Part 5 (1/2)

c.o.ke formed a partners.h.i.+p with Nestle in 2006 to roll out a green-tea drink it called Enviga, which was ”proven to burn calories.” The claim hinged on the antioxidant EGCG, the active component of green tea, which had been found in some controlled tests to speed metabolism. A study by c.o.ke and Nestle claimed that when thirty-one already thin adults drank Enviga for three days, they burned an average of 100 extra calories on the third day. Even to burn that modest amount of calories, you'd have to drink three 12-ounce cans of Enviga, at between $1.29 and $1.49 each. But c.o.ke was bold enough to say the drink had ”negative calories.”

That was too much for the ”food police.” Still smarting from being double-crossed on the school soda deal, c.o.ke's old nemesis CSPI filed a cla.s.s-action lawsuit against the companies. c.o.ke hedged, claiming ridiculously that it had said only that Enviga burned calories, not that it led to weight loss. ”You can stop that, it's about weight loss,” said a judge, swatting down the distinction during a hearing. In the end, the company cut the calorie-burning claims, and eventually c.o.ke and Nestle pulled Enviga entirely in the face of poor sales.

The same could not be said of VitaminWater, the leader in a new trend of ”enhanced beverages,” which c.o.ke had paid an eye-popping $4.1 billion to acquire through its parent company Glaceau in 2007. VitaminWater promised a c.o.c.ktail of exotic ingredients-guarana, acai, and green tea-that in another era would seem straight out of the carpetbag of a snake oil salesman. But consumers have literally drunk it up, with sales in recent years growing by double digits, comparable to bottled water sales a few years before (or, for that matter, soft drinks two decades ago). It has even found its way quietly into schools, when the American Beverage a.s.sociation and the Alliance for a Healthier Generation amended their agreement from allowing sports drinks and juices to allow any ”other drinks” with fewer than 66 calories per 8-ounce serving into school vending machines. In all of its advertising of vitamins and health additives, however, c.o.ke failed to advertise one ingredient in VitaminWater: a whole lot of sugar. In fact, a 20-ounce bottle of VitaminWater has 32.5 grams of sugar and 125 calories-nearly half of the calories in a comparable-size c.o.ke.

”When I bought VitaminWater, frankly I thought I was doing myself a favor healthwise,” says James Koh, a San Francisco gym rat who drank the stuff regularly. ”I had no idea I was actually getting almost a c.o.ke's worth of sugar and calories.” Koh is now the lead plaintiff in yet another cla.s.s-action lawsuit filed by CSPI, which may finally get its day in court. This time, CSPI didn't even bother calling c.o.ke before filing the suit in January 2009. As a sign of the increasing acrimony between the company and its nemesis, c.o.ke blasted the lawsuit as ”ridiculous and ludicrous.” Using language rare even for a company under attack, the company went on to call the suit an ”opportunistic PR stunt” and ”grandstanding at a time when CSPI is receiving very little attention.”

At the same time, in response to press inquiries, c.o.ke claimed it hadn't yet had the opportunity to read the complaint, so it couldn't respond to specific charges. Had the company read it, they would have found it alleged a grab bag of bogus health claims on behalf of c.o.ke to hide the fact that the drink is essentially watered-down soda.

The FDA allows food companies a lot of leeway in making claims about the nutritional effects of supplements-for example, that calcium supports the formation of strong bones. It prohibits companies from marketing food items as drugs intended to treat or cure disease (though in practice enforcement of this has been lax). VitaminWater's claims have skirted and in some cases crossed the line with claims that antioxidants in one flavor ”may reduce the risk of certain chronic diseases,” and vitamin A in another ”may reduce the risk of age-related eye disease.”

Even more egregiously, says CSPI's Stephen Gardner, the brand has deliberately misled consumers through a practice of ”double labeling”-listing the good stuff like vitamins and other nutrients by the bottle size, while listing the bad stuff like sugar and sodium by the serving size in order to minimize their appearance, since there are two and a half 8-ounce servings in a 20-ounce bottle. ”They say there are only 50 calories, but in effect there are 125 calories,” Gardner says, bristling. ”Why should consumers a.s.sume they are being lied to in the front? Why should they have to study the very hard-to-read fine print to know the ingredients?”

