“We see a world unfolding over the next decade and beyond that represents ideal conditions for extraordinary, sustainable growth,” Kent said, peering over his reading glasses and gesticulating vehemently. World population would swell, particularly in developing economies and the world’s largest cities. One billion more people would join the middle class, and per capita wealth would increase by nearly 30 percent. “That will mean more people with more wealth with more intense demand for choice, leading highly mobile, on-the-go urban lifestyles that are conducive to the incidence and the consumption of ready-to-drink beverages,” Kent continued. He projected that annual retail sales for the entire non-alcoholic industry would reach $1 trillion. “As we look ahead to the year 2020, I am convinced that these next few years will be defining moments for The Coca-Cola Company and the great Coca-Cola system. In a growing world of refreshment, ladies and gentlemen, the opportunities before us are tremendous.”
Gary Fayard, Coke’s chief financial officer, put it more succinctly: “We’ve got the best brands in the world. We’ve got the greatest system in the world. And we’ve got an operating model that generates more cash than any other business in the world.”
LIVING POSITIVELY. . .
The enormous cash flow also gave Coca-Cola leverage to pursue the halo effect through its “Live Positively” initiatives. “Imagine a better world where all people have access to safe water, where packaging has a life beyond its original use, and where communities are healthy and prosperous,” a 2010 Coke sustainability summary urged. Coke created the Replenish Africa Initiative, a $30 million program to provide safe drinking water to 2 million Africans by 2015. In Uganda and Kenya, the Company collaborated with the Bill & Melinda Gates Foundation to help mango and passion fruit farmers increase productivity, promising to buy the produce to make juices.
Coke offered Dasani and a few other beverages in a new PlantBottle containing 30 percent byproducts of sugar production. The entire bottle was still made of PET plastic that could be recycled but was not biodegradable. The main benefit was that it wasn’t made from petroleum. Coke announced a goal of making a 100 percent bio-bottle by 2020. Since oil supplies would inevitably dwindle and become more expensive, this move made economic as well as environmental sense. Coke sponsored RecycleMania, a recycling contest on college campuses, and helped build the world’s largest PET bottle-to-bottle recycling plant in Spartanburg, South Carolina, though the vast majority of Coke containers ended up clogging landfills anyway.* By 2015, all new Coke coolers would be HFC-free. Coke pledged to continue reducing carbon emissions from manufacturing operations and to use more hybrid diesel-electric vehicles. Its Belgian production facility used geothermal heat. By the end of 2010, Coke planned to treat all of its wastewater sufficiently so that fish could survive in it. (By early 2013 it had not quite reached 100 percent compliance.)
In more than 100 countries, the Company sponsored physical activity programs, including Copa Coca-Cola, a free soccer program that had already involved 600,000 students around the world. Coke promised to have activity programs in all two hundred-plus countries in which it operated by 2015. Most products revealed calorie content per serving. The Company sold 750 low- or no-calorie drinks, including NutriJuice, an orange juice with added iron, zinc, lysine, and vitamins A and C, to help address anemia and malnutrition in Filipino children.
Coke bragged about its charitable activities in several Open Happiness commercials. One featured a high school football game with a Coke scoreboard. “If you’ve had a Coke in the last 79 years,” the narrator says, “you’ve helped support community support programs yesterday and today.” Another showed students opening mailboxes and lockers to find Coke bottles, emblematic of the college scholarships the Company gave out, while a third pushed Coke’s “Give It Back” recycling effort.
Coke freely admitted that its do-good activities were ultimately designed to boost the bottom line one way or the other. Muhtar Kent pointed out that in Kenya, where Coke drilled a new well, women who had spent hours fetching polluted water in buckets were now operating a local catering business. Like thousands of others in the developing world, they used bicycles or pushcarts to deliver Coke products. “You bring the water,” Kent said, “and you emancipate the women.” Coke promised to double the number of women in its global supply chain by 2020.
