Reference no: EM13892385

Case Study

Coke - A "Devil" Company?

The Wall Street Journal (WSJ) reported in May of 2013 that the Coca-Cola Company is now broadening distribution of its low-calorie drinks in response to criticism from consumer and health groups as well as lawmakers that the company is contributing to obesity, particularly of children. Recall that New York City Mayor Michael Bloomberg recently attempted to ban in the city the sale of sodas in containers of 16 ounces or more; but that ban was invalidated by the courts. In addition, Coke will now place on the front of its packaging around the world the calorie counts of its products. The company is aggressively seeking to counter criticism that its products, containing sugar, are causing obesity. Coke is also promising to sponsor physical activity programs. Moreover, the company has reiterated its commitment not to market its drinks to children under 12 years of age in each of the 200 countries and territories that Coke operates. Coke, as well as other soda makers, such as PepsiCo, now are finding that their products have come under increasing scrutiny in a growing number of countries where people are suffering from rising obesity rates.

Coke, however, says that about one-third of its sales volume in North America comes from low-calories and zero-calories drinks, such as Diet Coke and Coke Zero; yet such low calorie drinks are not as widely distributed in other parts of the world. For example, in Latin America, such drinks only make up 18% of the company's volume. And in China, zero-calorie cola sales comprise less than 10% of Coke's cola sales. Coke's chairman and chief executive, Muthar Kent, was quoted in the WSJ as saying that "the key is to ensure that in every market where we operate to have no- or low-calorie beverages of our main brands available." In the U.S., the WSJ reported that Coke has moved "aggressively" to attempt to ward off critics by having television advertisements that state that soda should not be singled out for weight gain, and which encourage people to have "fun" burning calories through physical activity. In May of 2013, moreover, Coke unveiled plans for $3.8 million in grants for "active" lifestyle programs, such as dancing and cycling, in its home state of Georgia. Furthermore, overall, the soda industry has spent almost $100 million in the U.S. since 2005 lobbying to oppose various laws, such as proposed soda taxes by states and cities.

However, Coke and other soda makers are being targeted not only in the U.S., but also in Europe and elsewhere. France, for example, introduced a soda tax in 2012, and Hungary introduced a broader tax against products high in salt, sugar, or fat. In Britain, several prominent health groups are now calling for soda taxes in the United Kingdom too. Coke said it will start adding calorie counts to the front of all its packaging around the world, which is something it already does in the United States. It also intends to increase its sponsorship of physical activity programs in every country where it sells its products, up from 115 countries currently. Coke sells its products in every country except Cuba and North Korea. Moreover, Coke said it will make a commitment not to market its products globally to children under 12 years of age. Mexico actually is the country which drinks more of Coke's products on a per capita basis than any other country. In 2012, Mexican lawmakers, concerned about rising obesity rates in Mexico, proposed a 20% soda tax and also proposed that sugary sodas not be sold in schools. Both proposals are under advisement and negotiation by the Mexican government currently.

Nonetheless, despite these efforts by Coke and other soda companies, one professor of nutrition policy at a London university was quoted in the WSJ as calling soft drinks the "devil product of the moment."

Bibliography: Esterl, Mike and Ziobro, Paul, "Coke's Low Calorie Push," The Wall Street Journal, May 9, 2013, pp. B1, B2.

Questions for Discussion:

Should there be higher taxes on soda products? Should there be legal restrictions on the size of containers of soda? Should advertising of soda products aimed at children be banned by government? Discuss some of the legal issues and concerns raised in the foregoing questions as well as how you think they should be resolved.

Is Coke a "devil company"? Why or why not? Is it a moral company under Utilitarian ethics? Is it moral pursuant to Kantian ethics? Why or why not?

Is Coke proceeding in an ethically egoistic manner in order to fend off criticism and legal proposals? Why or why not?

Is Coke a "socially responsible" company? Why or why not? And if not, what should the company be doing to be a socially responsible one?