The Coca-Cola Company: Encyclopedia II - The Coca-Cola Company - Criticisms

The Coca-Cola Company - 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 the UK, the corporation has been investigated for food promotion, childhood obesity and for weaning young children onto junk food.^{[citation needed]} 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.

The Coca-Cola Company - 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]

The Coca-Cola Company - 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]

The Coca-Cola Company - Coca-Cola in UK

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.[10]

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.[11]

Coca-Cola has recently been denounced for weaning young children onto junk food.^{[citation needed]}

The Coca-Cola Company - 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).[12] In 1993, the company (along with PepsiCo) returned in pursuance of India's Liberalization policy.[13] In 2005, Coca-Cola and Pepsi together held 95% market share of soft-drink sales in India.[14]

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.

Some claim that Coca-Cola was banned from import in India in 1970 as a result of the corporation's refusal to release the list of its ingredients.^{[citation needed]}

Since relaunch, there were instances of substandard bottling practices by the company; the notorious discovery of a dead lizard inside a sealed Coca-Cola bottle was widely publicized.^{[citation needed]}

Finally, there were suspicions surrounding the addictive nature of the drink.^{[citation needed]} As the company refused to disclose the exact ingredients, this remains a matter of speculation.^{[citation needed]}

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.[15]

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

On 7 December 2004, India's Supreme Court ruled that both Coca-Cola and competitor Pepsi must label all cans and bottles of the respective soft drinks with a consumer warning, after tests showed unacceptable levels of residual pesticides. Both companies continue to maintain that their products meet all international safety standards. [16]

As of 2005, Coke and Pepsi together hold 95% market share of soft-drink sales in India.[17]

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.[18] The plant had previously had the capacity to draw 1.5 million liters of water from the ground each day.^{[citation needed]} As water resources are viewed as a public good in India, there is no regulatory agency to challenge this.^{[citation needed]} Reacting to villager complaints that water supplies had rapidly dwindled and were murky (several tests suggest that the water was undrinkable), the High Court in Kerala ruled in 2003 that the plant could only use as much water as any other landowner with 34 acres (140,000 m²) in the region.^{[citation needed]}

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. [19]

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.[20]

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.[21]

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 [22]).

The Coca-Cola Company - 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 Columbia.

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 Columbia 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.[23]

However, Coca Colas 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."[24]

Ultimately, shareholders rejected the resolution.

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 [25]. 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 labour issues in Colombia. Panamco and Colombian bottler Bebidas y Alimentos now face a trial.[[26]]

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 [27] [28] confirmed the workers' allegations. They found:

The bottler and The Coca-Cola Company deny these allegations. Specifically, The Coca-Cola Company stated in its 2004 proxy [29]

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.

In the 1980s, Guatemala also suffered a spate of mysterious murders of union-affiliated Coca-Cola employees. At one point, paramilitary mercenaries violently occupied a factory. Eventually, after pressure from several organizations worldwide, the conflict was ended when the corporation appointed a new franchise operator who brokered a deal with the union.

The Coca-Cola Company - 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' practicedeugenics and anti-Semitism. Some claim that several of Coke's top executives in Germany were prominent Nazi members.^{[citation needed]} However, 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.[30] The difficulty of shipping Coca-Cola concentrate to Germany eventually led to the creation of a new drink under the Coca-Cola brand, Fanta.

The Coca-Cola Company - 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. [31]

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. [32]

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%[33]. The company donates 10% of its profits to Palestinian charities.

Adapted from the Wikipedia article "Criticisms", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki