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Critical Sociology 39(2) 277 –293
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When Business and Community Meet: A Case Study of Coca-Cola
Tamar Barkay Tel Aviv University, Israel
Abstract Community involvement programs occupy centre-stage in the portfolio of many corporations who display and report upon their socially responsible performance. Focusing mainly on issues such as charity and employee volunteering, corporations remain fairly vague in reporting on the way they translate community involvement policies into concrete actions and on the social impact of their community programs. Based on first-hand observations and on-site ethnographic accounts, this study seeks to enrich extant understandings of the character and consequences of corporate involvement in communities. The study follows the diffusion of Coca-Cola’s global branding strategy and the community involvement program it recommended to the Israeli franchisee and analyzes its design and execution on the ground. The study finds a considerable gap between rhetoric of community involvement and practices of mobilizing the community to further the company’s ends. On a theoretical level, the study shows that community programs function as material performances of present-day capitalist ideology.
Keywords capitalism, Coca-Cola, corporate community involvement, corporate social responsibility, governance, sociology
Introduction
This article offers a case study of the way a national subsidiary of a global corporation designs and executes community programs. While substantial literatures in both sociology and management studies consider the interface of corporations and communities, only a handful of studies to date offer an in-depth analysis of the way community programs are deployed on the ground (cf. Bond, 2008; Idemudia, 2009; Kapelus, 2002; Muthuri et al., 2009; Welker, 2009).
In recent years, corporate community programs have been treated as an element of a broader movement, namely ‘corporate social responsibility’ (hereinafter CSR) (Waddock and Boyle, 1995). Within this framework, community programs are often considered, alongside other philanthropic
Corresponding author: Tamar Barkay, Department of Sociology and Anthropology, Tel Aviv University, Tel Aviv 69978, Israel. Email: [email protected]
423112CRS39210.1177/0896920511423112BarkayCritical Sociology 2011
Article
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endeavours, as the softer side of CSR (the hard-core consisting of self-regulation in the form of codes of conduct and management programs) (Husted, 2003).
At the same time, the evolving literature on CSR is premised on the view (critical or otherwise) that the key factor in assessing current corporate behaviour relates to its effect upon relevant stake- holders (Jamali, 2008). In fact, a stakeholder approach underlies the very normative turn that steered scholarship away from the legal-managerial analysis of corporations in terms of shareholders’ interests towards a consideration of employees, suppliers, and relevant communities (Jonker and Foster, 2002). Looked at with this conceptual framework in mind, the way corporations identify, target, and act upon what they consider to be relevant communities remains a fundamental issue: a focus on community programs may yield important insights concerning not only the impact of corporations on ‘real people’ but also the very means by which present-day capitalism actively participates in and shapes the nature of local governance (Matten et al., 2003).
However, empirical knowledge about the impacts of corporate involvement on communities and the way corporations translate their policies into concrete actions is still rather limited. While cor- porate involvement in communities often relies on the emancipatory rhetoric of community empow- erment, giving back to the community, and fulfilling community needs, some critical accounts point at a considerable gap between publicly declared corporate policies and actual performance (Banerjee, 2008; Hamann and Kapelus, 2004; Shamir, 2004, 2005; see also Christian Aid, 2004).
One study of corporate reporting on community involvement found that corporations mainly report on issues such as charity and employee volunteering (Global Reporting Initiative et al., 2008).1 The study also found that such social reports focused only on the more readily available measurable indicators of community performance (e.g. the number of employees that participated in community programs and the number of volunteering hours allocated to projects) and avoided substantive evaluations of the actual impacts of projects. Referring to corporate reporting on these issues as vague, this study and others conclude that corporations tend to count inputs rather than assess out- comes (also see Veleva, 2010).
Accordingly – and in order to somewhat fill the gap concerning our knowledge of the way com- munity programs are designed and deployed on the ground – this study analyzes the ‘community involvement program’ of the Israeli franchise of the Coca-Cola Company.2 Specifically, it analyzes the corporation’s worldwide Active and Healthy Lifestyle (AHL) branding strategy whose core output has been to encourage a variety of community involvement projects. The study traces the diffusion of this strategy to the local Israeli franchise and the subsequent execution of the project at various locations. The findings, detailed in the following sub-sections of the article, show that communities are subjected to two forces: the firm’s drive to enhance sales by means of sophisticated branding strategies and the firm’s response to public demands for greater stakeholder-oriented social respon- sibility. The outcome consists of community programs that have become captives of the imperative to combine ‘value’ with ‘values’: corporate practices that harness employees, local governments, and communities to the cause of enhanced profits. In other words, the emergent thesis of this article is that community programs function as material performances of present-day capitalist ideology.
