Coca Cola Board of Directors Background Guide
Chairs: Emma Allen EagleMUNC Website: Boston College [email protected] www.EagleMUNC.org
United Nations Conference Co-Chair March 18-20 2016 Deven Bhattacharya [email protected]
Coca Cola Board of Directors Introduction
Dear Delegates, My name is Emma Allen. I’m a sophomore in the Boston College Arts and Sciences Honors Program and I’m working towards a degree in Political Science and a minor in International Studies. I’m very excited to serve as the chair for the Coca Cola Board of Directors Crisis Committee and to facilitate your (hypothetical) creation of a larger international presence and revamp of the Coca Cola brand. I did not participate in Model UN in high school and found it here, at BC, at the Student Activities Fair while my roommate told me how much fun she had as a delegate in high school and the current members pelted us with candy. This is only my second year with EagleMUNC and with Model UN in general, but I love participating and plan to be a part of this conference for the coming years. Please feel free to contact me with any questions or concerns, and I look forward to meeting you in March!
Sincerely, Emma Allen [email protected]
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Coca Cola Board of Directors Message from the Vice-Chair
Hello Delegates, My name is Deven Bhattacharya and I am a freshman in the Morrissey College of Arts and Sciences at Boston College. I am currently studying political science, concentrating in political theory. I worked in my high school's Model UN club as both a delegate and a chair, so I understand both sides of the committee and am willing to offer any advice to you. The entire Mode UN community at Boston College has been totally welcoming towards me and their enthusiasm inspired me to become as involved as possible right away. I'm extremely excited to be a part of EagleMUNC and help facilitate lively discussion and resolution at this upcoming conference. If any of you have any questions about the upcoming conference with regards to our committee or in general, please reach out to me!
Sincerely, Deven Bhattacharya [email protected]
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Coca Cola Board of Directors Introduction
Historical Background In 1886, an Atlanta pharmacist, Dr. John S. Pemberton created the iconic drink that is famous around the world today. He wanted to make a “distinctive tasting soft drink that could be sold at soda fountains,” and thus created a flavored syrup and took it to a local pharmacy to be mixed with carbonated water. Pemberton’s bookkeeper and partner, Frank M. Robinson is credited with the name “Coca Cola” as well as with designing the unique script used today in
Coca Cola’s branding. Coke’s business tactics were seen as revolutionary in the 1800s.
Distributing coupons for free samples was innovative and unheard-of. These samples were followed by newspaper ads and the distribution of Coca Cola merchandise decorated with the characteristic script to participating pharmacies. 1
Pemberton died in 1888, but before his death he sold portions of his company; the majority share was sold to Atlanta businessman Asa G. Candler who sought to expand Coca Cola outside of the drink’s city of origin. Spurred by the growing demand for Coke and the desire to make the drink portable, Joseph Bidenharn installed bottling machinery in the back of his Mississippi soda fountain and became the first seller to put Coke in bottles. Three enterprising businessmen in Chattanooga, TN bought the exclusive
1 1. "About Us: Coca-Cola History," World of Coca-Cola, accessed August 28, 2015, https://www.worldofcoca- cola.com/about-us/coca-cola-history/.
4 Coca Cola Board of Directors rights to bottle and sell Coca Cola in 1899 for only $1. 2 These men- Benjamin Thomas, Joseph
Whitehead, and John Lupton- developed what was to become the Coca Cola worldwide bottling system. As the drink became more and more popular, the brand faced problems with imitation drinks and a lack of consistency in the bottles that factories were using. The solution was a distinctive bottle, and in 1916, the classic contoured bottle that has become so iconic was approved and would be trademarked in 1977.3
Coca Cola began to push the boundaries of its marketing strategies in order to grow its international and cultural presence. In 1977, the brand moved to identify with “fun, friends, and good times,” hoping to reach youth markets and embody the free spirit of thousands of young people. The 1980s saw the rise of such slogans as “Coke is It!”, “Catch the Wave,” and