Remaining a step ahead of the backlash, Coca-Cola recently released VitaminWater 10, with just 10 calories per serving (that is, 25 calories per bottle). The product contains stevia, a plant-derived sweetener that has faced its own controversy over claims it contributes to infertility and cancer, even though it has just won approval as safe by the FDA.

If c.o.ke doesn't succeed on VitaminWater, they may have few options left in the United States and European markets. While the key to capitalism is constant innovation, the company may have simply reached a plateau in developed countries. While c.o.ke has survived the backlash against soda in schools, the sugar-sweetened carbonated beverage market has stopped growing. Bottled water, too, has stagnated, and if it doesn't revive, it will spell a big loss to c.o.ke's profit center.

Fortunately for the company, it isn't dependent on the U.S. and European markets-and hasn't been for a long time. Like the tobacco companies, which looked overseas when they came under fire in the United States, c.o.ke has increasingly looked to countries like Brazil, China, and Russia as its next big markets. In addition to the growing populations of countries in the developing world, the company has the added benefit of a more lax regulatory environment, allowing c.o.ke to take advantage of lower costs. In doing so, however, it has created an even bigger conflict between the image of international harmony the brand projects and the reality of the company's operations on the ground.

The world of Coca-Cola isn't the World of Coca-Cola. isn't the World of Coca-Cola.

Part Two

TEACHING THE WORLD TO SING.

I'd like to teach the world to sing, in perfect harmony, I'd like to buy the world a c.o.ke, and keep it company, That's the Real Thing . . .

-c.o.kE COMMERCIAL, 1971.

SIX.

”Toma lo Bueno!”

Salamandering along the ridges of the Chiapas Highlands in southwestern Mexico, you might miss the small sign announcing the village of San Juan de Chamula. But you'd never miss the painted c.o.ke advertis.e.m.e.nts that surround it on all sides. As visitors come down the hill into the town of 60,000, it takes on the appearance of an army camp, with bright red tents bearing the red c.o.ke logo pitched all over town. Like most Mexican towns, Chamula centers around a huge central plaza where vendors sell bright Mayan textiles, piles of fruits and vegetables, knockoff clothes, and, of course, soft drinks. But the visibility of c.o.ke only hints at the complete cultural integration the fizzy beverage has achieved in Chamula. Facing the plaza is the Church of St. John the Baptist, a white colonial-style cathedral built in 1522, where c.o.ke has literally been turned into a means of religious veneration.

Nearly every day, gringo tourists line up outside the church, clutching tickets to observe the bizarre rituals within. Once through the entrance, they are enveloped in the warm, woodsy smell of pine incense, supplemented by fresh pine needles strewn on the floor. A soft light filters in from windows set below the ceiling some eighty feet above, while thousands of candles burn on tables before gla.s.s cases containing gaudily dressed statues of saints. As musicians near the altar play a repet.i.tive dirge, small groups of women and children are burning clumps of small, tapered candles stuck into the flagstones. Some are so close together, their combined flames look like a small campfire.

As bewildered tourists wander among them today, a young girl opens up a cardboard box to lift out a clucking brown chicken. Her mother takes it, holding it by its neck and feet, as she rubs it over each of her children. Then laying it on the ground in front of her, she talks to it and soothes it before calmly breaking its neck. The ceremony is a healing art; the chicken is intended to take away the problems of those upon whom it is rubbed. When it dies, the problems go away.

