A Case Study of Coca Cola Inc.
Coca Cola Inc. is a multinational beverage company with its headquarters in Atlanta, Georgia. It has many managed and private bottlers globally. As the largest beverage producer in the world, Coca-Cola sells to more than one billion consumers every day. Its well-defined distribution has been the cornerstone for its global positioning. The head factory produces the concentrated syrup, which is transported to its local distributors. The syrup and the production process intellectually protected by the intellectual property laws. As such, the head office controls all its products, including safety concerns. The organization produces a variety of carbonated drinks among others. Its main products include the Coke, Fanta, Sprite, and Diet Coke among many others. Throughout its existence, the company has struggled with numerous ethical issues that include environmental degradation of its activities, long-term health effects of its products, racial discrimination, use of harmful pesticides in its products, and the manipulation of earnings. These drinks have a high level of sugars, scientifically proven to trigger serious health concerns (Go and Roger 11). The practice of labeling the company’s products as healthy raises many ethical concerns.
The company has been in the spotlight for numerous issues stemming from its social responsibility in ensuring safety and health of its consumers. For example, in 1999, scores of children in Belgium fell ill after consuming coca cola products, forcing the company’s products to be pulled off the shelves of the country and the neighboring Netherlands and Luxemburg (Abelson 4). There have been numerous cases of mold in the company’s products in Senegal, France, and Poland that have tainted the commitment of the company to protect the health and safety of its consumers.
Conversely, in India, Coca-Cola experienced another ethical protest in what was seen as discrimination in the use of pesticides in developing world. High levels of cancer-causing toxins that include DDT, Lindane, malathion, and chlorpyrifos were found in its products sold in the country (Center for Science and Environment 3). Although the management claimed that the local laws were followed in the production, the level of toxins used was higher than the standards permitted in Europe and America. These incidences conveyed a perception that Coca-Cola doesn’t care about the well-being of its consumers.
This argument extends to the ages-long concern about the company’s carbonated beverages in the development of lifestyle diseases such as diabetes, and heart diseases. Like tobacco companies, Coca-Cola has cast doubt on scientific proof and discredited critics in an attempt to deflect blame. In some instances, the management has been quoted citing scientific studies that discredit the theory that obesity comes as a result of personal irresponsibility. Among them include the Mayo Clinic study that indicated sugary drinks are not linked to type-2 diabetes. In another study by the Global Energy Balance Network, it was concluded that being more physically active rather than drinking less soda prevents obesity despite the fact that some individuals cannot lose weight if they do not reduce intake (Nestle 6). It turns out that all these studies were funded by Coca-Cola company to convince health professionals that soda is safe.
Exploring the Ethical Issue
In the past three decades, the public has become more conscious about the long-term health effects of consuming soda. A Gallup Poll in the United States shows that 60 percent of Americans are making conscious efforts to avoid drinking soda (Nestle 1). As a result, this has led to a fall in the sales of its carbonated products by a significant percentage. As such, the company has launched several major marketing and brand campaigns, especially for its Coke brand that accounts for the largest percentage of its revenues. Unfortunately, this business strategy is a direct disregard of the health concerns of its consumers, especially children and adolescents who do not have informed ability to make proper health choices for themselves.
Scientific research indicates that there is a link between sugar in the company’s products and many lifestyle diseases. According to World Health Organization, a 300ml of soda contain contains fifteen times more of recommended sugar for daily consumption. Science has established a clear nexus between coke consumption and serious medical complications chiefly diabetes, obesity and related cardiovascular conditions (Hert, Fisk and YS 61). A study of the relationship between soft drinks intake and obesity, overweight, and diabetes in 75 countries indicated a substantial link between the two aspects. The results of the investigation show that a 1 percent increase in consumption of carbonated products led to a 4.8 percent overweight in adults, 23 percent obesity in adults, and 0.3 percent diabetes in adults (Basu, McKee and Galea 2075). Another study revealed that intake of sugar-sweetened beverages increased the level of bio-markers of chronic disease risks, independent of lifestyle and demographic factors.
States that have high rates of use such as Mexico have an especially higher mortality rate arising from these conditions than any other state (Wilhelm 7). The issue has a health dimension and as well as an ethical dilemma. The public and consumers are slowly becoming aware of the threat coke poses to the life. In many regions where the company previously enjoyed dominance, the competitors seem to have joined anti –Coke campaigns on allegations of health concerns affecting its sales. As a response, the company has resorted to deceptive practices such as denial of the connection between obesity and coke consumption (Busch 13). These responses raise serious ethical questions. It is essential to acknowledge that there are many dimensions of moral, legal, economic and social nature attached to the issue.
Informing Events
The U.S and other states with heavy consumption of soda have the highest levels of obesity and overweight. Research ranks soda as among the drinks with the highest levels of calories and sugars, thus posing greater health risks (Go and Roger 15). For instance, in Mexico research has concluded that soda kills twice as many Mexicans than any other coke in the market. However, Coca Cola Inc. uses its 73% influence in regulating health policy to its favor (Wilhelm 5). In some other states, the company has embarked on massive campaigns to re-brand its products as healthy and safe for human consumption.
