Citizen Coke: The Making of Coca-Cola Capitalism
W.W. Norton & Co, 2014, 432 pp., $27.95
Which Coca-Cola is the real “Real Thing”? Is it Citizen Coke, the responsible corporation that promotes local economic development and brings happiness and the American way of life to millions around the world? Or is it Killer Coke, a company that exploits public water, transportation, and waste systems to profit at the public’s expense, relentlessly promotes products to children that contribute to premature death, despoils the environment with its waste, underpays and mistreats the workers who produce its ingredients, and lobbies to defeat laws that protect public health?
In Citizen Coke: The Making of Coca-Cola Capitalism, Bartow J. Elmore, an environmental historian at the University of Alabama, tells us that the answer isn’t “either/or.” Citizen Coke and Killer Coke are conjoined twins, each providing the other with essential life support.
Elmore defines Citizen Coke as a company that sees itself as a manufacturer that meets consumer demands for refreshment and pleasure, whose business practices promote community development and local businesses, whose employment practices create jobs for hundreds of thousands of people around the world, and whose philanthropy supports the arts, health, and global sustainability. Like Charles Wilson, the General Motors CEO who became Secretary of Defense in 1953 and asserted at his confirmation hearing that what “was good for our country was good for General Motors, and vice versa”, Citizen Coke equates corporate and national well-being. As Elmore describes in detail, from its founding in 1886 to today, some elements of this flattering self-portrait are true.
But then there’s the evil twin. Killer Coke—my term, not Elmore’s—played an essential role in increasing consumption of high fructose corn syrup (HFCS), a product implicated in the global rise of diet-related chronic diseases such as diabetes and fatty liver disease. Between 1960 and 1997, per capita consumption of added fructose in the United States increased 140-fold. In the mid-1980s, Coke began using HFCS as its sole sweetener because it was much cheaper, and even sweeter, than cane sugar. By 2004, writes Elmore, sweetened beverages were the largest single source of calories in the American diet.
Killer Coke also uses its political clout to thwart public health measures such as soda taxes, product labeling, and portion-size limitations, measures that public health researchers believe could help reduce the growing burden of diet-related diseases. Since 2009, reports the Wall Street Journal, soda companies like Coca-Cola, PepsiCo, and the Dr Pepper Snapple Group have spent more than $100 million to defeat proposed taxes on sugary drinks in more than two dozen cities and states.
Killer Coke, labor activists charge, also colludes with growers and bottlers in the systematic intimidation, kidnapping, torture, and even murder of union leaders. In Colombia, for example, a Coke worker and union leader in Barranquilla was murdered in January 2012. Coca-Cola denies any involvement but has opposed an independent investigation into these allegations and released what activists called misleading information about the murder to the public and its shareholders.
A central theme of Citizen Coke is that Coke has created a brand of capitalism that increasingly dominates the global economy. What are the essential elements of Coca-Cola capitalism?
First, Coke capitalism looks to protect profit by outsourcing expensive or risky operations to others. From its early days, Coca-Cola decided to leave bottling to separate local companies. It thus avoided building expensive bottling plants, investing in new bottling technologies, or paying to transport filled bottles, rather than syrup, around the nation and the world. Later, when Coke did buy up some of its bottlers, profits fell. In 2013, Coke began to again spin off some of its bottlers. Similarly, unlike other food manufacturers, Coke never bought sugar or coffee plantations, leaving to others the risks of owning property in volatile business and political climates.
Second, Coca-Cola avidly pursues government subsidies. Local investments in water infrastructure, highways, and public recycling programs have enabled Coke to produce, distribute, and dispose of its products largely on the public dime. Without the New Deal’s Works Progress Administration (for water infrastructure), the postwar Highway Trust Fund (for a national highway system), the 1976 Resource Conservation and Recovery Act (public-funded recycling), and the trade and intellectual property rules of the 1995 World Trade Organization, Coca-Cola would have been unable to shift so many of its fixed costs to taxpayers. In this way, Coke more resembles one of Mitt Romney’s “takers” than it does the beneficent contributor to the American economy that the Citizen Coke image suggests.