By far the most prominent rituals in the church, however, are those involving soft drinks-which are used by the indigenous people here as a means of directly communing with G.o.d. Half-empty bottles of Pepsi and local drinks Big Cola and Gugar are scattered all over the ground amid the pine needles. The most common drinks, though, are half-liter bottles of c.o.ke. By the altar, one man opens up a canvas bag full of them, along with clear bottles of a homemade sugarcane rum called pox pox (p.r.o.nounced ”posh”). He pa.s.ses two small gla.s.ses to each member of the group, one full of (p.r.o.nounced ”posh”). He pa.s.ses two small gla.s.ses to each member of the group, one full of pox pox, the other of c.o.ke. Then the eldest man, who stands in the middle dressed in a black sheepskin vest and is missing most of his teeth, chants for five minutes. When he's done, he takes a gingerly sip of the cane liquor-then tosses back the whole gla.s.s of c.o.ke in one long guzzle, holding his hand out for a refill as the other members follow suit.

All around the church, in fact, the groups of people are performing the same ritual, explains Carlos Gallegos, an English-speaking tour guide leading a quiet group of Germans. ”People drink the pox pox first, then they drink the Coca-Cola,” he says. ”Then they make a little burp, and that is your spirit floating up into the air. It makes a confession to G.o.d and it comes back to your body.” The burps are virtually undetectable, done discreetly as a personal communication with G.o.d. The different colored candles, continues Gallegos, represent different supplications-yellow for health, green for the harvest, and so on, which are carried upward along with the little belches. ”People drink different ones now, but Coca-Cola is still the official one, the best one,” says Gallegos. So significant has c.o.ke become to the ritual life of the village that neighbors give it to celebrate births, deaths, and marriages, and judges order it as a means of payment in small claims court. ”Here,” says Gallegos, ”Coca-Cola is cash, poison, magic, pa.s.sion, pleasure, torture, love, and medicine.” first, then they drink the Coca-Cola,” he says. ”Then they make a little burp, and that is your spirit floating up into the air. It makes a confession to G.o.d and it comes back to your body.” The burps are virtually undetectable, done discreetly as a personal communication with G.o.d. The different colored candles, continues Gallegos, represent different supplications-yellow for health, green for the harvest, and so on, which are carried upward along with the little belches. ”People drink different ones now, but Coca-Cola is still the official one, the best one,” says Gallegos. So significant has c.o.ke become to the ritual life of the village that neighbors give it to celebrate births, deaths, and marriages, and judges order it as a means of payment in small claims court. ”Here,” says Gallegos, ”Coca-Cola is cash, poison, magic, pa.s.sion, pleasure, torture, love, and medicine.”

How a caramel-colored drink from Georgia came to be everything to a remote Mexican village is a long story, intertwined with c.o.ke's international expansion after World War II. When Asa Candler forecast c.o.ke's unstoppable growth, and Robert Woodruff imagined c.o.ke ”within arm's reach of desire,” they might have been picturing modern-day Mexico. from Georgia came to be everything to a remote Mexican village is a long story, intertwined with c.o.ke's international expansion after World War II. When Asa Candler forecast c.o.ke's unstoppable growth, and Robert Woodruff imagined c.o.ke ”within arm's reach of desire,” they might have been picturing modern-day Mexico. ”Toma lo bueno!” ”Toma lo bueno!” read ads blanketing the country-”Drink the good stuff!”-and Mexicans do, 635 cups of c.o.ke beverages annually per person, half again as much as the United States' 412. In part, it is c.o.ke's role as a symbol of the American way of life that has made it so popular, and in part, it's the extremes the company has gone through to get its soda into every village shop and dispensary. It's nearly impossible to describe the ubiquity of soft drink ads in Mexico, with c.o.ke's logo painted on houses and buildings along the roads at least every hundred feet. read ads blanketing the country-”Drink the good stuff!”-and Mexicans do, 635 cups of c.o.ke beverages annually per person, half again as much as the United States' 412. In part, it is c.o.ke's role as a symbol of the American way of life that has made it so popular, and in part, it's the extremes the company has gone through to get its soda into every village shop and dispensary. It's nearly impossible to describe the ubiquity of soft drink ads in Mexico, with c.o.ke's logo painted on houses and buildings along the roads at least every hundred feet.