Theoretical Framework
The broad theoretical framework of this article builds upon critical sociological analyses that show the remarkable capacity of corporations to resolve reputational crises and to adjust to new public demands without compromising their drive for profits (Shamir, 2008; Sklair, 1997; Strange, 1996). A key theoretical guideline is provided by the analysis of Boltanski and Chiapello, according to which ‘it is probably capitalism’s amazing ability to survive by endogenising some of the criticisms
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it faces that has helped in recent times to disarm the forces of anticapitalism, giving way to a tri- umphant version of capitalism’ (2005: 163). Grounded in a tradition of study that focuses on processes of capitalist reproduction yet without reducing them to simple mechanical moves, the theoretical framework of this article directs our sociological gaze to real changes in corporate behaviour, albeit such that successfully retain their level of profitability.
In the present study, this overall theoretical approach is applied to the consideration of the trajec- tory and impact of some concrete corporate community-involvement programs. Relations between corporations and communities are as old as capitalism itself. Typically framed as ‘community involve- ment’ or ‘community relations’, corporations had been experimenting with the creation of company towns and charitable displays of good corporate citizenship as early as the late 19th century (Jacoby, 1997; Seitanidi and Ryan, 2007). Traditionally, corporate community involvement was perceived as part of the charitable role that firms have voluntarily undertaken within the communities in which they operated as an add-on to their core business activities (Carroll, 1979; Crane et al., 2008).
This early history notwithstanding, the significance and merit of corporate community programs assumed new meaning in the 1990s, with the (re)-ascendance of the notion of ‘corporate social responsibility’ as an overall conceptual umbrella for normatively assessing the impact of corpora- tions on society (DeWinter, 2001; Winston, 2002). Accordingly, some scholars have begun to evaluate community involvement as early forms of corporate social responsibility (Muthuri et al., 2009) and to consider the extent to which the design and framing of corporate community involvement have undergone changes in recent years (Muthuri, 2007; Seitanidi and Ryan, 2007). For example, Chapple and Moon (2005) have noted that community programs often serve corporations as a major venue for implementing and displaying their social responsibilities, and Moon and Muthuri (in Charities Aid Foundation, 2006) have noted how community programs have been conveniently tied up with charitable corporate contributions and employee-volunteering initiatives.
Nevertheless, the place of community programs in this overall matrix has been somewhat pushed to the side in light of the theoretical focus on two broader aspects of CSR: first, the transformation of CSR from an activist agenda of public shaming to a business-led set of programs that are based on ‘the business-case for social responsibility’ (Carroll and Shabana, 2010); and second, the trans- formation of CSR from being a political signal for curbing corporate hegemony by means of formal national and transnational regulation into a field of private and self-regulation (Utting, 2005). In both cases, recent years have also witnessed the emergence of critical sociological scholarship which points out the link between said transformations and market-oriented neo-liberal policies in general (e.g. Bartley, 2007; Vogel, 2008; and especially Shamir, 2004, 2010).
As we shall shortly see, both directions of inquiry concerning the nature and trajectory of CSR have significant bearing for making sense of the way Coca-Cola designs and implements community programs. However the empirical analysis below warrants a short elaboration on each of the above- mentioned theoretical features of CSR.
CSR as Business
As previously mentioned, quite a few scholars – positively responding to and affirming the overall ‘capitalist reproduction’ framework with which I began – have noted that CSR crossed a crucial threshold of normative embeddedness once it moved from the realm of altruistic values to the eco- nomic sphere of utility and risk (Power, 2004). Nurtured, articulated, and globally diffused by business management academics and consultants, the new approach to CSR stipulates that the pursuit and adoption of socially responsible practices are not simply the morally right thing to do but also a profitable business strategy (Chapple and Moon, 2005; Margolis and Walsh, 2001; Rochlin and
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Christoffer, 2000; Vogel, 2005). Thus, in spite of the continuing vibrant academic debate on the relationship between CSR and profits and of the uncertainty of empirical evidence (Margolis and Walsh, 2003; Perrini, 2006; Salzman et al., 2005), the business-case approach has become a pervasive belief among practitioners, consultants, MBA programs, and business executives.
At first, the business-case approach tended to emphasize the potential commercial value of a good reputation, investors’ confidence, and the loyalty of employees which may be enhanced by sound social and environmental corporate practices (Schnietz and Epstein, 2005). At a more advanced level of sophistication, CSR has been bundled up with other corporate risk-management strategies, premised on the notion that social responsibility may serve as an effective mechanism for avoiding costly public relations scandals, legal claims, and other catastrophes which may result in sliding share value (Godfrey et al., 2009; Kytle and Ruggie, 2005; Shamir, 2010).
