Currently browsing posts about: Coca-Cola

The second quarter financial results are in and food companies are doing great, thanks to sales in developing countries. For example:

McDonald’s: Meatandpoultry.com reports (July 22) a 15% increase in income “boosted by strong sales throughout the world.”  Total revenue for the quarter was $6.9 billion, up 16% from $5.9 billion during the same quarter last year.

PepsiCo: Food Navigator reports an increase in net income to $1.88 billion up 18% from $1.6 billion last year. Despite “challenging conditions in the North American beverage market”… worldwide beverage and snacks businesses accounted for growth along with the acquisition of Russian dairy and juice company Wimm-Bill-Dann.  Sales in emerging markets increased 4% in beverages and 9% in snacks:  “We continue to enjoy robust top-line growth in key emerging markets,” said PepsiCo chairman and CEO Indra Nooyi.

Coca-Cola: Although its North American sales were sluggish, sales increased “due to growth in emerging markets such as China, Russia and Mexico.”  Income rose 18% to $2.8 billion from $2.4 billion last year.  Sales rose 6% in Latin America, 5% in Europe, 7% in Eurasia and Africa, and 7 in the Pacific region.   Growth in China ws 24%, in Russia 17%, and in Mexico 7%.  In contrast, North American volume recorded a growth of a measly 1%.

Americans are turning away from these products.  We already have plenty of obesity.  Now it’s time to export it.

My post last week about KFC, Pepsi, and cause marketing elicited a lively dicussion along with some further examples.

Ken Leebow of “Feed Your Head” sent this one along with a comment: “Don’t pollute the Earth, but your body: Go for it!”

Cara Wilking of the Public Health Advocacy Institute (PHAI) sent this one: Give blood, eat a Whopper.  Cara, by the way, has done her own piece on why organizations that care about health should avoid partnerships with soft drink companies.

And Lisa Young sent a note about Coca-Cola’s sponsorship of continuing professional education credits for dietitians, for a course about bone health.  On that same site, if you pledge to LivePositively.com, Coke’s Sprite Zero will donate $1 to the American Cancer Society.

For those of you who insist that these kinds of partnerships raise money for Good Causes, please consider whether soft drinks are good for bone health or whether artificial sweeteners are good for cancer prevention.  The answers may not be in, but the questions are worth asking.

Cause marketing, I submit, is much more about the marketing than it is about the cause.

It used to be that the “soda wars” referred to Coke vs. Pepsi.  No more.  Today’s soda wars are fought on the health front, as more and more evidence links sugary drinks to obesity and other health problems.

The current issue of the New Yorker has an article by John Seabrook (in which I am briefly quoted) about Pepsi’s attempt to “health up” its snacks and drinks.

Seabrook’s article, “Snacks for a fat planet,” describes the extraordinary amount of money and effort Pepsi is spending to try to tweak its products to make them seem healthier.  His article doesn’t exactly give Pepsi a pass (as some of my readers have complained), but it does not really come to grips with how sugary drinks and snacks affect health or how Pepsi is marketing its products in developing countries.

That, no doubt, is why Pepsi has sent out a press release to reports that enclosed the complete article and suggested that reporters might be “interested in the company’s focus on its innovative approach to:”

• Reduce salt, fat and sugar across the portfolio – the New Yorker feature explains PepsiCo’s effort to re-shape natural salt so that it has more surface area, and, in turn, is perceived as “saltier” on the tongue – meaning they can maintain all the salty flavor in Lay’s but reduce overall sodium content
• Scale more drinks and snacks made with whole grains, fruit, vegetables and dairy to new markets – e.g. bringing vegetable-based gazpacho (perhaps with an edible whole grain spoon) to the U.S.
• Test new ingredients brought back from “treks” around the world – e.g. using a state-of-the-art robot in PepsiCo’s new Hawthorne, NY research lab to test botanicals and other natural ingredients from near and far – e.g. even secluded villages in the far East – to determine their impact on taste and viability for use in PepsiCo snacks and drinks (Do they intensify sweetness? Can they be a substitute for sugar? Do they have a particular healthful function?)

Score this one as a win for Pepsi.

Along with such pledges, Pepsi is aggressively marketing sodas to teenagers.  The San Francisco Chronicle reports on Pepsi’s new “social marketing” vending machines.