Nutritionist and health experts have especially criticized the company for donating $1.5m to the Global Energy Balance Network, a body whose object is to reduce and prevent poor nutrition diseases and obesity. This is a clear deception from the public perspective as they view the company as the main threat to health. Currently, The Times has criticized the company for shifting blame to poor exercise as the sole cause of obesity. In support of the claim, the times alleged that the company has long time funded scientists to make claims that sugar drinks lack deleterious health implications. Negative perception is proving a threat to the future of the company, leading to these unethical practices for survival.
Authors’ Perspective
As the company’s CEO, I find the concern a two-way dilemma. Over time, the company has managed to maintain a strong brand title with the help of its reputation, which is currently under threat. The health implications of our products are too profound to deny or feign ignorance. However, due to the economic dimension attached to the matter, it has been difficult for the company to reconcile with this fact. I acknowledge that the company enjoys a strong base of loyal customers, and we should feel obligated to provide correct information whether self-defeating or otherwise. In my capacity, it is my testimony that the company is taking necessary measures to address the issue. We are still to come to this reality, though, and the efforts to denounce the threat are unethical and morally unacceptable.
The Issue
The company’s efforts in denouncing the public claims raise two important questions. Firstly, in the light of the available facts is it ethical for it to claim that its products are indeed safe for human use? Secondly, is it ethical for the company to fund health organizations while it is indeed offering ‘poison’ to the public?
Economic and Social-Cultural Relevance
Negative perceptions on the same are seriously affecting sales of the company’s once strong brands. The customer’s attitude has changed invariably to the disadvantage of the company. As a result, it has given the competitors a competitive edge. The emerging culture of preference for healthy sugarless drinks is an issue the company needs to address thoroughly. Well, a bigger fraction of the global community would wish the company to exercise a complete overhaul of company’s sweetened drinks. This move would be economically dangerous because creating a strong brand takes long and huge sums. However, maintaining the position through misrepresentation is utterly unethical and insensitive to public. Perhaps it is the time we change tact, and tell the public the reality to help them make informed decisions. This may be expensive initially, but may be a tragedy in the future when the truth becomes too bold to suppress. The thing is, there is a need to begin fact based awareness to create an informed society and encourage responsible use of the products as the company seeks a lasting solution (Busch 10).
Moral, Safety and Legal Significance
Much as the issue is an ethical question, it also has a moral dimension. A multinational company of our nature has an obligation to define the moral standard in the business community to guarantee fair business practices. Often, consumers are ignorant of the harmful potency of the products in the market. However, taking advantage of their ignorance is immoral. Availing the right information to the public helps to make informed decisions especially when assessing the health risks attached. The deception places their safety at risk. Besides, the practice doubles as a misrepresentation and negligence, actionable offenses in law. So far, the company is yet to face such courtroom battles. However, it is a public interest matter, and the company might face serious and unmanageable petitions in the future. Now, that will be a tragedy, and it will possibly mark the company’s downfall.
As a conclusion, the modern global business has been faced with numerous ethical issues, which continue to raise questions about the conduct of the business. The issue concerning coca cola and the health implications of their products has continued to elicit different reactions across different stakeholders. However, it is a fact that the products have resulted in numerous health concerns, which the company has not addressed properly. There is a need for the company to address the ethical issues because they might be expensive for the company in the future.
Actions Already Taken by the Company
Coca-Cola has made efforts to reduce the level of sugar in its major brands such as Sprite. In 2012, the company reduced the level of sugar in Sprite by 37 percent. The company has invested $19.84 million in developing a Coca-Cola Zero sugar product that will replace the Coke Zero launched in 2006 (Hepburn 7). Stevia plant, a zero-calorie sweetener ingredient will be used in the development of this product. Stevia plant is being used to replace a large percentage of sugar in drinks such as Sprite and Glaceau vitamin water zero. Conversely, the company has introduced smaller portion sizes of its products to encourage consumers to take less. The company has also increased the visibility of the ingredients on its containers to help consumers make informed choices when making a decision on which beverage to consume (Hepburn 10). Coca-Cola has also diversified its product portfolio into healthier drinks that include juices, dairy products, coffee, and mineral water among others.
Recommendations
Considering that the largest percentage Coca-Cola customers consume the sugary carbonated beverages, the company’s products contribute immensely to the national burden resulting from obesity and overweight health issues. As such, the company has negated its responsibility to the welfare of its clients by focusing on making profits at the expense of consumers’ health. The following practical recommendations can be implemented to address the ethical dilemma arising as a result of the health effects of the company’s beverage consumption.
