Coke: Campaigners demand action against feelgood drinks firm

Megabrand faces claims from India to Latin America that it bullies small retailers, exhausts local water supplies, and uses 'unsafe' additive.
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Coca-Cola is the world's most famous and powerful brand, selling more than one billion drinks every day. Its red and white logo can be seen everywhere from remote hillside shacks in Afghanistan to vast neon hoardings in central Tokyo.

With a marketing budget four times greater than the UN's annual spending on combating child poverty, it has spent millions on buying up the world's biggest sporting events - the World Cup and the Olympics - and global celebrities such as Muhammad Ali, David Beckham and Aretha Franklin.

But the drink which prides itself as the "real thing" is in trouble: its global dominance is under serious threat from its rival Pepsi, and its sales hit by a health-conscious backlash against the sugary drinks widely blamed for the West's obesity epidemic.

And now human rights groups and anti-poverty campaigners are calling for a global boycott of the world's most powerful drink - the latest in a string of multinational brands that have been pilloried for allegedly unethical and inhumane behaviour, such as Gap, Nike and Nestlé.

This week, as a Coca-Cola-sponsored replica of the World Cup is paraded through London by Wayne Rooney, the National Union of Students will hear demands for Coke to be stripped of its exclusive £15m deal to sell its drinks at more than 700 campuses across the country.

Campaigners accuse Coke of using ruthless tactics to ensure that it remains the world's number one brand. Coca-Cola, they allege, has caused droughts and poisoned water supplies in rural India, been linked to paramilitary gangs in Colombia and turned a blind eye to violent attacks on trade unionists in Latin America, Asia and Russia.

In a report being published tomorrow, the Third World development charity War on Want claims that Coca-Cola's wholesome, "feelgood" image is beginning to crumble.

Louise Richards, the charity's chief executive, said: "Coca-Cola promotes a sporty image of itself through tie-ins with sporting events, but across the world their foul play is clear. Cases of environmental damage, exploitation of water resources and abuses of workers' rights are shockingly common. It's time that directors of multinational companies were held to account."

The accusations are rejected by Coca-Cola, which insists it follows the highest ethical standards, working closely with the UN, trades unions and environment groups to improve its practices and promote the latest technical innovations. "The Coca-Cola Company exists to benefit and refresh everyone it touches," the corporation states in its latest code of conduct.

Meanwhile, Coke's reliance on one of the world's most popular artificial sweeteners, a compound called Aspartame, is also under examination. British and European food safety experts are studying allegations that Aspartame - the main sweetener in Diet Coke - could be carcinogenic.

The Government's Committee on Toxicology is assessing a critical report on the additive after allegations about its safety were raised by Liberal Democrat MP Roger Williams in the Commons last December. Its findings will be taken up by the European Food Safety Authority, which is expected to rule in May on whether Aspartame should be banned.

Coke was first launched as a health tonic at a small chemist's shop in Atlanta, Georgia, more than 120 years ago. Its inventor, John Pemberton, a pharmacist, claimed the sugary medicine could treat headaches, impotence and morphine addiction. It originally had some novel active ingredients: the coca leaf which produces cocaine, and kola nuts, a source of caffeine. The coca was soon dropped from its famous "secret formula", but the drink was a hit. The firm's decision to provide cheap drinks to GIs serving overseas in the Second World War was a watershed. After they returned home, its popularity took off. It now operates in nearly every country in the world, selling 12,500 drinks every second with its other global brands, such as Sprite, Fanta and Lilt. Its profits last year were just under $15bn, thanks to a $2bn-a-year marketing budget which is four times greater than the total annual spending of the UN's children's programme, Unicef.

According to anti-poverty campaigners, this contrast is greatest in India, where Coca-Cola's environmental record has come under the greatest attack. It has invested more than $1bn in India and reputedly controls more than 50 per cent of its vast soft drinks market.

But in several Indian states, its unquenchable thirst for water has been blamed for exhausting scarce underground water supplies, causing crop failures for local subsidence farmers. It takes nearly three litres of water to make a litre of Coke, and campaigners allege that in Rajasthan, Uttar Pradesh, Kerala and Maharashtra, the arrival of Coke bottling plants has led to a sharp fall in water availability.

