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Michael F. Jacobson Headshot

Is Coke's Fizz Going Flat?

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Like a tobacco company, Coca-Cola primarily sells one product--in its case, sugar water--that is linked to a number of diseases. It's under fire all over the world for its environmental, human rights, and health record. Here at home, it finds itself as the potential target of new taxation, expelled from America's schools, and outflanked by its nimbler competitor, PepsiCo. Angry parents, activist scientists, and wary shareholders are watching the company's every step.

Check sales. Notwithstanding hundreds of millions of dollars invested in advertising, over the past decade, U.S. sales, per capita, of flagship Coca-Cola have declined by 26 percent between 1998 and 2008. (Though Pepsi-Cola sales have declined even more, PepsiCo can make up in sales of Frito-Lay, Quaker, and Tropicana products for what it loses in soda sales.)

In the Wall Street Journal last October, CEO Muhtar Kent whined that his industry "has become an easy target in this debate [over health and taxes]." That's true, but the company has basically painted the bull's-eye on its own forehead. And now it's scrubbing furiously to wash it away.

The company is mounting both defensive actions against a grimmer future and a PR offensive to persuade the public that it is our friend--benevolently helping us achieve "a balanced diet and active lifestyle" by advertising its commitment to children's well-being, listing calories on labels, and marketing low-calorie New Age drinks like Enviga and VitaminWater. (But don't always believe the label claims on those drinks or the ads. My organization has sued Coca-Cola over the misleading labeling and advertising of both of them.) And those lower-calorie Cokes that the company has been touting in ads? At my local supermarket, 7.5-ounce cans cost more than twice as much per ounce as 12-ounce cans! You'll save money by buying 12-ounce cans and pouring a third or more down the drain.

Lately, one of Coke's top priorities has been to attack the idea of taxing soft drinks to fund health-care reform. Health experts, including former New York City health commissioner Tom Frieden (now head of the federal Centers for Disease Control and Prevention) and Yale obesity expert Kelly Brownell, say that such taxes make perfect sense. After all, soft drinks are the only food or beverage that has been demonstrated to cause weight gain and obesity, arguably America's biggest health challenge. Obesity rates in children have tripled over the past 30 years. A tax would both cut consumption and potentially raise $10 billion a year. Coca-Cola has spent more than $5 million on advertisements and more than a dozen lobbyists to stymie the health advocates, and helps fund the American Beverage Association's "Americans Against Food Taxes" advertising campaign.

Meanwhile, like the tobacco companies were famous for doing, Coke has been spending like a drunken sailor to win friends or at least neutralize potential critics. That's why several years ago it gave a million dollars to the American Academy of Pediatric Dentists (almost overnight the group stopped linking soft drinks and tooth decay, instead equivocating that the "scientific evidence is certainly not clear"). Several months ago Coke gave hundreds of thousands of dollars to the American Academy of Family Physicians, another potential ally or foe. And the company has given money to various Latino organizations--such as the National Hispana Leadership Institute and the League of United Latin American Citizens--who lent their names to full-page newspaper ads opposing a federal soda tax.

Less public is the company's funding of a bare-knuckles public-relations firm, Berman & Co., which runs a front group with the Orwellian name Center for Consumer Freedom. That company attacks consumer and health groups in ways that the public-spirited-wannabe Coca-Cola Company can't afford to do using its own brand name.

Coca-Cola's carefully cultivated family-friendly image is unraveling elsewhere in the world, too. The company is fending off unproven but troubling charges ranging from complicity in the deaths of union officials in Colombia to marketing to school kids in Mexico to using up ground water in parched Indian villages. Overseas, as in the United States, there's a race between increasing health-consciousness and increasing soda marketing.

Though Coca-Cola created one of America's iconic consumer products, its time may be running out. All of the company's marketing campaigns and all of the company's political contributions may not be able to put King Coke together again. An increasingly powerful coalition, composed of epidemiologists, clinical researchers, angry moms, and elected officials, is demanding change. That's what has been fuelling the bans on sales of soft drinks on school campuses, the increasing talk of excise taxes, and an anti-soda publicity campaign mounted by the New York City health department. The end result should be seen in weaker sales and slimmer waistlines.

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