For present purposes, it is noteworthy that at least some scholars have critically commented upon the implications involved in the transformation of CSR into a full-blown ‘business-case’. In particular, some attention has been given to the increasing tendency of corporations to shape socially respon- sible practices in ways that prioritize shareholders (and other immediate commercial concerns) as the ultimate ‘stakeholders’ of the firm, thereby at least potentially compromising the original under- lying logic of CSR (Crane and Livesey, 2003; Seitanidi and Ryan, 2007). Directly relevant to the case below is the terminology that corporations and relevant consultancies have recently adopted, invoking terms such as ‘sustainable community development’, ‘corporate community impact’, and ‘community investment’ when designing community programs (Campbell, 2007; Fombrun et al., 2000; Muthuri, 2007; Tsang et al., 2009).
CSR as New Governance
Another prominent scholarly view of CSR had tied it to the academic literature about ‘new gover- nance’: the notion that present-day assemblages of political authority are premised on the increased participation of non-state actors in shaping public policy, on private–public dialogue, partnerships, and collaboration and, more broadly, on novel forms of regulation (Bingham et al., 2005; Lobel, 2004). The majority of new governance scholarship regards new governance as an effective political framework for bridging socioeconomic cleavages and for potentially allowing a greater degree of democratic participation (e.g. Braithwaite, 2008; Pierre, 2000; Scharpf, 1997). Furthermore, quite a few scholars noted that as the underlying logic of ‘new governance’ schemes rests on a market- like model of authority, public policy is best shaped and pursued by means of diverse and even competitive sources of authority such as local government, non-profit organizations, and commercial enterprises (Cutler et al., 1999). In turn, government itself assumes the form of a commercial enter- prise, expected to achieve financial viability, to generate funds for public expenditures, and to enter into sustainable partnerships with other sources of authority (Lemke, 2001). New Governance is therefore also marked by the proliferation of regulatory instruments above and beyond legal direc- tives such as private regulation, codes of conducts, and best practices principles (Vogel, 2008).
Grounded in a critical perspective on governance, this article considers the proliferation of practi- cal and discursive forms of governing in recent decades within the context of the perceived triumph of the neoliberal project and the transformative capacities of capitalism (Jessop, 1998; Lipschutz and Rowe, 2005; Mouffe, 2005; Shamir, 2008, 2010; Swyngedouw, 2005). Accordingly, the increased participation of non-state actors in shaping policies and in the provision of social goods is understood in terms of processes of economization and marketization of authority. This understanding allows the exploration of ways in which frameworks of governance obscure the asymmetry of power rela- tions prevailing between social groups and networks.
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As mentioned above, some scholarly observers have noted that present-day practices which are framed as displays of corporate social responsibility (e.g. emphasis on voluntarism, partnerships with local government, assuming governmental-like functions in targeting or addressing the needs of communities) are premised on the scheme of new governance (Lipschutz and Rowe, 2005; Matten and Crane, 2005; Parker, 2002; Scherer and Palazzo, 2011). Such observations may have significant bearing on the analysis of corporate community programs. In light of the literature, we should expect that the design and execution of community programs would involve relations with other sources of local authority, would be explicitly based on issues of cost and utility, and would emphasize voluntary and non-coercive means for achieving social goals.
This study shows how the two trajectories of CSR described above converge in the design and implementation of community involvement programs, and provides us with a sound theoretical framework for understanding their meaning and long-term implications.
Methodology and Design
The study is based on two years of participant observations, in-depth interviews, and the compila- tion and analyses of textual intra- and inter-organizational materials (for details on data sources see Tables 1–3 in the appendix). Twenty-eight on-site observations included full-day trips to locations where the company deployed its programs, participation in managerial meetings at company head- quarters and regional offices, and observations at events and informal gatherings organized by the company. These observations included numerous on-site informal talks with mid- and high-level executives, town officials, and local residents.
Interviews with corporate executives included a series of meetings with the company’s CEO, execu- tives of the marketing and sales department, the human-resources department, and the chief technology officer. In-depth interviews were also held with blue-collar employees such as drivers, service techni- cians, and company-union leaders. All in all, apart from numerous anecdotal exchanges and observations, the findings below are based on 29 in-depth interviews. Interviews were divided between a close-session set of preconceived questions (average 70 minutes) and open-ended conversations on a variety of related topics, both conceptual and practical. By and large, interviewees and informants consisted of three groups: high and mid-level executives of Coca-Cola, mid- and low-ranked employees of Coca-Cola, and officials and residents of towns where Coca-Cola deployed its program.
A primary informant in the research had been the company’s Community Relations Coordinator with whom exchanges, joint field-trips, and formal interviews were conducted on a regular basis. These included interviews held while joining her on various field missions and 11 formal recorded interviews at company offices.