Coke’s “Live Positively” efforts convinced some former skeptics. In a December 2009 New York Times editorial headlined “Will Big Business Save the Earth?” Jared Diamond, author of Guns, Germs, and Steel and Collapse, wrote that he once had thought that “big businesses are environmentally destructive, greedy, evil and driven by short-term profits,” but now he wasn’t so sure. “Coca-Cola’s survival compels it to be deeply concerned with problems of water scarcity, energy, climate change and agriculture,” Diamond observed. “Economic reasons furnish the strongest motives for sustainability, because in the long run (and often in the short run as well) it is much more expensive and difficult to try to fix problems, environmental or otherwise, than to avoid them at the outset.” He concluded that “we should reward companies that work to keep the planet healthy.”
TREATED NEGATIVELY
Diamond’s praise didn’t quiet a chorus of naysayers. The Energy and Resources Institute report commissioned by Coke did not entirely exonerate the Company’s practices in India, though it found no pesticides in Coke’s bottling plants or wastewater. Two of six bottling facilities examined were located in areas where groundwater tables were “overexploited,” according to TERI. The $16 million Kaladera bottling plant had “significant impacts” on local water supplies. TERI suggested several options for the Kaladera facility: truck in water from elsewhere, store excess water (if any existed), relocate the plant, or shut it down. “Coca-Cola has no business operating a bottling plant in such dire conditions, and we are not sure why they opened the factory in the first place,” complained anti-Coke activist Amit Srivastava of the India Resource Center. In Kerala, a government committee recommended that Coke pay $47 million in damages related to its closed Plachimada bottling plant, though the ruling had no teeth.
The negotiations with anti-Coke lawyers and Colombian union leaders had fallen apart in 2008. Coke offered $12 million in victim compensation, including a fund for victims of anti-union violence, but with the stipulations that the union plaintiffs resign from their jobs at Coke bottling plants, that a gag order on any union criticism of Coca-Cola be instituted, and that the Killer Coke campaign be dismantled. “You were involved in those crimes, you have to pay and admit it,” insisted the uncompromising Edgar Paez, chief negotiator for the Sinaltrainal union. “The whole truth must come out.” By this time, however, Coke wasn’t feeling as much heat. “We are in a much better position to deal with this dissipating campaign,” Coke’s Ed Potter observed. Terry Collingsworth finally filed an appeal of the alien tort claims decision on the Colombian murders, but a three-judge panel rejected it in 2009.
The following year, a Canadian documentary, The Coca-Cola Case, raised the Colombian stink all over again. The film mostly follows lawyer Dan Kovalik of United Steelworkers, who took a leading role in the failed negotiations, though Collings-worth, Rogers, and the Colombian union leaders are also featured. Viewers see Kovalik’s ebullience—“I think this is an historic deal”—turn to frustration and dejection. The Coca-Cola Company objected to the film as “defamatory” and said that it broke confidentiality agreements covering the negotiations, but that only called attention to the documentary, which had to turn away crowds at some showings.
The International Labor Organization’s report on Coke’s bottlers in Colombia found no major labor rights violations, but the ILO made no attempt to investigate the old murder allegations. It did raise concerns about job outsourcing, however, which allowed the Coke system to underpay and fire employees with impunity. In Belching Out the Devil, a book published in the United States in 2009, British comedian-activist Mark Thomas documented such uses of Colombian fleter
os (“hired transporters”). Among others, he interviewed Carlos Maldonado Anaya, who for twenty-five years delivered Coke products wearing a Coke uniform yet worked for a subcontractor and received minimum wage. He was told he would be fired if he joined a union. The film-makers for The Coca-Cola Case interviewed two young fleteros who made $1 an hour for a fifteen-hour day. It took the Colombians two years to earn what Coca-Cola’s CEO made in an hour. Coke executives bragged that nearly a third of Colombian Coke bottling employees were unionized, which was technically true but ignored the fleteros, who comprised about 80 percent of the labor force.*
Thomas wrote in a cheeky style but made pointed jabs. “Trying to get The Coca-Cola Company to answer a question directly is like trying to run a quiz night in an Alzheimer’s care home.” He traveled from Colombia to Turkey, where he found similar complaints about underpaid subcontractors, and he interviewed protestors who had been gassed, clubbed, and kicked by police. Thomas went to El Salvador, where he saw child labor among the sugar cane fields. They get in enough trouble over their drinks being too sugary for kids, he thought, without the public finding out that children are helping to supply the sugar in the first place. In the town of Nejapa, El Salvador, Thomas heard claims that the local Coca-Cola bottler was polluting the stream, killing its fish, and that kids who swam in it developed rashes. Then he was off to India and protests over Coke’s water usage, also featured in FLOW, a 2008 documentary about the “domineering world water cartel.”
