forumforfuturemarketing

By Marc Grau and Laura Tschentscher

At the moment, the Coca-Cola Company is celebrating its 125th anniversary. The legend says that on May 8, 1886 the pharmacist John Pemberton invented the formula of Coca-Cola. He just sold 9 glasses of Coca-Cola a day in the first year. Today, the Coca-Cola Company has a revenue of $38 billion and a net income of more than $12 billion. For many years, Interbrand has been listing Coca-Cola as the most valuable brand in the world with a brand value that is worth more than $70 billion.

Big companies like Coca-Cola have a great impact on the economic, social and ecological environment. Therefore, Coca-Cola launched a sustainability program just like other big companies did, too. The idea behind their systemwide sustainability framework LIVE POSITIVELY™ is their “commitment to making a positive difference in the world”. This program started in 2007 with the purpose of bringing structure and visibility into those sustainability activities that already existed.

Big Red Truck TV spot for Coca-Cola Canada’s LIVE POSITIVELY™ campaign (YouTube)

LIVE POSITIVELY™ — The Program

LIVE POSITIVELY™ consists of seven core areas which affect the company`s ecosystem as well as its value chain (Fig. 1). The areas are named as follows: Beverage Benefits, Active Healthy Living, Community, Energy Efficiency and Climate Protection, Sustainable Packaging, Water Stewardship and Workplace. Coca-Cola has set guidelines and specific goals for each area which are associated with metrics that are reported in the annual sustainability review. The seven core areas will be outlined in the following.

Beverage Benefits

The first core area, Beverage Benefits, is concerned about the company and its products. Coca-Cola wants to offer beverages for every style of life and every situation, Beverages of high quality that customers can trust. The company is planning to invest more than $50 million in research by 2015, especially in the field of natural sweeteners in order to reduce calories. Furthermore, Coca-Cola continues its efforts to offer low- and no-calorie options, as well as listing the calories on the front of the packaging mainly in societies with obesity problems.

Active Healthy Living

The second area, Active Healthy Living, is about supporting an active and healthy life of the customers. The goal of Coca-Cola is to support at least one physical activity program in each of the 200 countries they are active by the end of 2015. Another principle this core area deals with is to avoid addressing children younger than 12 years with direct marketing activities.

Community

Coca-Cola wants to improve the quality of life and support economic development in the communities they operate in. This is what the third core area, Community, deals with. To achieve these goals, the company takes one percent of its operating income each year to support projects around the world like Micro Distribution Centers in Africa or empowering women through the Coca-Cola system.

Energy Efficiency and Climate Protection

In the beverage industry, another goal of Coca-Cola is to be the global leader in the fourth of its core areas, Energy Efficiency and Climate Protection. The big challenge for the company is to achieve growing business without increasing carbon emissions. One aspect is to reduce the absolute emissions in Annex 1 countries by five percent by 2015. Another goal affects the energy efficiency of the cooling equipment and also hydro fluorocarbon (HFC)-free coolers in their point of sales.

Sustainable Packaging

The fifth area, Sustainable Packaging, is all about improving packaging by reducing materials and utilizing renewable resources. A further goal of Coca-Cola is to recover 50 percent of the produced bottles and cans every year by 2015.

Water Stewardship

Water is one of the most valuable resources in the world and it is the primary ingredient of all products of Coca-Cola. So it is for its own good to handle this resource carefully, which the sixth core area of LIVE POSITIVELY™ deals with. Coca-Cola wants to return water that is used for products and fabrication to nature. Hence, another goal is to improve water efficiency by 20 percent by 2012. Using the example of Water Stewardship, the intent of the sustainability framework of Coca-Cola will be demonstrated later on in this paper.

Workplace

The seventh and last core area regards the workplace at Coca-Cola and the employees. The company wants to offer safe and healthy workplaces and to respect the international human rights principles.

LIVE POSITIVELY™ is a fundamental component of the 2020 vision of Coca-Cola. However, like every company, especially multinational enterprises, Coca-Cola also has profit- and productivity-driven objectives and visions. That leads to several critical questions which will be discussed in the following.

Live Positively?

Is the Coca-Cola Company actually concerned about the environment and do they really treat natural resources in a sustainable way? Is the creation of a sustainability campaign and the pure definition of values enough to act in a sustainable and responsible way? Is this about supplying the customers with a clean conscience and improving the company’s reputation, or does Coca-Cola really want to do a good deed in the sense of Marketing 3.0 with the intention of making this world a better one?

These are questions that arise if one takes a closer look at Coca-Cola’s sustainability campaign LIVE POSITIVELY™. Even if this campaign creates a positive image and makes many promises, this does not say anything about the company’s true beliefs and whether the good intentions are actually applied in the different areas of operation.

With a focus on the treatment of water, which is the most important resource in the supply chain of Coca-Cola, this work will investigate if Marketing 3.0 is used and it will be checked, whether the ideas of LIVE POSITIVELY™ are being followed.

Coca-Cola and the water stewardship

„Water is the most precious resource on our planet, and […] a key ingredient in every beverage […] “

The Water Stewardship and Replenish Report (The Coca-Cola Company, 2011)

Water plays a crucial role for Coca-Cola. It is necessary to produce soft-drinks such as Coke, Fanta and carbonated water, but also for the cleaning of the bottles.

Therefore, one of the seven core areas of LIVE POSITIVELY™ is concerned about “Water Stewardship“. As mentioned before, one goal among many is to improve water efficiency by 20 percent until 2012, in comparison to 2004. As shown in Fig. 2, usage of water has already been reduced about 13 percent since 2004. Nevertheless, the production of one liter of Coke, Sprite, Fanta or any other of the 3,500 beverages offered by Coca-Cola still needs 2.36 liters of water.