Additional primary data was gathered from a variety of textual materials published or distributed by Coca-Cola for internal and external purposes. These included emails, printed correspondence, PowerPoint presentations, management circulars, workflows, press releases, and the official web pages of both Coca-Cola Israel and the Global Coca-Cola Company.
Finally, a note on access to the field is in order. The initial request to conduct close observations at Coca-Cola was met with reluctance. Mid-level executives doubted the value of the study or otherwise expressed discomfort at speaking without authorization. In a last effort of persuasion, I scheduled a meeting with the CEO. In this meeting, invoking the idea that transparency was part of the social responsibilities of the company, and finding common ground around the notion that community programs were important to the company, consent was granted. With high-level permis- sion, later encounters were, by and large, open and forthcoming. All in all, Coca-Cola allowed me fair and open access to the meetings and events which are reported upon in this study.
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The findings below are divided into three sub-sections. In the first section I show how corporate authority is deployed so as to define community needs in ways that fit organizational strategic considerations. In the second section I move to show how the corporation assumes a governing role, negotiating its community programs with local governments. In the third section I discuss how the overall result amounts to a material and ideological colonization of the community. I end with some theoretical conclusions and suggestions for future research.
Whose Needs? CSR between Value and Values
In 2004 the community programs of Coca-Cola Israel changed focus and direction in response to directives from Coca-Cola’s world headquarters in Atlanta. Overseas, the marketing department of Coca-Cola developed a comprehensive strategic plan whose purpose was to address a global sales crisis. At the root of this crisis, at least according to prevailing beliefs at Coca-Cola, lay growing public awareness of soft-drinks-related health and nutritional harms and the increasing prevalence of obesity to which sugar-sweet soft drinks contributed (Herrick, 2009). In response Coca-Cola designed a ‘sustainability scheme’ which was aimed at improving its image as a brand committed to promoting solutions to the worldwide health-related negative side-effects of ‘modern lifestyles’ (Coca-Cola, 2011).
The newly designed strategic plan had come to be known as the Active and Healthy Lifestyle (AHL). It consisted of several elements: enhancement of Coca-Cola’s line of products to a wider selection of diet beverages, juices, energy drinks, and water; a new policy of transparency concern- ing nutritional information on product labels; and a massive launch of community involvement projects that would directly and visibly promote nutritional education and physical activity.
The AHL program sought to unite two organizational goals under the same roof: developing community programs which would enhance the nutritional value of the brand and thereby also display the investment of the firm in socially responsible practices. Thus, from the outset CSR was perceived by the firm as bearing a commercial value and therefore as a suitable platform for advanc- ing marketing issues such as re-branding, reputation, consumer trust, and investors’ confidence. In this regard, the newly envisioned community programs have signaled a transition from ‘old philan- thropy’ to ‘strategic community engagement’ (Austin, 2000).
This spirit of fusing social responsibility with marketing and branding concerns directly affected the newly shaped community involvement programs of Coca-Cola in Israel. The Atlanta headquarters planned AHL as a global strategy and provided guidelines for the implementation of the AHL plan to national and regional bottling companies across the world. These guidelines were explicit on the absolute need to deploy the AHL plan through the active nourishment of relations between the company and local communities (interview with strategy and Research Manager). However it was left to the local branches to decide upon concrete details and to identify the most appropriate ways to achieve the stated goals (interview with Marketing Director). In Israel, these directives led to a further conceptual link, not only between marketing and social responsibility but also between suitably adapted community programs and the employee volunteering programs of the firm. A new hybrid was born, carrying the somewhat complex title of ‘Employee Involvement Project for an Active Lifestyle for Social Change’.
Until the arrival of the AHL plan and the revisions that it ushered in, Coca-Cola Israel supported a community project which ran under the title of ‘A Child’s Smile’. The program consisted of regular financial contributions to children of battered women in 14 refuges across Israel. All these refuges were entitled to public funding yet depended heavily on the support of community centers, non- profit organizations, philanthropists, and commercial firms (Yanay, 2005). In addition to its financial
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contributions to the refuges, the firm also secured a budget for charitable contributions on a sporadic basis. Expected to implement the AHL plan, the firm incrementally reduced its investments in its previous programs and embarked on an overall reform of its community-oriented policies.
A preliminary organizational move had been to create a new mid-level executive position of ‘Community Relations Coordinator’. The mandate of the Community Relations Coordinator (here- inafter CRC), directly conveyed to her upon recruitment, was to integrate the business interests of Coca-Cola with its community-related programs and, moreover, to base such programs on schemes for employee volunteering (interviews with Marketing Manager and CRC). The CRC perceived her role in terms of a business approach to CSR: designing a new ‘community package’ that would reflect a serious business-like approach to socially responsible programs in general and to the ‘active lifestyle’ plan in particular (interview with CRC).