Coca-Cola has responded to these allegations by building "rainwater harvesting" projects at 26 plants, cutting water use by 25 per cent and shipping in drinking water to stricken villages. But Dr Sandeep Pandey, a prominent critic, is unimpressed. "The visible employment that Coke generates is smaller than the large numbers of hidden and unorganised people it puts out of business, like the vendors of traditional Indian fruit drinks and hence the farmers supplying them."

The corporation has faced a similar backlash in Latin America. Raquel Chavez, who owns a tiny shop in a poor suburb of Mexico City, cost Coca-Cola $68m in fines last November for illegally trying to stop her selling a rival brand. Her local Coke distributor saw she was stocking a cheaper competitor, a Peruvian brand called Big Cola. He warned her to drop it, then threatened to take away the fridge the firm had lent her, and cut off her Coke supplies.

After persuading Mexico's Free Competition Commission to take up her case, she lodged an action against the company but she says Coca-Cola's distributors just shrugged her off. "They said they had so many lawyers and so much money they could do what they wanted."

Last July, the commission ruled that 15 Coke bottlers had violated anti-monopoly laws in the case, and fined them about $15m. The fines mounted up. Within weeks, similar cases against Coke were decided, with 54 Coca-Cola distributors fined about $1m each. Coca-Cola is now appealing against all these fines.

But the corporation has been accused of being implicated in far more violent controversies. In Colombia, eight employees of Coke bottling plants have been killed by paramilitaries with alleged links to the government, with a further 48 forced into hiding and 65 getting death threats.

Trades union leaders claim these murders and attacks are part of a concerted campaign to suppress union activity in Colombia, and are suing Coca-Cola in the US courts. The company insists it has "normal relations" with 12 unions in Colombia, including collective bargaining covering wages and working conditions. "We continue striving to take a leadership role in ensuring the rights and safety of workers around the world," the company said last week. Its firm, it insists, is one of the most heavily unionised multinationals.

Yet Coke is entangled in similar disputes across Asia and the Americas. In Pakistan, it illegally dismissed employees who called a strike, and in Turkey, riot police have been accused of violently dispersing peaceful protests over the sacking of union leaders. In Peru and Chile, workers at its subsidiaries have gone on strike over complaints about working hours and intimidation. In Russia, it is accused by War on Want of opposing union organisation.

Earlier this month, Coca-Cola retaliated. Its chairman, Neville Isdell, met the UN Secretary General, Kofi Annan, to sign the UN's Global Compact on human rights and labour relations. But campaigners claim that global tastes are changing quicker than Coca-Cola's marketing strategy. Now, they claim, consumers are looking behind the label, and can force the world's most powerful brand to listen up.

Additional reporting by Tim Gaynor in Mexico City and Sybille Regout

IN FACTS

Jolly

Coke is often credited with creating the modern image of Santa Claus as a rotund, red-cheeked and white-haired grandfather figure for a Christmas advertising campaign in the 1930s

Sporty

After first sponsoring the Olympics in 1928, Coke spent £33m in a deal for the 2004 games in Sydney and 2008 games in Beijing. Its deal with the Olympics lasts until 2020. Coke also now dominates football, paying £25m to sponsor this year's World Cup, and £15m on sponsoring the English Football League

Starry

Tom Jones, Nancy Sinatra and the Supremes were among the first pop stars hired by Coke, appearing in TV ads during the 1960s. Aretha Franklin, Elton John and Missy Elliot have since followed.

Toppled

Coke lost its crown as the world's top seller last Christmas, when Pepsi was valued at $98.4bn compared to Coca-Cola at $97.9bn

Sophisticated?

Coca-Cola Blak, the first coffee-flavoured Coke, will be launched in the US next month. The firm calls it an 'innovative carbonated fusion beverage'

Worried?

New tea drinks, vitamin-enhanced juices and new cherry, lemon and lime flavours of Diet Coke are planned in Britain this year to stop the slump in Coca-Cola sales

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