Change the ingredient,
Introduce health effects label
Diversify to healthy products
Donate money to health organization
Stop selling the product (this approach might be impossible because Coke constitutes the company’s largest source of revenue)
The company should consider changing the ingredients of its major brands including Coca-Cola that makes the largest percentage of its sales. Coca-Cola is highly carbonated, containing high levels of sugar than is needed. WHO estimates that one bottle of Coke contains as much as twice the levels of sugar a person needs in a day (WHO 3). Therefore, taking more than two bottles of Coke is too much for any individual, especially those struggling with weight issues. A sugar that is not bonded to fiber accumulates in the body faster, leading to numerous health issues.
It is possible to replace sugar in the recipes of the carbonated drinks with other better and natural sweeteners that give similar taste. These include the Stevia Plant, Aspartame, Cyclamate, Saccharin, Sucralose, Acesulfame potassium, Lead Acetate, and Mogrosides. These sugar substitutes provide a sweet taste as that of sugar, but contain very low levels of food energy. Therefore, they reduce the risk of developing chronic diseases, especially obesity and diabetes among consumers. The company gets to keep the taste and unique quality of its products while the consumers stay healthy, hence resolving the ethical issues on health and safety.
The Coca-Cola Company should consider diversifying its products towards healthier drinks as a strategy to address the increasing calls for healthier products. Although the company has recently made significant strides in moving towards other products, it is still dragging behind in addressing the major concerns. For example, by acquiring dairy, fruit, and coffee businesses, the company is still swimming in the same waters characterized by sugary drinks. For this reason, the company should consider developing zero sugar teas and coffee, 100 percent juice, mineral water, and low-fat milk among other low-calorie drinks.
Coca-Cola should consider donating money to health organizations such The Obesity Society and the American Diabetes Association to help in research, treatment, and prevention programs. The company is morally obligated to this course because it products have played a major role in the increase of these health cases. This approach will not only improve the image of the company, but also help sensitize consumers on making healthy choices in consumption of coca-cola products. Instead of funding research organizations to shift blame for obesity and diabetes away from its products, the company should play a leading role in stewardship of healthy and active lifestyle while encouraging the consumers at risk of developing chronic illness to consume its low-calorie substitutes.
Although unlikely, the company can consider labeling the health effects of its products on the bottles. Just like cigarettes’’ “smoking may cause lung cancer” or alcohol’s “Excessive consumption of alcohol is harmful to your health,” Coke products can be labeled “Excessive consumption of Cola may lead to obesity and diabetes.” As a result of labeling, the blame for the health effects of cigarette and alcohol (cirrhosis and lung cancer) has shifted from the producers to the consumers who despite warnings, they make a conscious decision to consume the products. Although this approach seems unlikely now, its implementation is foreseeable in the future.
Implementation of the Recommendations
The funding for the development and implementation of the recommendation will be drawn from the Operating and Expenses account, Research and development costs. The program will run for a period of five years and will cost close to $119 million. Shifting from starch and sugar beverages to substitute sweetened cola products will be given a major priority. The principle activities will include standardization of sweeteners, development of recipes, the design of production procedures, packaging, and marketing. It will be expensive to convince customers that the new products are healthy and of similar quality owing to the company’s policy of secrecy in its production activities.
Conversely, the company will engage in a continuous global push to acquire and collaborate with other beverage companies whose activities involve the production of healthy drinks. This will include companies in the areas of milk processing, fruit drinks, mineral water, and other local products. As the company seeks to address the changing demands of the market, it should also involve itself in community development programs aimed at addressing health issues related to consumption of carbonated products. In five years, the company will develop an associate department in its Coca-Cola Foundation that will engage with health organizations and experts in helping address obesity, diabetes, and other health issues.
Implementation Timeline
Works Cited
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Basu, S, et al. "Relationship of soft drink consumption to global overweight, obesity, and diabetes: a cross-national analysis of 75 countries." American Journal of Public Health (2013): 2071-2077.
Busch, Matthew. "Pom Wonderful v. Coca-Cola and the Implications of Granting
Competitors the Right to Challenge False or Misleading Food and Beverage Labels
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Center for Science and Environment. Pesticides in Soft Drinks. 2003. Web <http://www.cseindia.org/content/pesticides-soft-drinks-1>. 1 August 2016.
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Go, A. S., D. Mozaffarian, and V. L. Roger. "Sugar-sweetened beverages initiatives can
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Hepburn, Matthew. Ways we’re helping you enjoy less sugar. 19 May 2016. web <http://www.coca-cola.co.uk/stories/5-ways-were-helping-you-enjoy-less-sugar>. 1 August 2016.
Hert, KA, et al. "Decreased consumption of sugar-sweetened beverages improved selected biomarkers of chronic disease risk among US adults: 1999 to 2010." Nutrition Research Journal (2015): 58-65.
Nestle, Marion. Coca-Cola says its drinks don't cause obesity. Science says otherwise . 11 August 2015. Web <https://www.theguardian.com/commentisfree/2015/aug/11/coca-cola-obesity-health-studies>. 1 August 2016.
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