Coke managers told Thomas that the Nejapa wastewater met international environmental standards and that the Company provided two local schools with clean water. The undocumented claims in the Thomas book looked more serious when, in 2009, a Coke-owned subsidiary, AMCAN Beverages, in American Canyon, California, paid $7.59 million to the city for wastewater violations. But it was unlikely that Coke would pay any such fine in remote El Salvador.
The Coke Machine, another book critical of the Company, came out in 2010. In it, journalist Michael Blanding again covered the Colombian murders, Indian water issues, Coke’s exclusive school deals, obesity problems, and other controversies.
REPRISE, REPRISAL, AND MURDER IN GUATEMALA
The same year, Terry Collingsworth filed a lawsuit against Coca-Cola in the New York State Supreme Court, accusing Industria de Café S.A. (INCASA), a Guatemalan Coke bottler and instant coffee maker, of collusion in threats, murder, rape, and torture of union employees and their families.* INCASA owned a coffee and Coke syrup plant in Guatemala City and a Coke bottling plant in Retalhuleu, a city to the west.
The case, involving two union employees, was eerily reminiscent of the Guatemalan Coke bottler who had reputedly hired death squads to kill union leaders in the late 1970s.† José Armando Palacios, a twenty-seven-year veteran at the Guatemala City plant, allegedly received death threats from the INCASA personnel manager early in 2004 after he joined the union, followed by an attempt on his life. In April 2005, two men pushed into his home, tied up his son, and pointed a gun at his wife and daughter, threatening to kill them if Palacios did not quit the union. The following month, he was fired. Palacios refused to accept severance pay and continued to fight to get his job back. In June, the U.S. Labor Education in the Americas Project (USLEAP) called attention to Palacios’s case in a petition to the U.S. government.
USLEAP originated as a response to the Guatemalan Coke bottling union troubles of the 1970s and 1980s, so it seemed fitting that it would become involved in this case. But as the situation evolved, fractures, turf battles, and ego clashes within the international labor movement affected the outcome for Palacios, a short, uneducated, but determined former Coke security guard. His union, SITINCA, was small and received only lukewarm support from the International Union of Food Workers (IUF), whose general secretary, Ron Oswald, worked in Geneva. Only a few months before Palacios was fired, Oswald had signed a joint statement with Coca-Cola to work towards a labor agreement. USLEAP executive director Stephen Coats, who did not speak Spanish, worked in Chicago. The only USLEAP representative on the ground in Guatemala was Bob Perillo, who desperately worked to help Palacios and his family.
The Coca-Cola Company became involved in the case, discreetly and indirectly. Coke’s Ed Potter hired Stan Gacek, who served on the USLEAP board of directors, as a “consultant.”* On January 26, 2006, Gacek told Coats and Perillo that he understood that Palacios would give up his fight for reinstatement and that Atlanta-based Coke would pay for security guards for him. But the next day Palacios told Gacek during a Skype call that he had not agreed to give up his fight for his job. Perillo wrote, “It’s clearly urgent that Potter meet [directly] with these [Guatemalan union] folks.”
On January 28, as Palacios approached his home, a man driving a red car (the same color as Palacios’ truck) and who resembled him was shot and killed, only three feet away. Convinced that the gunman was after him, Palacios panicked. After he negotiated a severance package, he was approached by Rodrigo Romero, a Coca-Cola lawyer, who said, “We can arrange a meeting between you and a check,” if he signed a blank piece of paper that would be a settlement with Coke, agreeing to drop all legal claims and to remain silent. Palacios refused to sign and fled to the United States on February 6, 2006.