Third, Coca-Cola has lots of local partners who look out for the company’s interests. Bottling plants, local food retailers, and fast food outlets prosper when they sell more Coke, making them an ardent sales force. Producers of bottles, cans and packaging, natural and synthetic caffeine, and sugar and HFCS also benefit when Coke sells well (as did cocaine producers, before the ingredient was removed in 1928). Having such powerful local, national, and global allies helps Coca-Cola in its lobbying and public relations campaigns.
Finally, Coca-Cola capitalism is well-suited to the age of globalization. If a sugar producer in one region raises prices, Coke simply searches elsewhere for a cheaper supplier. If Western developed nations or cities impose burdensome taxes, portion-size limits, or labeling requirements on soda, Coke follows the playbook of the tobacco industry, growing its businesses in Asia, Africa, and Latin America. As soda consumption declines in the United States, global sales are becoming increasingly important. In 2013, 37 percent of Coca-Cola’s revenues came from outside the United States, with Pacific nations providing the largest foreign share.
According to Elmore, this new brand of capitalism is the wave of the future. Apple, Microsoft, McDonald’s, and the big banking and investment firms follow in Coke’s footsteps, outsourcing when they can, enlisting local partners, trading commodities rather than manufacturing goods, and pressing governments, taxpayers, and customers to take on the externalized risks.
So what’s wrong with Coca-Cola capitalism? Isn’t it one more example of America’s genius at adapting to a changing world? Elmore’s detailed examination of Coke’s history highlights some of the problems. It turns out that what’s good for Coke’s bottom line is not so good for American or global health, the environment, democracy, or most typical workers. Furthermore, as Elmore shows, the support that governments and taxpayers provide Coca-Cola allows the company to ship and sell more products and, in the process, deplete public goods such as water and land that could grow healthier crops. This in turn generates more diet-related disease and solid waste that consumers and taxpayers must pay to remedy.
To add insult to injury, some of the profits that these government subsidies help to generate are then turned into lobbying and campaign contributions to thwart measures that could protect the public. According to the Open Secrets of the Center for Responsive Politics, Coca-Cola and its affiliated companies contributed almost $13 million directly to candidates running for office between 1990 and 2014. Coke-affiliated PACs contributed more. Since 1998, Coca-Cola and Coca-Cola Enterprises spent about $58 million to lobby the Federal government. Millions more in contributions to trade associations like the American Beverage Association, the Grocery Manufacturers Association, the National Restaurant Association, the National Association of Convenience Stores, the Business Roundtable, and the U.S. Chamber of Commerce amplify Coke’s political clout and provide another opportunity to recycle public subsidies into advancing the company’s private interests.
Part of Coke’s success, writes Elmore, grows from the intimate relationships with other big corporations, constituting what I have called the “corporate consumption complex.”1 This network of corporations, financial institutions, law firms, advertising agencies, and trade associations promotes hyperconsumption to feed the bottom line and collaborates in the political arena to achieve common goals.
For example, Coke has long bought the caffeine that enables its beverages to hook customers from Monsanto, and Coke recently teamed up with Monsanto to fund opposition to referenda on GMO labeling. When natural caffeine became too expensive, Merck supplied the synthetic caffeine that Coke added to the “real thing.” In the 1990s, McDonald’s was Coke’s largest customer; it helps to promote Coke at its 35,000 outlets in more than a hundred countries. When General Foods, one of the nation’s largest food companies, had a surplus of caffeine after it started marketing de-caffeinated coffee, Coke became an eager customer for the unneeded extracted caffeine General Foods sold at rock bottom prices. Through these relationships, Coke advances its business and political objectives by sharing information, joining trade associations, and doing deals that benefit Coke and its partners. The only problem with these every day, mostly legal practices, Elmore points out, is that they impose undisclosed and undeniable burdens on local governments, public health, and the environment.