However, the CRC soon realized that the company had neither a guiding policy concerning charity giving nor a record-keeping mechanism that would have allowed it to report and publicize its social contributions. Concretely, the new guidelines which came from Atlanta required firm links between the ‘community package’ and the AHL strategy. The CRC therefore concluded that the ‘Child’s Smile’ program was ill-fitted for the task: it lacked a direct association with an active life style and it could not be publicly displayed for marketing purposes (interview with CRC). Moreover, the ‘Child’s Smile’ program lacked the vital element of employee volunteering of which the new coordinator was in charge. A new community program had to be developed, one which would abide by the new guidelines and spirit.
Yet the CRC was not the only executive in charge of the new plans. A broader team had been assembled, consisting of representatives from the firm’s Human Resources, Marketing, and Sales departments, to be coordinated and advised by the CRC (interview with VP Human Resources; conversation with VP Marketing; observation of planning team meeting). The idea was to bring together various organizational perspectives and to therefore realize, at the level of planning and design, the new understandings about the business value of community programs. Jointly, and after considering a number of options, the team ultimately came up with the ‘Active Playgrounds’ project.3 The idea was to identify suitable recreational public playgrounds which were in need of repair throughout the country and to deploy volunteering employees who would actively renovate the selected spaces.4
It is noteworthy that no effort had been made to perform any type of community need assessment prior to the decision to embark on the program. Similarly, none of the members of the planning team had ever raised the question of how to assess or measure the actual impact of the program on the recipient communities.5 The unchallenged assumption that ran throughout the deliberations of the planning team had been that the envisioned future availability of renovated playgrounds would not only be a useful display of an active lifestyle (i.e. physical work) by the employees but would also necessarily facilitate an active lifestyle (i.e. positive social change) for the community.
Having decided upon the needs of the community, the team moved to consider the corresponding needs of the company. The ‘business model’ of the renovation project assumed the budgetary con- straints of Coca-Cola as a prime factor. The task was therefore to successfully link the Active Playgrounds project to employee volunteering rather than to monetary contributions. However, the problematic interface between community needs and company needs resurfaced during preparatory meetings between the representatives of Coca-Cola, local officials, and community activists.
Such meetings often began with a joint tour of the relevant locality in order to identify suitable playgrounds. From the point of view of the firm’s executives, such scouting tours were vital in order to choose the playgrounds that ‘best fit our needs’, namely playgrounds that may be renovated by employees over a short period of time without exceeding the limited budget (interview with CRC).
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The meetings between the representatives of Coca-Cola and town officials in various places thus typically led to a process of commercial-like ‘negotiations’ over competing needs.
In one such meeting, a senior town official explained that his office identified two nursery play- grounds in need of renovation. These playgrounds did not seem suitable to the representatives of Coca-Cola because they lacked the needed visibility which had been essential to the project. They explained that they were looking for poorly maintained playgrounds which were open to the public at large, preferably in poor neighborhoods.6 A Coca-Cola representative also clarified that they needed to find playgrounds which only required gardening and painting jobs that could be traded for employee working hours, rather than playgrounds that required major construction work or considerable investment in new equipment.
The parties then proceeded to tour the town and to visit the two playgrounds which had been suggested by the town official. While driving, the representatives of Coca-Cola identified a play- ground that seemed suitable to their needs. In spite of the objection of the town’s official, the Coca- Cola people insisted on renovating the playground of their choosing. Pressing the issue with the mayor, the latter consented to their plan without attaching any further conditions (observation of a visit to a small town in the north of the country by the planning team).
In another instance, the mayor of a selected town asked a community activist to escort the representatives of Coca-Cola in their search for a suitable playground. The question of whose needs the playground best served quickly emerged. The activist took the Coca-Cola people to a badly neglected playground and outlined his own future vision of the place. A representative of Coca- Cola observed that the playground seemed in need of an investment that exceeded the company’s budget. This observation prompted the community activist to ask who was going to make the decision upon a suitable playground: ‘Are we going to decide together or is it a matter for your people alone?’ The reply was that he should propose as many options as possible so as to allow Coca-Cola to reach the best decision ‘both for you and for us’ (observation at a small town at the centre of the country).
A single exception to this general lack of consideration for actual community needs occurred at a place where the municipality had neither the financial resources nor the organizational capacity to assume a partnership with Coca-Cola for the purpose of renovation. Instead Coca-Cola joined forces with a residents’ volunteering organization that had already been involved in addressing community needs without the assistance of local government. In this case it was the community organization that chose a playground prior to Coca-Cola’s arrival on the scene, mobilized residents to donate funds and to purchase equipment, and involved residents in active work on site. Unlike the situation elsewhere, here Coca-Cola was merely welcome to join the process, committing itself to some financial assistance and its standard contribution of employee working hours. While the division of labor and resources between the parties was eventually similar to that which had materialized in other places, this case seemed to more directly address the expectations of residents (community communication).