IUF’s Ron Oswald e-mailed that he was “talking to Potter relatively regularly through the night,” and that he was in “almost daily contact with CCC Atlanta over this case.” Oswald was deeply concerned, not about Palacios, but about the possibility that he would contact Terry Collingsworth. Coats steered the Guatemalan towards another lawyer for prolonged, unproductive negotiations with Coca-Cola. With his wife and daughter still in Guatemala, Palacios feared to mount a lawsuit, but when they were finally able to join him late in 2008, he approached Terry Collingsworth. In the meantime, Perillo became convinced that Coats, Oswald, and Gacek were running interference for Coca-Cola to prevent a major lawsuit. He resigned from USLEAP and joined Collingsworth as a field investigator in Guatemala.
The second case erupted early in 2008. Union representative José Alberto Vicente Chávez, who worked at the Retalhuleu Coke bottling plant, was involved in bitter collective bargaining negotiations with INCASA management in February 2008. After Vicente complained that the company was violating the agreement, he was summoned to a meeting in Guatemala City. As his family waited for him at the Retalhuleu bus station around 1 a.m. on March 1, four armed men killed Vicente’s son and nephew and gang-raped his sixteen-year-old daughter. One of the assailants was killed by police, and the others were caught and convicted. There was no investigation of possible links to the Coke bottler, although one of the killers had two cousins and an uncle who worked in the plant. Vicente and his family went into hiding, though he continued to work for INCASA.
In his 2010 Complaint, Terry Collingsworth asserted that “Coke has the control to prevent and/or remedy violence against workers and trade union leaders in its foreign bottling plants.” He quoted Ed Potter’s 2005 statement that “Coca-Cola acknowledges that Coca-Cola workers are allowed to exercise rights to union membership and collective bargaining without pressure or interference. Such rights are exercised without fear of retaliation, repression, or any other form of discrimination.” The lawsuit would remain unresolved for years. Collingsworth remained hopeful, though no alien tort claim had yet won in U.S. courts.
BOTTLED WATER WOES AND THE SODA TAX
In Atlanta, Coke executives were more concerned about campaigns against bottled water and soda than human rights issues. Since 2006, Corporate Accountability International (CAI) had been mounting Tap Water Challenges across the United States in imitation of the old Pepsi Challenge. Consumers discovered that in blind taste tests, they couldn’t tell the difference among Dasani, Aquafina, or local tap water. In September 2007, when the University of Central Florida inaugurated its new football stadium, the temperature neared 100 degrees Fahrenheit. The stadium had no water fountains, and the $3-a-bottle Dasani sold out. Eighteen attendees were hospitalized from dehydra
tion and heat exhaustion.
The adverse publicity forced the university to install water fountains, but the controversy over bottled water had only begun. CAI’s “Think Outside the Bottle” campaign asked people to drink public water whenever possible, and in 2008 the U.S. Conference of Mayors passed a resolution to ban bottled water at municipal buildings and events. By that year, the bottled water industry was selling nearly 9 billion gallons a year in the United States, over 25 times the amount sold three decades before. Americans drank more bottled water than beer or milk.
Water had become a cash cow for Coke, but Dasani sales were declining. Consequently, the Company supported the Competitive Enterprise Institute, which launched an “Enjoy Bottled Water” campaign in 2008, calling tap water unsafe and ridiculing opponents of bottled water. Still, Dasani sales fell 16 percent in 2009. By the following year, forty-four American cities had either banned bottled water or actively encouraged the use of tap water, and Illinois, New York, and Colorado had initiated statewide programs. The Grand Canyon National Park planned to ban bottled water, but the head of the National Park Service cautioned in a 2010 e-mail that “there are going to be consequences, since Coke is a major sponsor of our recycling efforts,” and the proposed ban was abandoned.
Bottled water may have had its critics, but as a multi-billion-dollar global industry, it wasn’t going away. “All of a sudden public water fountains have vanished and bottled water is everywhere,” observed Peter Gleick in his 2011 book, Bottled and Sold. It proved difficult to build brand loyalty for the clear, flavorless liquid, though, and with the recession, more people switched to cheaper private labels.
For God, Country, and Coca-Cola Page 77