Along with Canada and Hawaii, Mexico was one of the first foreign countries to sell c.o.ke, dating back to 1897. For the next few decades, the company sold small amounts in Cuba, the Philippines, England, Germany, and other countries. Early sales abroad ranged from sporadic to anemic. In 1927, Woodruff focused on the market with a new Foreign Department, which contracted out with local companies and businessmen to operate plants overseas, eventually spinning off into a separate subsidiary called the Coca-Cola Export Corporation.

The franchise system put into place when Candler accidentally gave away the store proved useful in foreign markets, allowing the company to expand more rapidly and with less risk-not to mention decreasing the company's liability if anything should go wrong. The company took delight in calling itself a ”local” company wherever it went, pointing out that only 1 percent of Coca-Cola Export's employees were American. Then again, the bulk of the profits-up to 80 percent in some cases-flowed back to Atlanta. And not all countries were created equal. In developing nations, bottling companies were often contracted out to American corporations, such as the powerful United Fruit Company in Guatemala and Nicaragua, or owned outright by c.o.ke, as in India.

However much it championed local autonomy, the company was not above using its lobbying clout to force its way into countries that weren't so receptive. In Brazil, for example, a law prohibited drinks containing the preservative phosphoric acid, necessary to prevent degradation of caffeine. (Since Brazilian colas contained caffeine naturally derived from the guarana plant, the preservative was not needed locally.) As part of a bilateral trade agreement with the United States in 1939, the country was forced to repeal the law. The agreement also reduced taxes on soft drinks sold in 6-ounce bottles, a transparent sop to c.o.ke, since local sodas were sold in 12-ounce bottles.

Despite expansion into South America and Europe in the 1930s, c.o.ke's sales overseas didn't really pick up until after World War II-thanks to Woodruff's promise to give soldiers c.o.kes for a nickel and the taxpayer-funded bottling plants it engendered. In many ways, the company's international success mirrored that of the country that created it. As Europe lay in ruins, the United States suddenly found itself, along with the Soviet Union, as one of the world's two superpowers. With the new economic and cultural hegemony came a new resentment from some foreigners, particularly in Europe, where the Marshall Plan facilitated the entry of American corporations, at the same time creating anxiety about the cra.s.s commercialism of American culture. In some cases, the opposition spilled out into open protest, often directed against the most obvious symbol of the United States: Coca-Cola.

Local communists, in particular, spread wild rumors about the American drink-warning that it turned children's hair white overnight, or that its bottling plants were cover for atomic bomb factories. Nowhere was opposition stronger than in France, where the French Communist Party lamented the growing ”Coca-Colonization” of the continent, and the left-centrist newspaper Le monde Le monde warned that nothing less than ”the moral landscape of France is at stake!” Joining the leftists in an unlikely alliance were conservative wine growers who feared c.o.ke's effect on French viniculture-the liquid symbol of France's own way of life. warned that nothing less than ”the moral landscape of France is at stake!” Joining the leftists in an unlikely alliance were conservative wine growers who feared c.o.ke's effect on French viniculture-the liquid symbol of France's own way of life.

When the communists and their allies tried to pa.s.s a law in the French National a.s.sembly to effectively ban c.o.ke in France and its colonies, c.o.ke reacted with immediate furor. ”Coca-Cola was not injurious to the health of American soldiers who liberated France from the n.a.z.is,” fumed Coca-Cola Export head James Farley, a former political operative in the Roosevelt administration. ”This is the decisive struggle for Europe,” cried c.o.ke's top lawyer, as if describing a military conquest. The company called in all of its troops. At its urging, the State Department warned France of ”serious possible repercussions” if it pushed through a ban so ”prejudicial to American interests.” One Georgia congressman forswore French dressing (in an eerie precursor to the ”Freedom Fries” protest by Republican congressmen preceding the invasion of Iraq); another more seriously threatened a trade war on French wine, cheese, and Champagne.