All in all, the findings indicate that Coca-Cola Israel, following the general guidelines of its global parent company, assumed the responsibility of defining the needs of the community: the need to lead an active lifestyle, realized through better availability of public playgrounds. This framing of community needs had then been activated through a business approach to social responsibility: assembling a variety of organizational logics and commercial interests in order to maximize repu- tational value through employee working hours. Thus the design of the Active Playground project reflects Coca-Cola’s adoption of the widespread conviction that socially-responsible corporate behavior yields benefits such as reputation and consumer trust and is a valuable risk-management strategy. The end result, as we shall also see in some more detail below, seems to indicate that company ‘needs’ had been prioritized over community ‘needs’ (in themselves defined by the com- pany) in the design of the community program.
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Community Programs and New Governance
Negotiating ‘community needs’ and negotiating the division of tasks between the company and local government were inherently intertwined. Yet it is possible to make an analytical distinction between the two. The previous section of the article demonstrated the asymmetrical meeting of needs between company and community and the way it surfaced in the course of the dialogue between Coca-Cola and its community counterparts (in most cases, local government officials). This section focuses on negotiating the division of tasks between the two, guided by the view that Coca-Cola’s Active Playground project is a modest example of what is accounted for in the literature as ‘new governance’: a configuration whereby state and non-state stakeholders share authority and divide social tasks between them through dialogue, learning, and cooperation (Bingham et al., 2005; Lobel, 2004). Specifically, it aims to show that the increasing dependence of local government on non-state support on the one hand and the emergent business model of CSR on the other hand shaped the contours and substance of the emergent community-oriented ‘partnership’.
The Coca-Cola team were quick to realize that the full cooperation of local government was essential for the project to succeed. Both Coca-Cola and local government officials were acutely aware of the financial restructuring that trimmed municipal budgets and social services in the last two decades. In one instance, a local official explained that he did not have a budget for badly needed renovations at five different playgrounds around town: ‘The financial resources of municipalities are extremely scarce these days,’ he said. ‘Each year I actually do less than I did the year before and this explains our need to lean on donations and support from external sources’ (interview with a town official). On her part, the Community Relations Coordinator complained that recipients thought ‘we are the Rothschild family’ and expected the firm to perform as old philanthropists used to: donate money and keep out of the practice (interview with the CRC).
The representatives of Coca-Cola were thus adamant in conveying to town officials that the project was about active involvement: volunteered employee working-hours for the benefit of the community. Yet negotiations on this basis were not always fruitful. Some municipalities vied for monetary contribu- tions alone and were not interested in the division of labor that Coca-Cola advocated. This had been the case in a city where Coca-Cola planned to renovate a playground which was located in an Arab neigh- bourhood (interview with the CRC). In another instance, the officials of the town lost interest in facilitating the community program once they learned about the limited size of the budget (conversation with the General Manager of a small town in the south-west of the country). The CRC of Coca-Cola later explained that this particular town had come under rocket attacks from the Gaza Strip. Consequently, she said, town officials were able to attract considerable monetary donations from a host of civic charities and founda- tions: ‘the people of the municipality became euphoric’, she complained, having obtained a quarter of a million US Dollars to build a community centre at the exact location where the planned playground reno- vation had been planned (interview with the CRC). Yet in at least one case, Coca-Cola encountered the opposite situation when a town’s public services had been so dramatically outsourced that the municipality could not afford even basic support for the company’s plans (interview with the CRC).
The division of labor between Coca-Cola and local government rested on the expectation that most work needed for renovation would be done beforehand either by municipality workers or, as was sometimes the case, by private sub-contractors. In two cases, local residents voluntarily worked at the playground for several weeks before corporate employees stepped in. This model of task shar- ing was needed because Coca-Cola’s community involvement project was designed to last for two days only in each playground. The plan to which Coca-Cola remained faithful throughout the project was based on the allocation of two groups of workers with each working at the site for one full day.
In one case the official informed the Coca-Cola people that his workers had already completed all the preparations for the project: ‘I have realized that if we didn’t take care of all of this, you would
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find it very difficult to proceed with the project, for it has required a lot of work and it was quite costly’ (observation at a small town in the north of the country). He then suggested that his own workers would complete the work on their own, freeing Coca-Cola to send only ten volunteers who would work at the site for one day alone. Fully understanding that the project did not require the full attendance of their employees, the planners from Coca-Cola nonetheless insisted on, and successfully negotiated, the active involvement of fifty employees who would volunteer their full working-day hours at the site. Thus the interest of the company in measuring community inputs as opposed to assessing outputs or outcomes prevailed. From the perspective of the business-case approach, this emphasis on inputs makes perfect sense as investors and consumers rely on readily-measured scores and indicators of CSR when seeking to assess firms’ social performance (Tsang et al., 2009). Moreover, the emergent division of labor between the company and its constituents also shows – in line with critical scholarship (Shamir, 2008; see also Barkay, 2009) – that a neo-liberal ideology of voluntarism and responsibilization underlies schemes of new governance.
