Coca-Cola Company: Corporate Rap Sheet
By Philip Mattera
Coca-Cola is one of the best known product names in the world, and the Coca-Cola Company has long been the leader of the international soft drink industry. Once preoccupied with its perennial market-share battle with PepsiCo, the company has had to cope with declining consumption of carbonated beverages, prompting it to branch out into juices, sports drinks and bottled water. While it has long cultivated a benign image, Coca-Cola has also been confronted with international pressure campaigns on issues ranging from labor practices in Colombia to water use in India. In the United States, the company has faced charges of racial discrimination, accusations that its marketing efforts contributed to the national obesity problem and criticism over the environmental impact of its move into the bottled water business.
Environment and Product Safety
Coca-Cola's biggest environmental issue has been its use of water, both in the bottling of its traditional beverages and in the sale of bottled water itself, mainly its Dasani brand.
When Coca-Cola introduced Dasani in 1999 environmental groups such as the Natural Resources Defense Council were already raising questions about the growing bottled water industry. As the industry grew, so did the controversy. The criticism focused on the environmental impact of producing and disposing of the plastic bottles. Groups such as Corporate Accountability International, which in 2006 launched its Think Outside the Bottle Campaign, also accused companies such as Coca-Cola of promoting the privatization of municipal water systems and of threatening public water access in places such as India.
The controversy in India had begun several years earlier, when local activists accused Coca-Cola (which returned to the country in the late 1990s after a two-decade absence stemming from a dispute with the government over domestic ownership) of depleting water supplies. In 2003 a New Delhi environmental group issued a report alleging that Coca-Cola and PepsiCo products being sold in India contained high levels of pesticide residue. This prompted widespread protests in the country. Later that year an Indian court ordered Coca-Cola to stop using local groundwater for its Plachimada bottling plant.
Meanwhile, Coca-Cola suffered a significant setback during its European introduction of Dasani in 2004. The company was forced to recall some 500,000 bottles from the British market after authorities there found excessive levels of bromate, a by-product of the process it was using to purify the tap water. The uproar prompted the company to postpone Dasani’s launch in the rest of Europe.
Back in India, opponents of the company continued their effort to keep the Plachimada plant closed while also challenging Coca-Cola’s other operations in the country. Their struggle was attracting growing support from activists around the world—a campaign that a 2005 front-page article in the Wall Street Journal (June 7, 2005) said was costing the company “millions of dollars in lost sales and legal fees in India, and growing damage to its reputation elsewhere.”
Coca-Cola took some solace in the results of a company-commissioned study by an Indian research group called TERI that found no basis for the allegations about pesticide contamination, yet the report also raised questions about the siting of bottling plants in “water stressed” locations. The campaign against Coca-Cola continued to be waged by groups such as the India Resource Center, which called the struggle an issue of climate justice. In 2010 a government panel found that Coca-Cola’s Indian subsidiary’s bottling plant in Kerala had caused environmental damage and depleted groundwater; it recommended that the company be ordered to pay some $47 million in compensation to local framers.
At the same time, Corporate Accountability International is keeping up the pressure on Coca-Cola in other countries by demanding that the company label Dasani as deriving from tap water.
As for the safety of its products, Coca-Cola ignored warnings about the safety of aspartame and became one of the largest users of the artificial sweetener in its Diet Coke line. In 2008 the U.S. Food and Drug Administration notified the company that its label for Diet Coke Plus with Vitamins & Minerals was in violation of federal rules.
In 2009 the Center for Science in the Public Interest sued Coca-Cola for making deceptive health claims about its VitaminWater line of beverages, which the company had purchased two years earlier. Coca-Cola admitted that VitaminWater was not a health product but still sought to have the case dismissed. It failed, and the class action is pending in federal court. In 2011 Britain’s Advertising Standards Authority barred Coca-Cola from claiming that VitaminWater is “nutritious.”
In 2012 Coca-Cola and PepsiCo changed the composition of the caramel coloring used in their cola products to avoid a cancer warning required by California law for the ingredient 4-methylimidazole.
As an aggressive multinational, Coca-Cola has faced labor disputes in many countries. One of the most turbulent took place in Central America in the 1970s when workers at the Coca-Cola bottling operation in Guatemala organized a union. This fledgling organization experienced attacks, resulting in the deaths of more than a dozen people, from right-wing death squads. The International Union of Food & Allied Workers Associations mobilized an international campaign that prompted the Coca-Cola Company to put pressure on its Guatemala franchisee to see to it that the union's rights were recognized. Despite the signs of improvement in the situation, the company decided to close the plant in early 1984. After the destitute workers occupied the facility for more than a year, Coca-Cola arranged to keep the operation going under the control of a new set of investors.
In 2010 a group of Guatemalan trade unionists and their families filed suit against Coca-Cola in state court in New York, charging the company failed to take action to stop violence against union activists by its Guatemalan bottler.
After announcing in 1986 that it was leaving South Africa, the company arranged to sell its bottling plant to black entrepreneurs and move its syrup plant to neighboring Swaziland. But the move angered the divestment movement, which felt that the company would continue to profit from sales of its beverages in the apartheid society. There was also unrest among Coca-Cola's South African workers, who went on strike in 1988—while the change of ownership was still in progress—to protest subcontracting of union work.
For many years Coca-Cola faced criticism in connection with the low wages and poor conditions for migrant workers employed at its Minute Maid subsidiary. Conditions improved somewhat after Minute Maid signed a contract with the United Farm Workers in 1972. Coca-Cola sold off its Florida citrus groves in 1994, ending its contractual relationship with the UFW.