At a trade show in Chicago this week, PepsiCo rolled out a prototype interactive soda machine that lets you send a drink as a gift to a friend or a random stranger.

“Our vision is to use innovative technology to empower consumers and create new ways for them to engage with our brands, their social networks and each other at the point of purchase,” Mikel Durham, PepsiCo Foodservice’s chief innovation officer, said in a press release.

“Social Vending extends our consumers’ social networks beyond the confines of their own devices and transforms a static, transaction-oriented experience into something fun and exciting they’ll want to return to, again and again.”

But these kinds of marketing pushes are not confined to Pepsi.   Advertising Age reports that Joe Tripodi, Coke’s chief marketing officer of Coca-Cola explains the company’s growth strategy: focus on teenagers:

The company sees huge opportunities to grow colas, and the business as a whole, around the world in the next decade. Teen recruitment will be particularly important, as the company follows demographic trends.

“There was a time [a decade ago] when we walked away from teen recruitment and probably lost a generation of drinkers,” Mr. Tripodi said. “Parts of the world lost confidence in cola as the engine of growth. We’ve gotten that back in a big way. …When you look at the massive opportunity in so many huge countries in the world, that’s what energizes us and why we believe cola is still at its very early stages.”

And then there are partnership strategies. The latest is Sonic drive-ins’ campaign for Limeades for Learning. The campaign encourages eaters to vote for school projects like those that support physical activity.  Sonic promises to fund the projects with the most votes. The Limeades, by the way, are 620 calories (for a medium) or 950 calories (for a large).

Finally, for now, the Boston Globe reports that most Massachusetts voters support a sales tax on sodas if the money is used for some useful purpose.  But:

The American Beverage Association has been aggressively fighting taxes on soda, as cities and states across the country look for new tools to counter an obesity epidemic and raise revenue amid squeezed budgets. It has spent millions fighting initiatives that impose product-specific excise taxes on sugar-sweetened beverages and has been successful in nearly every attempt.

Expect more such public relations efforts superimposed on fundamental marketing techniques aimed at kids and fighting back on taxes and other attempts to limit soda intake.

How does this comport with the spanking new advertising guidelines to children or any of the previous pledges? Is sending a soda to a friend an activity or marketing? Or both?

http://www.sfgate.com/cgi-bin/blogs/techchron/detail?entry_id=87904

Today’s New York Times carries a piece by Robert Pear on soda industry opposition to NYC Mayor Bloomberg’s proposal to ban the use of food stamp (SNAP) benefits to buy sugary drinks.

My first-Sunday monthly column for the San Francisco Chronicle is on precisely the same topic.  I will post it tomorrow.

In the meantime, here’s what the Times says about how the soda industry is organizing opposition:

While the American Beverage Association has led the opposition, the fight demonstrates how various parts of the food industry have united to thwart the mayor’s proposal. Beverage industry lobbyists have worked with the Snack Food Association, the National Confectioners Association, which represents candy companies, the Food Marketing Institute, which represents 26,000 retail food stores, as well as antihunger groups like the Food Research and Action Center and Feeding America.

But here’s how the strategies play out in practice:

Eighteen members of the Congressional Black Caucus recently urged the Obama administration to reject New York’s proposal. The plan is unfair to food stamp recipients because it treats them differently from other customers, they said in a letter to Agriculture Secretary Tom Vilsack.

While Coca-Cola and PepsiCo are among the largest contributors to the nonpartisan Congressional Black Caucus Foundation, a research and education institute, caucus members say their positions are not influenced by such contributions.

See my Food Matters column tomorrow for how I view all this.

Among the many thoughtful comments on yesterday’s post is one from the Director of Oxfam America’s Private Sector Department, Chris Jochnick, who writes that I did not “quite capture the scope and intent of this project.”

As part of our work, Oxfam has a responsibility to engage with global corporations, through both collaboration and campaigns, in order to have constructive dialog on their business practices.

….Throughout the work, Oxfam has maintained complete independence including the ability to undertake advocacy against either company if the situation warranted. The Coca-Cola Company and Oxfam America shared the costs of the collaboration roughly in the proportion of 2:1, with The Coca-Cola Company contributing two-thirds of the costs (US $400,000) and Oxfam America contributing one-third of the costs in kind including staff time.