The tendency to define and shape tasks in terms that prioritized the business model of the com- pany over the goals and imperatives of local government had also become apparent in disputes over the scope and type of playground renovation. In one episode, financial considerations led the Coca- Cola planners to suggest that rather than buying new playground equipment for the selected site ‘we should renovate existing equipment which is located in another playground and then move it to the one we have chosen for the project’ (interview with the CRC). On more than one occasion, town officials pointed out health and safety regulations which required the building of a fence around the playground. The Coca-Cola planners only grudgingly consented to such unexpected constraints and negotiated acceptable ‘settlements’: Coca-Cola covered the costs involved in paving a pathway while the municipality paid for the fence, or in another case, Coca-Cola financed the buying of plants and the municipality planted them in the form of a protective fence (observation at two small towns in the north and south of the country; interviews with the CRC and a town official).
In sum, some accounts of ‘new governance’ suggest that there is a strong belief among partici- pants that public/private partnerships are effective in the implementation of socially responsible programs (King, 2007; Seitanidi and Crane, 2008; Van Huijstee and Glasbergen, 2010). Also closely related is the belief that employee involvement contributes to the success and positive impact of community programs. However, when they are assessed on the ground, there is evidence to suggest that the asymmetry between corporations and local governments, and the primacy of a business-case approach to social responsibility, may bias the design and character of community programs in ways that do not benefit local people and public authorities. In the next and final section, I show the accumulated effects of such biases in the actual sites of renovation.
On the Ground: Corporate Invasion
It was only after playgrounds had been well prepared that Coca-Cola’s volunteering employees arrived for two days of final works. Employees joked that during these two days the playground was turned into a ‘Coca-Cola Zone’ (observation at a small town at the center of the country). On the first morning at one such site, 15 municipality workers were already there when the employees of Coca-Cola arrived. Having prepared most of the infrastructure in the preceding days, these work- ers were busy finalizing the stage for the volunteers. When the Coca-Cola volunteers arrived they were first preoccupied with putting up Coke branded parasols and hanging company flags all around the playground. This early bird activity was carried out under the imperative of ‘painting the area with Coca-Cola’s colors’. The volunteers were also provided with t-shirts, towels, and hats carrying the AHL slogan: ‘Coca-Cola Active – there is sense in active living’.
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Perhaps this display of corporate force was more common in small towns and at places where local government was in dire need of support. In a larger city where Coca-Cola wanted to renovate a playground, it failed to conclude negotiations with the municipality after being told that it would not be allowed to put up a permanent plaque indicating the company’s contribution.
A company’s mobile canteen also arrived at the site, equipped with refrigerators and freezers. Coke drinks and a range of snacks and refreshments were freely available to the volunteers throughout the hot day. At lunch-time, Coca-Cola’s employees were grouped together in a shaded area of the playground. The municipality’s workers sat on the curb of a nearby pavement. It was only after a senior official of the municipality pointed out that his people also worked on the site that they were invited to share lunch.
In more than one way, the community ‘disappeared’ in the course of the employee volunteering workdays. A few children of the neighborhood – on summer vacation and temporarily prevented from playing in the playground – also offered to help. They would have also liked to enjoy some refreshments. Having planned the renovation process as a matter of employee volunteering, the Coca-Cola people on site were unsure how to handle this unexpected encounter. A day later, upon the invitation of the Gardening Department of the municipality, the children were allowed to partake in some painting tasks.
During these two days the playground was off limits for play and leisure. However the Community Relations Coordinator asked the children who watched the works to distribute Coca-Cola fliers invit- ing ‘the community’ to a ceremony at the end of the second day. Having been transformed into a company-occupied space, the invitation aptly ran under the slogan of ‘Handing the Playground Back to the Community’.
By the end of the second day, a town official took the podium, thanked the company, and congratu- lated the volunteering employees for their hard work. The CEO of Coca-Cola Israel, accompanied by other company executives, had also been on site. The local media were present. Also present were family members of two brothers who were killed while in the army and in whose name the playground had been commemorated. They also expressed gratitude. The unexpected attention on the family some- what altered the original intention, as the community was symbolically reduced to a single family.7 The ceremony ended with the unfolding of a plaque bearing Coca-Cola’s brand colors, the AHL logo, and an inscription indicating that the garden was ‘renovated with love by Coca-Cola employees’.
