban bottled water from city functions. According to CAI’s Gigi Kellett, Coke then pulled its part of the funding for the program, leaving the city to pay for its own recycling bins and providing another example, as if one was needed, of how CSR efforts provide cover for other company goals.
Despite its efforts to save the bottled water market by emphasizing environmental sustainability, Coke found itself back where it had been only a few years ago—with a consumer backlash driving down sales. And in a larger instance of “coming full circle,” the one area where bottled water was still growing by 2009 was that in which Coke had originated more than one hundred years before: health beverages. Even while Neville Isdell was rallying for a return to soft drinks in 2005, he was making good on his promise that Coke would eventually carry health benefits.
Coke formed a partnership with Nestlé in 2006 to roll out a green-tea drink it called Enviga, which was “proven to burn calories.” The claim hinged on the antioxidant EGCG, the active component of green tea, which had been found in some controlled tests to speed metabolism. A study by Coke and Nestlé claimed that when thirty-one already thin adults drank Enviga for three days, they burned an average of 100 extra calories on the third day. Even to burn that modest amount of calories, you’d have to drink three 12-ounce cans of Enviga, at between $1.29 and $1.49 each. But Coke was bold enough to say the drink had “negative calories.”
That was too much for the “food police.” Still smarting from being double-crossed on the school soda deal, Coke’s old nemesis CSPI filed a class-action lawsuit against the companies. Coke hedged, claiming ridiculously that it had said only that Enviga burned calories, not that it led to weight loss. “You can stop that, it’s about weight loss,” said a judge, swatting down the distinction during a hearing. In the end, the company cut the calorie-burning claims, and eventually Coke and Nestlé pulled Enviga entirely in the face of poor sales.
The same could not be said of VitaminWater, the leader in a new trend of “enhanced beverages,” which Coke had paid an eye-popping $4.1 billion to acquire through its parent company Glaceau in 2007. VitaminWater promised a cocktail of exotic ingredients—guarana, açai, and green tea—that in another era would seem straight out of the carpetbag of a snake oil salesman. But consumers have literally drunk it up, with sales in recent years growing by double digits, comparable to bottled water sales a few years before (or, for that matter, soft drinks two decades ago). It has even found its way quietly into schools, when the American Beverage Association and the Alliance for a Healthier Generation amended their agreement from allowing sports drinks and juices to allow any “other drinks” with fewer than 66 calories per 8-ounce serving into school vending machines. In all of its advertising of vitamins and health additives, however, Coke failed to advertise one ingredient in VitaminWater: a whole lot of sugar. In fact, a 20-ounce bottle of VitaminWater has 32.5 grams of sugar and 125 calories—nearly half of the calories in a comparable-size Coke.
“When I bought VitaminWater, frankly I thought I was doing myself a favor healthwise,” says James Koh, a San Francisco gym rat who drank the stuff regularly. “I had no idea I was actually getting almost a Coke’s worth of sugar and calories.” Koh is now the lead plaintiff in yet another class-action lawsuit filed by CSPI, which may finally get its day in court. This time, CSPI didn’t even bother calling Coke before filing the suit in January 2009. As a sign of the increasing acrimony between the company and its nemesis, Coke blasted the lawsuit as “ridiculous a
nd ludicrous.” Using language rare even for a company under attack, the company went on to call the suit an “opportunistic PR stunt” and “grandstanding at a time when CSPI is receiving very little attention.”
At the same time, in response to press inquiries, Coke claimed it hadn’t yet had the opportunity to read the complaint, so it couldn’t respond to specific charges. Had the company read it, they would have found it alleged a grab bag of bogus health claims on behalf of Coke to hide the fact that the drink is essentially watered-down soda.
The FDA allows food companies a lot of leeway in making claims about the nutritional effects of supplements—for example, that calcium supports the formation of strong bones. It prohibits companies from marketing food items as drugs intended to treat or cure disease (though in practice enforcement of this has been lax). VitaminWater’s claims have skirted and in some cases crossed the line with claims that antioxidants in one flavor “may reduce the risk of certain chronic diseases,” and vitamin A in another “may reduce the risk of age-related eye disease.”
Even more egregiously, says CSPI’s Stephen Gardner, the brand has deliberately misled consumers through a practice of “double labeling”—listing the good stuff like vitamins and other nutrients by the bottle size, while listing the bad stuff like sugar and sodium by the serving size in order to minimize their appearance, since there are two and a half 8-ounce servings in a 20-ounce bottle. “They say there are only 50 calories, but in effect there are 125 calories,” Gardner says, bristling. “Why should consumers assume they are being lied to in the front? Why should they have to study the very hard-to-read fine print to know the ingredients?”
Remaining a step ahead of the backlash, Coca-Cola recently released VitaminWater 10, with just 10 calories per serving (that is, 25 calories per bottle). The product contains stevia, a plant-derived sweetener that has faced its own controversy over claims it contributes to infertility and cancer, even though it has just won approval as safe by the FDA.
If Coke doesn’t succeed on VitaminWater, they may have few options left in the United States and European markets. While the key to capitalism is constant innovation, the company may have simply reached a plateau in developed countries. While Coke has survived the backlash against soda in schools, the sugar-sweetened carbonated beverage market has stopped growing. Bottled water, too, has stagnated, and if it doesn’t revive, it will spell a big loss to Coke’s profit center.
Fortunately for the company, it isn’t dependent on the U.S. and European markets—and hasn’t been for a long time. Like the tobacco companies, which looked overseas when they came under fire in the United States, Coke has increasingly looked to countries like Brazil, China, and Russia as its next big markets. In addition to the growing populations of countries in the developing world, the company has the added benefit of a more lax regulatory environment, allowing Coke to take advantage of lower costs. In doing so, however, it has created an even bigger conflict between the image of international harmony the brand projects and the reality of the company’s operations on the ground.