“Can’t Beat the Feeling.” And in 1993, Coca Cola
introduced to the world its new mascot, the Polar Bear, to
associate its product with such traits as innocence,
mischief, and fun. The “Open Happiness” campaign began
in 2009 with the idea that people could pause and refresh
with a Coke. Stores, billboards, TV spots, printed and
digital advertisements and music were employed to spread
the campaign internationally.4
Coke has continued to declare its presence in the
2 Ibid. 3 Ibid. 4 Ibid.
5 5 Coca Cola Board of Directors international community by associating itself with soccer and declaring itself the official drink of the sport. In the 2010 FIFA Men’s World Cup, Coca Cola turned to the music industry to find a song that would “capture the spirit of host-continent Africa and the celebratory mood in soccer stadiums” as well as pay homage to the Open Happiness campaign, and include the five note jingle that played in all Coca Cola commercials. By partnering with Canadian-Somali artist K’Naan and releasing the song “Wavin’ Flag,” the company was able to transcend borders and boost the song to the No. 1 iTunes hit in seventeen countries and tied its brand to soccer and pop music. 5
Today, the original Coca Cola drink recipe is still kept a secret and the soda sales make up 74% of the company’s business worldwide. Coca Cola is the world’s largest beverage company and 25% of all carbonated beverages consumed globally are Coca Cola products.
Pepsi only lays claim to 11%.6
5 Duane Stanford, "Coke's World Cup Song Is a Marketing Hit," Bloomberg Business, July 15, 2010, accessed August 30, 2015, http://www.bloomberg.com/bw/magazine/content/10_30/b4188024314746.htm. 6 Duane Stanford and Claire Suddath, "Coke Confronts Its Big Fat Problem," Bloomberg Business, July 31, 2014, [Page 2], accessed August 30, 2015, http://www.bloomberg.com/bw/articles/2014-07-31/coca-cola-sales-decline- health-concerns-spur-relaunch#p2
6 6 Coca Cola Board of Directors Current Issues
Influence in Latin America
Coca Cola has been called the “second religion of Latin America.”7 The Company’s influence in this region is enormous, with advertising for their products on everything from shacks to Christmas trees. Coca Cola was first introduced to Latin America in the 1920s to
Colombia, Honduras, Mexico and
Venezuela. By 1942 it was being sold in Nicaragua, Brazil, Costa Rica, and
Uruguay. Today, the highest per capita consumption of Coke in the world is in Mexico.8 Even Mexico’s president (2000-2006) was the former president of Mexico’s Coca Cola branch.
The company brands itself as a healthy product and is omnipresent in Latin American life and culture. A majority of people in these areas cannot afford healthcare or dental care, and when the consumption rate of unhealthy soft drinks is so high, health and dental are likely to be detrimentally affected. The average consumption per person is around 1 serving per day, which can cost around 30 or 40 cents when many people only make around $5 a day.9
Coca Cola has been called under fire for violations of human rights in Latin American countries. There is strong evidence that the company supported murders and kidnappings of
7 Kari Lydersen, "Coca-Cola: Latin America's Second Religion," Alternet, May 27, 2002, [Page #], http://www.alternet.org/story/13226/coca-cola%3A_latin_america%27s_second_religion. 8 Ibid. 9 Ibid.
7 7 Coca Cola Board of Directors active and senior union members in Colombian and Guatemalan bottling plants. The use of paramilitary forces to prevent laborers from unionizing or acting out at bottling plants has been reported in Mexico, El Salvador, and many other countries in the region. Lawsuits have been filed against the company under the 1789 law that allows non-citizens to hold Americans accountable for actions abroad in the United States Court System, the Alien Tort Claims Act.10
One claims that Coca Cola allowed and even encouraged the use of paramilitary force and threats of death if workers did not quit the unions. Coke maintains that the bottling plants are their own companies and it should not be held accountable, but it has been pointed out that when the Coca Cola headquarters was notified on numerous occasions of the violence and corruption, they did nothing to prevent or curtail those actions.11
Culture Shock and Endangered Languages
According to a UNESCO report, it is possible that half of today’s 6000 indigenous languages and dialects will become extinct by the year 2100. 12 Globalization, as a result of increased trade and access to remote areas of the world, has created an unprecedented shift towards dominant dialects that are used in business and trade. As a result, many members of the younger generation do not devote time or resources to learning or preserving native languages because they do not find much use for it in the modern business-oriented world.
UNESCO also cites rapid urbanization, increased migration, and external forces such as
10 Corporate Campaign, Inc., "Stop Killer Coke," Campaign to Stop Killer Coke, last modified October 4, 2004, accessed August 28, 2015, http://killercoke.org/index.php 11 Lydersen, "Coca-Cola: Latin America's Second," 12 "Endangered Languages FAQ," United Nations Educational, Scientific, and Cultural Organization, last modified 2015, accessed August 30, 2015, http://www.unesco.org/new/en/culture/themes/endangered-languages/faq-on- endangered-languages/.
8 8 Coca Cola Board of Directors educational, military, and religious subjugation among the main causes of Language
Endangerment.13 In the process of language extinction, in which said language is no longer the primary language taught in the household, we lose cultural significance as well as ecological, historical, and spiritual knowledge and traditions that are important not only to those who were raised in a unique culture, but also to the international community as it looks to cultural biodiversity.14
Coca Cola has attempted to become a world advocate for biodiversity and sought to celebrate the differences of its consumers around the world with the idea of “sharing a coke with the world.” At the 2014 Super Bowl, a commercial aired that included the singing of
“America the Beautiful,” in nine different languages, including Keres an unwritten language spoken by the Pueblo people, and Tagalog, a Philippine language that has been listed as
endangered.15 The backlash that Coca
Cola received was enormous, creating a
storm of social media opinions that
accused Coke of being un-American and 1 Scene from Coke's controversial "America the Beautiful" ad called on the company to retract the advertisement. The controversial commercial sparked national conversations in which many asserted that Americans should and must speak English. Coca Cola’s attempt at highlighting diversity earned them scorn from many of their home consumers. But Coke is an international
13 Ibid. 14 Ibid. 15 Corporate Campaign, Inc., "Stop Killer Coke," Campaign to Stop Killer Coke, last modified October 4, 2004, accessed August 28, 2015, http://killercoke.org/index.php
9 9 Coca Cola Board of Directors and globally recognized company. And so their contribution to globalization, English-speaking employees, and industrialization of areas where plants are located has created an environment that is detrimental to the preservation of culture. As Coca Cola, a symbol of America, is consumed and advertised all over the world, the spread of American ideas, culture, and values is also accelerated.
Decrease in Sales
Sales of carbonated beverages have been going down for a decade in the
United States. Coca Cola boomed in the mid-20th century, becoming the drink of the Baby Boomer generation.
But as that generation has reached its old age and younger generations have become the target for Coke’s products, the once dominant soft drink has fallen from grace somewhat.16 Coca Cola has not developed a new product or market to offset the decline in carbonated beverage sales and has instead focused on adjusting marketing and expanding overseas instead of being innovative. This has led to talks about cutting budgets but this is only a short term solution that will set the
16 Adam Hartung, "Coca-Cola's Problems Reflect a Giant Losing Relevance," Forbes.com, October 28, 2014, [Page #], accessed August 31, 2015, http://www.forbes.com/sites/adamhartung/2014/10/28/coca-colas-problems-show- us-a-giant-losing-relevance/2/.
10 10 Coca Cola Board of Directors company back further by preventing managers from being able to take more risks.17 Coke has acquired different drink brands in the interest of diversifying its products to lessen the impact of the decline in soda sales, but the company is not being innovative enough to create a new product with such large commercial appeal as its soda.18
Additionally, rising health trends and demands for low-calorie and healthy products have been issues for Coca Cola as it is often pointed to as a prime example of unhealthy soft drinks. These trends and the growing desire of the public to know the contents of products puts Coke on the wrong side of the popular trends. Places that used to sell so much Coca Cola they had refrigerators lining every wall now stock more fruit juices and teas and flavored water than soda. The government has even attempted to make the public more healthy, to the dismay of companies like Coca Cola. Former Mayor of New York City, Michael Bloomberg, made national headlines because of his controversial stance on how to curtail rising obesity rates in the United States.19 By pointing to the unhealthy ingredients and effects of soda,
Bloomberg attempted to put a ban on sodas exceeding a certain size and stop excessive consumption of soft beverages.
The Rise of Competitors
Coca Cola has constantly been in competition with PepsiCo and Dr Pepper Snapple, for the past twenty years or so, and has often come out on top. But now, as the global demand for soft drinks decreases, Coke’s competition is beginning to catch up. Dr Pepper suffered fewer
17 Ibid. 18 Eric Volkman, "How Coca-Cola Built Up Its Business Way Beyond Soda," Daily Finance, August 30, 2014, [Page #], accessed August 31, 2015, http://www.dailyfinance.com/2014/08/30/coca-cola-business-diversification/. 19 Duane Stanford and Claire Suddath, "Coke Confronts Its Big Fat Problem,"
11 11 Coca Cola Board of Directors losses because they only operate within North America, so they are not subject to international currency changes.20 Furthermore, while Coke shares went up 15% in the past year, PepsiCo shares increased by 25%.21 PepsiCo, in addition to the popular soft drink, also owns Frito-Lays snack brand and Quaker Foods so they are not feeling as sharply the sting of the global shift away from soft drinks.22 Though Coca Cola is still on top, thanks to its fountain deals with companies like McDonald’s, rising companies are putting the pressure on Coca Cola to innovate. Something needs to change and now is a critical transition point for Coke as the other soft drink companies take action to adapt and grow.
Questions to Consider 1. How will Coca Cola adapt its image and products to a quickly shifting global market? 2. Will you, as the directors, continue to push the envelope with new marketing techniques, or will you be innovative, and explore the creation of a new product and attempt to expand the company’s horizons? 3. Looking towards Coca Cola’s involvement in Latin America, how will this Company repair its image and return integrity to the Coca Cola name while continuing to keep costs low and maintain dominance in its supply chain? 4. How will Coca Cola, a dominant international company, address their consumer base and the issue of cultural diversity? Will its directors move forward with capitalistic goals and seize all opportunity to further the company’s presence, or will they look to preserving biodiversity and unique traditions as a part of the American way?
Works Cited
Jonathan Berr, "Coke, Pepsi, and the New Front in the Cola Wars," CBS News, last modified February 12, 2015, accessed August 31, 2015, http://www.cbsnews.com/news/coke- pepsi-and-the-new-front-in-the-cola-wars/.
20 Jonathan Berr, "Coke, Pepsi, and the New Front in the Cola Wars," CBS News, last modified February 12, 2015, accessed August 31, 2015, http://www.cbsnews.com/news/coke-pepsi-and-the-new-front-in-the-cola-wars/. 21 Ibid. 22 Ibid.
12 12 Coca Cola Board of Directors
Coca-Cola. "About Us: Coca-Cola History." World of Coca-Cola. Accessed August 28, 2015. https://www.worldofcoca-cola.com/about-us/coca-cola-history/.
Corporate Campaign, Inc. "Stop Killer Coke." Campaign to Stop Killer Coke. Last modified October 4, 2004. Accessed August 28, 2015. http://killercoke.org/index.php.
Hartung, Adam. "Coca-Cola's Problems Reflect a Giant Losing Relevance." Forbes.com, October 28, 2014. Accessed August 31, 2015. http://www.forbes.com/sites/adamhartung/2014/10/28/coca-colas-problems-show-us- a-giant-losing-relevance/2/.
Lee, Jolie. "Coca-Cola Super Bowl Ad: Bilingual Girls Explain Meaning." USA Today, February 5, 2014. Accessed August 31, 2015. http://www.usatoday.com/story/news/nation- now/2014/02/05/coca-cola-super-bowl-ad-america/5224595/.
Lydersen, Kari. "Coca-Cola: Latin America's Second Religion." Alternet, May 27, 2002. http://www.alternet.org/story/13226/coca- cola%3A_latin_america%27s_second_religion. Stanford, Duane. "Coke's World Cup Song Is a Marketing Hit." Bloomberg Business, July 15, 2010. Accessed August 30, 2015. http://www.bloomberg.com/bw/magazine/content/10_30/b4188024314746.htm
Stanford, Duane, and Claire Suddath. "Coke Confronts Its Big Fat Problem." Bloomberg Business, July 31, 2014, 1-5. Accessed August 30, 2015. http:/www.bloomberg.com/bw/articles/2014-07-31/coca-cola-sales-decline-health- concerns-spur-relaunch#p2.
13 13 Coca Cola Board of Directors United Nations. "Endangered Languages FAQ." United Nations Educational, Scientific, and Cultural Organization. Last modified 2015. Accessed August 30, 2015. http://www.unesco.org/new/en/culture/themes/endangered-languages/faq-on- endangered-languages/.
Volkman, Eric. "How Coca-Cola Built Up Its Business Way Beyond Soda." Daily Finance, August 30, 2014. Accessed August 31, 2015. http://www.dailyfinance.com/2014/08/30/coca- cola-business-diversification/.
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