Many, but not all, of the hourly workers at Coca-Cola’s U.S. bottlers are unionized. In the 1990s its largest bottler, 35-percent owned Coca-Cola Enterprises (CCE), was embroiled in a controversy over allegations that two of its managers bribed a worker to spy on colleagues to help kill a union organizing among CCE drivers and plant workers in Atlanta (Wall Street Journal, 10/6/1995). The managers were hit with federal bribery charges, but they were acquitted in 1997.
During the 2000s, relations between CCE and its main union, the Teamsters, grew more contentious. Teamster members staged walkouts at CCE facilities in New Jersey in 2003 and in California and Connecticut in 2005. In 2007 the union carried out a national pressure campaign to protest what called “anti-worker tactics” used in the course of restructuring CCE.
In 1999 a group of African-American employees at Coca-Cola filed a class-action race discrimination lawsuit against the company. The suit charged that black employees, including supervisory and managerial personnel, were often paid less than whites in comparable positions and that blacks had fewer opportunities for advancement.
Coca-Cola initially disputed the charges but later entered into settlement talks. In April 2000 the plaintiffs stepped up the pressure on the company by calling for a boycott of its products. In November 2000 Coca-Cola settled the litigation by agreeing to spend a total of $192 million in payments to plaintiffs, adjustments to the pay of black employees and diversity initiatives.
In 2002 Coca-Cola agreed to pay out some $8.1 million to current and former female employees in North America to settle charges of sexual discrimination brought by the U.S. Labor Department’s Office of Federal Contract Compliance Programs.
In March 2012 a group of 16 workers filed a racial discrimination suit against Coca-Cola in federal court in Brooklyn, New York.
In September 2012 workers at a Coca-Cola bottling plant in Fort Worth, Texas voted against representation by the Teamsters after the company made extensive use of anti-union consultants. It would have been the company’s first unionized facility in the southern U.S.
See also the discussion of Colombia in the section on Human Rights
Coca-Cola has been targeted in legal actions and pressure campaigns stemming from allegations that two of its bottlers in Colombia conspired with paramilitary groups to intimidate and assassinate trade unionists. In 2001 the International Labor Rights Fund and the United Steelworkers of America filed suit in federal court in Miami on behalf of Sinaltrainal, the union representing workers at the bottling companies, as well as several workers who said they had been tortured and the estate of a union leader slain in 1996. In addition, due to their overall control of the Colombian bottling operations, the suit named the Coca-Cola Company and its subsidiary, Coca-Cola Colombia, as defendants under the Alien Tort Claims Act.
The district court dismissed the case against Coca-Cola and its subsidiary in 2003, but supporters of the plaintiffs launched a campaign that continued to pressure the parent company to address the conditions of the workers in Colombia. The Stop Killer Coke Campaign, led by veteran labor campaigner Ray Rogers, has targeted Coca-Cola’s relationship with financial institutions and promoted a boycott of the soft drink company, focusing on its campus contracts. The campaign claims credit for getting numerous colleges and universities to suspend their business with Coca-Cola.
In 2012 human rights activists accused Coca-Cola of propping up the dictatorial regime of King Mswati II of Swaziland, where the company has a concentrate plant.
Anti-competitive and Consumer Protection
In 2003 a Coca-Cola employee named Matthew Whitley went public with an accusation that the company engaged in fraudulent marketing and accounting practices, including the charge that it rigged the results of a marketing test for Frozen Coke sold at Burger King outlets. In August 2003 Coca-Cola agreed to pay up to $21 million in compensation to Burger King operators, and in October 2003 Coca-Cola reached a $540,000 settlement of a lawsuit filed by Whitley.
Other Marketing Controversies
Coca-Cola has long been criticized for its marketing efforts aimed at children, including efforts in schools, where it negotiated contracts to place soda machines in hallways and cafeterias.
Responding to that criticism, the company announced in 2001 that it would scale back (but not eliminate) its educational marketing in the United States. That did not end the controversy. Facing a growing threat of lawsuits and legislation, Coca-Cola, PepsiCo and Cadbury Schweppes agreed in 2006 to start removing sweetened drinks from school cafeterias and vending machines.
The debate extends beyond the schools. Nutrition watchdog groups such as the Center for Science in the Public Interest (CSPI) have long criticized Coca-Cola and other soft drinks for contributing to the general rise in obesity in the United States and causing other health problems. In 2005 CSPI published a report that denounced these drinks as “liquid candy” and called for taxing them, with the revenues earmarked for health and fitness programs.
The tax idea caught on, and by 2009 it was being promoted at a national level by some members of Congress and the Obama Administration as a way of helping to pay for healthcare reform. This prompted the soft drink industry to mount a counterattack under the banner of Americans Against Food Taxes.
Watchdog Groups and Campaigns
Key Books and Reports
Belching Out the Devil: Global Adventures with Coca-Cola by Mark Thomas (2008).
The Big Drink: The Story of Coca-Cola by E.J. Kahn Jr. (1960).
Coca-Cola: An Illustrated History by Pat Watters (1978).
The Coke Machine by Michael Blanding (2010).
The Cola Wars by J.C. Louis and Harvey Z. Yazijian (1980).
For God, Country, and Coca-Cola: The Unauthorized History of the Great American Soft Drink and the Company that Makes It by Mark Pendergrast (1993).
The Real Thing: Truth and Power at the Coca-Cola Company by Constance Hays (2004).
Refreshing Pauses: Coca-Cola and Human Rights in Guatemala by Henry J. Frundt (1987).
Soft Drink, Hard Labor: Coca-Cola Workers in Guatemala by Miguel A. Reyes (1987).
The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink by Michael Blanding (2010)
Note: This page draws from a corporate profile originally prepared by the author for the Crocodyl website in November 2009.
Last updated October 8, 2012.
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