26 Nov 2014 Citizen Coke: The Making of Coca-Cola Capitalism
The book, Citizen Coke: The Making of Coca-Cola Capitalism, has been described by one reviewer as “An eye-opening account of the “unmatched ecological appetite” and “A superb, quietly devastating environmental and business history behind Coca-Cola’s worldwide success.”
Acknowledging the company’s marketing genius, Elmore claims that Coke’s real secret formula has been to rely on other people’s time and money, often using public infrastructure to extract raw materials and transport finished products. The strategy—first developed by mass marketers at the turn of the 20th century and later imitated by McDonald’s, large software firms and other corporations—eliminates upfront costs and risky investments.
Since its founding in 1886, Coke has relied on partnerships for the sugar, caffeine, water, cans and bottles, and other raw materials needed to create its beverages (now selling more than 1.8 billion servings per day). Drawing on archival sources, the author devotes chapters to the ecological impact of each key Coke ingredient.
Here’s an extract from the book:
Coca-Cola was the world’s most valuable brand in 2012. That year, the company was all over the map, operating in over two hundred countries and selling more than 1.8 billion beverage servings per day (one serving for every four people on earth). It was the twenty-second-most-profitable company in the United States, with revenues topping $48 billion and net income over $9 billion, making it one of the greatest profit-generating businesses in world history. By the twenty-first century, Coke had conquered the globe, its market reach unmatched.
How did this happen? How did a patent medicine created in a small southern pharmacy in 1886 become one of the most ubiquitous branded items in human history?
The easy answer is marketing. Some have claimed that Coke was successful because it was a “want maker,” adept at conjuring up magical, eye-catching advertisements that persuaded people to buy its nonessential products. As the story goes, Coke’s genius lay in its ability to link its product to patriotic events, American family life, and even religious iconography. Coca-Cola’s advertising and promotional campaigns transubstantiated the company’s sugary beverage into “an old friend, a piece of everyday life, a talisman of America,” and it was this iconic status that helped to explain its commercial success.
Rosy-cheeked Santa Clauses and smiling GIs in Coke’s advertisements surely helped create consumer loyalty for its beverages, but this was only the veneer of what Coke had to sell. Behind the advertisements, Coke vended a concoction of sugar, water, and caffeine, packaged in glass, plastic, or aluminum. To be successful Coke had to turn these products of the earth into a real, drinkable beverage that could be placed on retail shelves all around the world.
In short, Coca-Cola had to acquire copious quantities of natural resources in order to thrive. By the mid-twentieth century, Coke was the single largest buyer of sugar in the world, the largest global consumer of processed caffeine, the biggest commercial buyer of aluminum cans and plastic bottles in the nonalcoholic beverage industry, and a major water guzzler. Here was a company with an unmatched ecological appetite for an array of natural resources. It gorged on commodities in order to make profits.
Yet this hefty diet did not make Coke fat. Even as the company consumed more and more, it maintained a lean corporate figure, investing little in the productive industries that supported its growth. For the vast majority of its history, Coke did not own sugar plantations in the Caribbean or decaffeination plants in the United States or coca farms in Peru. It remained a third-party buyer, letting others engage in the oft-unprofitable business of mining and processing resources from the natural world.
Coke’s success, in other words, was not manufactured in-house. The company depended on infrastructure built and managed by a host of public and private sector partners. Indeed, it would not be unfair to call Coca-Cola the Forrest Gump of the twentieth-century economy, a native son of the American South that seemed to find his way into a dizzying array of global trading networks. The company became connected to numerous supply chains through corporate intermediaries counted among the biggest commercial titans of their day, including the Sugar Trust, Monsanto Chemical Company, Cargill, General Foods, Kraft, McDonald’s, the Hershey Chocolate Company, and Stepan Chemical Company. These businesses fed Coke’s insatiable demand for cheap commodities, and by doing more—by building factories and distribution facilities, warehouses and processing plants—they enabled Coke to invest less.
Government played a large role, too. Federal agencies subsidized farmers to fuel the production of corn Coke needed to produce its sweeteners. Local governments also invested in infrastructure, such as public waterworks and municipal recycling systems, which helped reduce the price of raw materials. Throughout the twentieth century, Coke’s growth always hinged on its ability to use government scaffolding, its sleekness in part a product of expanded government power…..