As the combined political pressure defeated the anti-c.o.ke alliance in the National a.s.sembly, the company was in fact living up to the fears of those opposing it-becoming a cultural bully that imposed its will, and its products, on a country whether it liked it or not. Despite its victory in France, a 1953 poll there found that only 17 percent of respondents liked c.o.ke ”well enough” or ”a lot,” while 61 percent liked it ”not at all.” Company officials justified their forceful entry into Europe in the name of the free market, in contrast to the totalitarian control by communists.

”My guess is that the commies don't dislike us so intensely just because we're American,” mused one c.o.ke executive. ”It's because c.o.ke is a champion of the profit motive. . . . Everyone who has anything to do with the drink makes money.” c.o.ke had good reason to resent communists, who had nationalized bottling plants in Cuba and China after World War II. For years, c.o.ke steered clear of the communist world, even as Pepsi broke into the Soviet Union with the help of former Pepsi counsel Richard Nixon in the 1960s.

With the exception of its stand against ”the commies,” however, the company was as flexible in its politics internationally as it had been at home. In the Middle East, it used every excuse not to open a franchise in Israel so it didn't upset the wealthy sheiks who owned bottling franchises in Saudi Arabia, Egypt, and other Arab countries. When American Jews protested in a boycott in 1966-Mount Sinai Hospital and Nathan's Famous Hot Dogs both suspended sales-c.o.ke backtracked and granted a franchise in Tel Aviv within days. The Arab League predictably retaliated with its own boycott. c.o.ke did the math, and stayed with the Jews, closing up shop in the rest of the Middle East for the next two decades. In an interview, company head Paul Austin said it would simply be against company policy to give in to a boycott, despite the fact that the company seems to have done exactly that.

As president of c.o.ke in the 1960s and chairman in the 1970s, Austin spent more than half his time flying around the world to cultivate new countries for c.o.ke. By 1976, the overseas market accounted for 40 percent of consumption and 55 percent of profits. By this time, the concept of the ”multinational corporation” had become the established way of doing business around the world. All across the business world, companies sp.a.w.ned international subsidiaries to exploit local markets, while profits invariably flowed back to New York, London, Paris, or Stockholm. c.o.ke was virtually unique, however, in spinning off not only control but also owners.h.i.+p to its franchises.

”We're not multinational, we're multilocal,” said Austin, who after the Arab boycott began actively trying to walk the walk in living up to the image of international harmony espoused by c.o.ke's ”Teach the World to Sing” commercials. As the idea of corporate social responsibility (CSR) caught on, Austin set out to make c.o.ke a leader. In addition to buying Aqua-Chem, the subsidiary that made desalinization plants to provide fresh water in the Middle East, he invested money in sports programs and nutritious milk-based drinks to sell in Latin America alongside sugary sodas. Austin's efforts to create his so-called halo effect seemed genuinely aimed at improving the lot of people in countries where c.o.ke was sold. If it had a secondary effect of selling more c.o.ke in markets where c.o.ke struggled, that was just the ”perfect harmony” of the company's business plan.

In the campaign for president in 1976, Austin cultivated corporate peanut farmer-turned-Georgia governor Jimmy Carter, throwing the candidate multiple fund-raisers and offering free use of c.o.ke's corporate jet. ”We have our own built-in State Department in the Coca-Cola Company,” Carter said in one interview, claiming c.o.ke execs gave him ”penetrating a.n.a.lyses” of foreign countries, ”what its problems are, who its leaders are, and when I arrive there, provide me with an introduction to the leaders of that country.” The strategy paid off for c.o.ke after Carter's election, when Portugal suddenly reversed its long-standing resistance to a c.o.ke bottling plant (maintained out of deference to citrus growers). Shortly after c.o.ke went on sale there, the State Department approved a $300 million loan to the country, a coincidence that did not go unnoticed by U.S. editorial writers.