The world of Coca-Cola isn’t the World of Coca-Cola.
Part Two
TEACHING THE WORLD TO SING
I’d like to teach the world to sing, in perfect harmony,
I’d like to buy the world a Coke, and keep it company,
That’s the Real Thing . . .
-COKE COMMERCIAL, 1971
SIX
“¡Toma lo Bueno!”
Salamandering along the ridges of the Chiapas Highlands in southwestern Mexico, you might miss the small sign announcing the village of San Juan de Chamula. But you’d never miss the painted Coke advertisements that surround it on all sides. As visitors come down the hill into the town of 60,000, it takes on the appearance of an army camp, with bright red tents bearing the red Coke logo pitched all over town. Like most Mexican towns, Chamula centers around a huge central plaza where vendors sell bright Mayan textiles, piles of fruits and vegetables, knockoff clothes, and, of course, soft drinks. But the visibility of Coke only hints at the complete cultural integration the fizzy beverage has achieved in Chamula. Facing the plaza is the Church of St. John the Baptist, a white colonial-style cathedral built in 1522, where Coke has literally been turned into a means of religious veneration.
Nearly every day, gringo tourists line up outside the church, clutching tickets to observe the bizarre rituals within. Once through the entrance, they are enveloped in the warm, woodsy smell of pine incense, supplemented by fresh pine needles strewn on the floor. A soft light filters in from windows set below the ceiling some eighty feet above, while thousands of candles burn on tables before glass cases containing gaudily dressed statues of saints. As musicians near the altar play a repetitive dirge, small groups of women and children are burning clumps of small, tapered candles stuck into the flagstones. Some are so close together, their combined flames look like a small campfire.
As bewildered tourists wander among them today, a young girl opens up a cardboard box to lift out a clucking brown chicken. Her mother takes it, holding it by its neck and feet, as she rubs it over each of her children. Then laying it on the ground in front of her, she talks to it and soothes it before calmly breaking its neck. The ceremony is a healing art; the chicken is intended to take away the problems of those upon whom it is rubbed. When it dies, the problems go away.
By far the most prominent rituals in the church, however, are those involving soft drinks—which are used by the indigenous people here as a means of directly communing with God. Half-empty bottles of Pepsi and local drinks Big Cola and Gugar are scattered all over the ground amid the pine needles. The most common drinks, though, are half-liter bottles of Coke. By the altar, one man opens up a canvas bag full of them, along with clear bottles of a homemade sugarcane rum called pox (pronounced “posh”). He passes two small glasses to each member of the group, one full of pox, the other of Coke. Then the eldest man, who stands in the middle dressed in a black sheepskin vest and is missing most of his teeth, chants for five minutes. When he’s done, he takes a gingerly sip of the cane liquor—then tosses back the whole glass of Coke in one long guzzle, holding his hand out for a refill as the other members follow suit.
All around the church, in fact, the groups of people are performing the same ritual, explains Carlos Gallegos, an English-speaking tour guide leading a quiet group of Germans. “People drink the pox first, then they drink the Coca-Cola,” he says. “Then they make a little burp, and that is your spirit floating up into the air. It makes a confession to God and it comes back to your body.” The burps are virtually undetectable, done discreetly as a personal communication with God. The different colored candles, continues Gallegos, represent different supplications—yellow for health, green for the harvest, and so on, which are carried upward along with the little belches. “People drink different ones now, but Coca-Cola is still the official one, the best one,” says Gallegos. So significant has Coke become to the ritual life of the village that neighbors give it to celebrate births, deaths, and marriages, and judges order it as a means of payment in small claims court. “Here,” says Gallegos, “Coca-Cola is cash, poison, magic, passion, pleasure, torture, love, and medicine.”
How a caramel-colored drink from Georgia came to be everything to a remote Mexican village is a long story, intertwined with Coke’s international expansion after World War II. When Asa Candler forecast Coke’s unstoppable growth, and Robert Woodruff imagined Coke “within arm’s reach of desire,” they might have been picturing modern-day Mexico. “¡Toma lo bueno!” read ads blanketing the country—“Drink the good stuff!”—and Mexicans do, 635 cups of Coke beverages annually per person, half again as much as the United States’ 412. In part, it is Coke’s role as a symbol of the American way of life that has made it so popular, and in part, it’s the extremes the company has gone through to get its soda into every village shop and dispensary. It’s nearly impossible to describe the ubiquity of soft drink ads in Mexico, with Coke�
�s logo painted on houses and buildings along the roads at least every hundred feet.
Along with Canada and Hawaii, Mexico was one of the first foreign countries to sell Coke, dating back to 1897. For the next few decades, the company sold small amounts in Cuba, the Philippines, England, Germany, and other countries. Early sales abroad ranged from sporadic to anemic. In 1927, Woodruff focused on the market with a new Foreign Department, which contracted out with local companies and businessmen to operate plants overseas, eventually spinning off into a separate subsidiary called the Coca-Cola Export Corporation.
The franchise system put into place when Candler accidentally gave away the store proved useful in foreign markets, allowing the company to expand more rapidly and with less risk—not to mention decreasing the company’s liability if anything should go wrong. The company took delight in calling itself a “local” company wherever it went, pointing out that only 1 percent of Coca-Cola Export’s employees were American. Then again, the bulk of the profits—up to 80 percent in some cases—flowed back to Atlanta. And not all countries were created equal. In developing nations, bottling companies were often contracted out to American corporations, such as the powerful United Fruit Company in Guatemala and Nicaragua, or owned outright by Coke, as in India.
The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink Page 16