If one considers the total water usage by the company, it turns out that this number has almost steadily been on the rise since 2004. Even though water consumption slightly decreased in 2005 and 2009, the overall consumption has increased about 8 percent since 2004 to 309 billion liters. According to the India Resource Center, this would be enough water to satisfy the worldwide water needs for more than ten days. This extreme form of water usage causes serious problems, in particular in dry countries.

Water shortage in India

In the beginning of 2000, there were protests against bottling plants. The Coca-Cola Company was accused of using too much water and being responsible for the drop in the groundwater level around the bottling plants.

According to the CorpWatch group, every day 1.5 million liters of water haven been pumped out of the wells owned by the company in a bottling plant in Plachimada, a town in the south of India. For the population, this water is lost as drinking water or to water their fields. Villages within a radius of 5 kilometers feel the consequences. How the groundwater level can change under influence of a Coca-Cola bottling plant is shown by a recently published illustration of the India Resource Center. The data is based on information provided by the Central Groundwater Board India.

Due to continuing protests, the plant was shut down by the authorities in 2004. The official reason was stated as follows: “Poor villages lack drinking water, because the Coca-Cola plant in Plachimada was wasting water in order to produce beverages for people, who spend their money in other areas”. Additionally, Coca-Cola was sentenced a fee of 2.16 million Indian Rupees (USD 48 million) in 2010 by the state government of Kerala. As reasons for this, “causing pollution” and “water depletion” in Plachimada were mentioned. Coca-Cola argued against the conviction, but founded the “Global Water Stewardship Initiative” in 2003 and the sustainability campaign LIVE POSITIVELY™ in 2007. According to the company, “Community Water Partnerships” have been developed, with more than 320 projects in 86 countries. One of the biggest collaborations is with the United States Agency for International Development and with the bottling partners, who founded the “Water and Development Alliance” in 2005, with the intention “to protect and improve the sustainability of watersheds, increase access to water supply and sanitation, and enhance productive use of water in 23 countries in Africa, Asia, Latin America and the Middle East”. Since then, 29.7 million USD have been invested in this particular project.

Greenwash or Marketing 3.0?

Has Coca-Cola put on the emergency brake due to ongoing critique, in order to demonstrate their environmental awareness and to prevent future damage to their reputation? Or has there been a major change in the company’s consciousness? Is this about pleasing the customers with their wishes and fears in the sense of Marketing 3.0, i.e. to approach them with heart, mind and human spirit? Does Coca-Cola offer honest solutions to social issues?

A precise answer cannot (yet) be given here. However, we point out that Coca-Cola has recently shown some efforts to do good deeds by defining their intentions, creating multiple partnerships and setting ambitious goals. Problems caused by the entrepreneurial actions of the company are being addressed and possible solutions are investigated. However, in which way particular issues such as water shortage in India are dealt with, is controversial. At least there is no detailed information provided by Coca-Cola. Despite of protests and water shortages in neighboring areas, Coca-Cola has closed none of the bottling plants. Therefore, it can be concluded that the Coca-Cola Company is still primarily concerned about their own profits and not about acknowledging and satisfying the wishes of the customers, in the sense of Kotler’s Marketing 3.0. A statement made by Muhtar Kent, CEO of Coca-Cola, saying that he wants to double the turnover by 2020, further supports this conclusion.

References

India Resource Center (2011): Sharp Drop in Groundwater Levels Around Coca-Cola Bottling Plant.
http://www.indiaresource.org/news/2011/1005.html
Accessed: June 15th, 2011.

India Resource Center (2010): Government Moves to Claim $48 Million Compensation from Coca-Cola.
http://www.indiaresource.org/news/2010/1037.html
Accessed: June 15th, 2011.

Kotler, Philip et al (2010): Marketing 3.0: From Products to Customers to the Human Spirit.  Wiley.

Pitzke, Marc (2007): Wut auf Brause-Multi – Umweltschützer geißeln Coca-Colas Wasserverbrauch. In: Spiegel Online.
http://www.spiegel.de/wirtschaft/0,1518,472470,00.html
Accessed: June 15th, 2011.

Ridderbusch, Katja (2011): Eine Marken-Ikone wird 125. In: DIE WELT. http://www.welt.de/print/die_welt/wirtschaft/article13357762/Eine-Marken-Ikone-wird-125.html
Accessed: June 15th, 2011.

The Coca-Cola Company (2010): 2009/2010 Sustainability Review – Our commitment to making a positive difference in the world

The Coca-Cola Company (2011): Live Positively – Water Stewardship.
http://www.thecoca-colacompany.com/citizenship/water_main.html
Accessed: June 15th, 2011.

The Coca-Cola Company (2011): Environmental Initiatives – Community Water Programs.
http://www.thecoca-colacompany.com/citizenship/community_initiatives.html
Accessed: June 15th, 2011.

The Coca-Cola Company (2011): The Water Stewardship and Replenish Report, January 2011.
http://www.thecoca-colacompany.com/citizenship/pdf/replenish_2011.pdf
Accessed: June 15th, 2011.

The Coca-Cola Company (2011): Umwelt – Wasser ist kostbar.
http://www.coca-cola-gmbh.de/nachhaltigkeit/umwelt/wasser/index.html
Accessed: June 15th, 2011.

The Coca-Cola Company (2011): Heritage Timeline.
http://heritage.coca-cola.com/
Accessed: June 15th, 2011.

Wolfram Alpha (2011): Coca-Cola.
http://www.wolframalpha.com/input/?i=coca-cola
Accessed: June 15th, 2011.