Citizen Coke highlights the challenges that Coca-Cola capitalism poses, but the book is more diagnosis than prescription. Elmore asks, “Why should a citizenry invest in companies that abide by a nineteenth-century commitment to perpetual growth in a twenty-first-century world facing both biological and environmental limits to relentless volume sales expansion?” Good question, but what can those troubled by the Coca-Cola brand of capitalism do to create more sustainable alternatives? What could persuade Coca-Cola to abandon some of its harmful practices?
A first step is to analyze carefully the vulnerabilities of companies like Coke. As many observers have noted, it is not the secret formula or the taste of Coca-Cola that keeps customers coming back, but rather the image of a brand that brings happiness, refreshment, and sociability. The habituating properties of sugar and caffeine help to maintain sales but many companies sell products with these ingredients; Coke is a best seller because of its branding.
But this dependence on brand identity leads to vulnerability. Already food, health, environmental, and labor movements have challenged the beneficent image of soda that Coke, Pepsi, and others seek to broadcast. Coke’s campaign and lobbying resources may help it to win a few more electoral or legislative battles, such as its defeat of a soda tax in San Francisco and of GMO labeling requirements in several states last November. But in the U.S. market, Big Soda is losing. Americans drank an average of 51 gallons of soda in 1998; today we drink nearly 20 percent less according to Beverage Digest, a trade publication and data service. If health and social justice activists continue to convince people that the Coke brand is about spreading diabetes and premature death rather than happiness, the company’s future is not bright.
In New York City, which has led aggressive campaigns against soda consumption, the proportion of the population that consumed more than one can of sugar-sweetened beverages per day declined by 12 percent between 2007 and 2009. The tobacco control movement showed that health activism helps individuals make healthier choices and creates a climate for majority-support of policies that can accelerate these changes. In the next few decades, jurisdictions around the nation are likely to enact policies to further reduce soda consumption. Accelerating these changes will help us avoid hundreds of thousands of diet-related premature deaths and preventable illnesses, an opportunity lost in the fight against the tobacco industry, which succeeded in delaying for four decades the actions that epidemiological evidence suggested.
Coca-Cola depends on the Citizen Coke image to achieve its business and political objectives. But in every setting in which it operates, its evil twin, Killer Coke, is also in the room, creating a vulnerability that activists can exploit. Unions and human rights groups challenge the company’s labor practices. The American Federation of Teachers voted last October to ban Coke products at its annual meetings because of its labor practices in Colombia and Guatemala. To protest its labor and environmental practices, student groups have mobilized to defeat exclusive “pouring rights” contracts between Coke and major universities.Schools around the nation have eliminated soda from vending machines and USDA guidelines now set nutritional standards for vending machine beverages.
In Contra Costa, California, more than twenty doctors cancelled their membership in the American Academy of Family Physicians (AAFP) when it accepted a grant from Coca-Cola to create the Consumer Alliance, a new corporate partnership program between Coke and the AAFP to educate people about healthy lifestyles. How can we belong to a professional association dedicated to health, these doctors asked, when it partners with an organization dedicated to expanding consumption of beverages most associated with the rise of diabetes? On another front, the global social responsibility group Corporate Accountability International has challenged Coca-Cola for its depletion of water supplies in the United States and globally.
So far these and other efforts to hold Coca-Cola accountable for its harmful practices have been small and disjointed. Again, the tobacco control effort suggests some lessons: It took four or five decades for the streams of anti-tobacco activism that trickled though the nation to converge into a river that could change policy, social norms, and individual behavior. Food advocates rightly point out that food and tobacco are different, but Coca-Cola and other sugary beverages are more like tobacco than they are like real food.
Coca-Cola capitalism is vulnerable for another reason. As Elmore shows, because its harms are not confined to health or the environment, touching also on labor practices, agricultural self-sufficiency, and the corruption of politics by money, few companies better symbolize the risks of contemporary capitalism. This is why anti-Coca-Cola activism has such potential to bring together health, environment, democracy, inequality, labor, and human rights concerns into a coherent vision for a better world. Citizen Coke is required reading for those who need the factual basis to take the first step toward realizing this potential.
1Freudenberg, “Insatiable: Sizing Up the Corporate Consumption Complex”, The American Interest (March/April 2014).