The limits of Austin's ”halo effect” were most evident-violently so-in Guatemala, a sliver of a country southeast of Chiapas that shares its indigenous Maya population. The c.o.ke franchise in Guatemala City had pa.s.sed from United Fruit in the 1950s, and was now run by Texas businessman John Trotter. A lawyer who loved polyester suits and hated communism, Trotter flew in on his Piper Club plane every few weeks to give pep talks to local managers. Mostly he harped on one theme-the evil of unions, which he ranked second only to communists in their desire to s.n.a.t.c.h away the G.o.d-given profits of the working businessman. Under no circ.u.mstances, he told them, should the cancer of unionism be allowed to affect the plant. ”halo effect” were most evident-violently so-in Guatemala, a sliver of a country southeast of Chiapas that shares its indigenous Maya population. The c.o.ke franchise in Guatemala City had pa.s.sed from United Fruit in the 1950s, and was now run by Texas businessman John Trotter. A lawyer who loved polyester suits and hated communism, Trotter flew in on his Piper Club plane every few weeks to give pep talks to local managers. Mostly he harped on one theme-the evil of unions, which he ranked second only to communists in their desire to s.n.a.t.c.h away the G.o.d-given profits of the working businessman. Under no circ.u.mstances, he told them, should the cancer of unionism be allowed to affect the plant.

Workers at the c.o.ke plant at the time suffered under inhuman working conditions, spending twelve-hour s.h.i.+fts loading crates at the minimum wage of $2 a day. By spring of 1976, more than 80 percent of the two hundred-some workers signed papers to unionize in an effort to improve their lot. When union leaders Israel Marquez and Pedro Quevedo presented the pet.i.tion to Trotter, however, the Texan refused to recognize it, firing 154 workers. With the law on their side, the workers successfully sued for reinstatement-but Trotter and local executives continued to break up the union, subdividing the bottler into other companies to make it more difficult for workers to organize. The c.o.ke workers reached out to the Catholic Church for help, and were answered by a Philadelphia-based order of nuns called the Sisters of Providence, who owned two hundred shares of Coca-Cola stock-as a way to generate wealth for their order and to influence policy abroad.

Horrified to hear of the situation, its leader, Sister Dorothy Garland, contacted the Coca-Cola Company to demand changes. c.o.ke's president, Luke Smith, admitted tension, but said the franchise agreement tied the company's hands. ”There is no provision in the bottlers' agreement . . . which give us any right to intervene on such a dispute,” he explained. Undeterred, the nuns filed a shareholders' resolution at the company's annual meeting in 1977 to demand an independent investigation into the issue.

Before the vote, c.o.ke announced its own investigation, which came back a few months later, exonerating Trotter. The nuns cried foul, even as a new president a.s.sumed power in Guatemala in 1978. General Romeo Lucas Garcia was one in a long line of military leaders who had ruled the country since a CIA-sponsored coup in the 1950s. But the avowed anticommunist was particularly brutal in his crackdown on ”subversive elements,” directing his secret police to rout any leftist influences in government, academia, and industry-including unions.

Taking advantage of the situation, Trotter threatened the union organizers with violence if they didn't give up their efforts. Shortly thereafter, Israel Marquez was sprayed by machine-gun fire in his jeep, narrowly escaping with his life. Pedro Quevedo wasn't so lucky. Sitting in his truck during deliveries, he was ambushed by two men, who pumped four rounds into his face, then another eight into his throat before driving away on waiting motorcycles. Another union leader, Manuel Lopez Balan, was also killed, his throat slit while making deliveries on his route.

Even as most of the workers resigned from the union, Marquez traveled to Wilmington to confront c.o.ke chairman Paul Austin at the 1978 annual meeting. In a soft voice, he detailed the murders of his colleagues, before directly appealing to Austin's business sense. ”Coca-Cola's image in Guatemala could not be worse,” said the small Guatemalan man through a translator. ”[In Guatemala,] murder is called 'Coca-Cola.' I have come here today to ask your immediate help so that blood no longer flows through the Coca-Cola plant.” Unmoved, Austin tabled the resolution as out of order. Then amid cries from the audience, he gaveled the meeting to a close.