Unrelated to the study, The Coca-Cola Company made an earlier donation of $2,500,000 to Oxfam between 2008-2010 for humanitarian work in Sudan, with an emphasis on work related to water, sanitation and hygiene.

….Our independent voice keeps Oxfam’s approach to private sector collaborations dynamic and honest.

Let me add a bit more about what I think is wrong with this picture.

The goal of Coca-Cola is to sell more Coca-Cola.  The goal of Oxfam is to address world poverty.  I’m having trouble understanding how these goals could be mutually compatible.

Coke sales in the United States are flagging.  Last year, three quarters of Coke’s revenue derived from sales outside of North America in emerging economies where rates of obesity are increasing rapidly.

Sugary beverages like Coke are increasingly associated with obesity and its health consequences, problems now rampant in developing economies.

In the past year, Coke has embarked on an aggressive campaign of contributions to potentially critical groups such as the American Academy of Family Physicians, the Children’s Hospital of Philadelphia, Save the Children, and now Oxfam.

These groups are now highly unlikely to advise their constituents to cut down on sugary sodas.  If nothing else, sponsorship buys silence.

Oxfam may have done the work of its Poverty Footprint Report without company interference.  It is what is not in the report that is so much in Coke’s interest.

For just under $3 million, Coke has purchased an endorsement from Oxfam of its “anti-poverty” practices and silence on the role of sugary drinks in obesity.  This kind of public relations is well worth the price.

What does Oxfam get in this bargain?  The money, of course, but at the cost of serious questions about the credibility of its report and its independence.  Perhaps these are tolerable, but what about loss of respect?

I score this as a win for Coca-Cola.

I keep arguing that partnerships and alliances with food corporations put agriculture, food, nutrition, and public health advocacy groups in deep conflict of interest.

The latest example is Oxfam America’s partnership with Coca-Cola and bottler SAB Miller to evaluate the effectiveness of these corporations in reducing poverty (again, you can’t make these things up):

Despite the challenges involved, The Coca-Cola Company and SABMiller have each made ambitious and laudable commitments to labor rights, human rights, water, gender, and sustainability. However, there is little accountability to such commitments without the informed engagement of affected groups. By looking across all relevant issues (no cherry-picking) with an organization like Oxfam America and reporting out to stakeholders, these companies have opened themselves to heightened public scrutiny and hopefully increased accountability.

Hopefully, indeed.

The Oxfam Poverty Footprint Report describes the work Coca-Cola and SAB Miller are doing in Zambia and El Salvador to empower and promote sustainability.  It highlights Coca-Cola’s sustainability initiatives.

It does include some telling recommendations for follow-up.  For example:

• Engage sugar farmers and producers to improve safety and health of sugarcane harvesters.
• Investigate why independent truck drivers in Zambia work more than eight hours per day and discuss with drivers potential mechanisms to ensure safe driving.
• Ensure The Coca-Cola Company’s global Advertising and Marketing to Children Policies are being effectively and consistently implemented at a regional level.

You have to read between the lines to see what this report really says.

And what about health, obesity, or the shocking increase in childhood tooth decay that is occurring in Latin America these days as a result of the influx of sugary drinks?  Not a word.

Why is Oxfam America helping Coca-Cola to market its products in Latin America and Africa?  I can only guess that Coca-Cola’s grant to Oxfam must have been substantial.

And thanks to Kelly Moltzen for sending the links.

I enjoy reading the San Francisco Chronicle when I’m in that city.  Today’s has a full-page ad from Coca-Cola: “Everything in moderation.  Except fun, try to have lots of that.”

Our nation is facing an obesity problem and we plan on being part of the solution.  By promoting balanced diets and active lifestules, we can make a positive difference.

For some people, a 12-fl.-oz. beverage may be too much.  Everyone’s needs are different.  So we’ve created a variety of package sizes….

While keeping track of calories is important, so is burning them off.  In our partnership with the Boys & Girls Clubs of America, we’ve heled more than one million kids learn the importance of physical activity and proper nutrition….

  As I keep saying, you can’t make this stuff up.

As a commentary on my recent post on soft drink marketing, Jerry Gross Yisroel sends this photo, which he took a week or so ago in front of the emergency entrance to Beth Israel Medical Center, Brooklyn.

They do say that a picture is worth a thousand words….