The town official in charge of the project voiced his opinion that it would have been appropriate to mention the municipality’s workers as well. Executives of Coca-Cola who stood nearby did not respond. On several counts, the ‘community’ was neither seen nor heard. Yet the community eventu- ally reappeared, and when it did, it appeared in the form of Coca-Cola’s consumers. After the formal ceremony, a garden party offered the local residents unlimited access to pre-installed fountain dispensers which provided a variety of the company’s drinks free of charge.
Yet the community reappeared as a body of consumers in still a stronger sense. Threatened by the prospect of a consumer boycott, one particular Active Playgrounds project assumed a distinctly different character than the others. The context was the concerns of Coca-Cola about widespread allegations that it discriminated against (minority) Arab retailers who served Arab localities by selling them products for prices higher than charged in the (majority) Jewish sector. Threats of boycott had been made and even already implemented in several localities. The allegations were vigorously denied by the company. One executive suggested that the boycott against Coca-Cola in Israel merely exploited the vulnerability of the company’s highly visible global brand and served as a means for highlighting discrimination against Arabs in general (on site interview with an executive from the sales department).
When an Arab employee of Coca-Cola approached senior management with the idea of renovat- ing a playground in his hometown, the response had thus been enthusiastic. A sales executive expressed the opinion that the project was ‘perfectly timed’ because it would have ‘a direct effect on our sales to the Arab sector’ (conversation with an executive). Budgetary constraints were removed, with Coca-Cola committing to a budget roughly five times larger than those designated
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for other places. Unlike other renovation projects, this one involved the construction of a whole new playground. The Coca-Cola employee who initiated the project also mobilized his neighbors. Local residents contributed money and volunteered for several weeks of infrastructural work in anticipation of Coca-Cola’s two employee volunteering days (observation; interview with the employee who initiated the project).
This had been a project undertaken under the threat of consumer boycott. The importance of the community resided precisely in the fact that, at least from the point of view of Coca-Cola, it repre- sented the consumer power of an ethnic minority with grudges against the company. It was the identity of the community as a group of socially designated consumers that activated and fuelled this ‘irregular’ project of community involvement. The CEO of Coca-Cola spoke at the concluding ceremony that took place at that locality. He stressed the importance of maintaining good relations with the Arab minority and self-congratulated Coca-Cola in Israel for its fair proportion of Arab employees. Weeks later – while preparing employees at the company’s headquarters for a day of volunteering – the Community Relations Coordinator portrayed the Arab project as ‘a most genuine model of cooperation and community involvement’ (observation at an Arab town).
Discussion
The main finding of the article is that regardless of rhetoric, Coca-Cola’s community involvement in Israel is shaped by the corporation’s strategic objectives to an extent that overwhelms stakeholders’ needs (i.e. ‘the community’). The voice of the ‘community’, typically represented by local government officials with whom Coca-Cola negotiates, is hardly heard. The company also does not assess the potential impact of its projects on the client community. The company’s focus is on its input, by and large in the form of employee volunteering. Framed as a strategic element in the corporation’s overall business practices, ‘community involvement’ becomes a means for serving the firm’s commercial interests.
The first section of the article described the evolution of a particular community program and showed how corporate reputational interests overruled a consideration of community needs. This finding is consistent with critical theoretical approaches to CSR that note how the ascendance of ‘a business case for social responsibility’ marks a shift of focus away from actual community needs towards concerns with the added value of community programs to the reputation of the firm (Banerjee, 2008; Hamann and Kapelus, 2004; Shamir, 2004). In fact, the findings illustrate that the planning and execution of community programs do not only follow the dictates of a business-case approach but also construct it from bottom up. Thus, such community programs may later be picked up by scholars as ‘evidence’ of the viability and merit of the business-case approach to social responsibility.
However the findings go beyond extant critical approaches that focus on the connection between the business-case approach to CSR and capitalist reproduction. The second section of the article found that community programs relied on contemporary notions about the merit of ‘governance’, namely, the active participation of multiple actors in the provision of social goods to citizens. Indeed, many scholars theorize ‘new-governance’ as a model form of greater transparency and enhanced democratic participation in the execution of public policies (Braithwaite, 2008; Lobel, 2004). Still, the findings of this article indicate substantive asymmetries among the various participants in the project. Specifically, the findings indicate that Coca-Cola had been the decisive participant while the ‘community’, typically represented by local authorities, played a minor and secondary role. The theoretical importance of such findings is that they indicate a potential link between the discourse of governance and the transformative capacities of capitalism. To wit, frameworks of governance obscure the asymmetry of power relations between corporations and local authorities, community groups, and non-governmental organizations. Moreover, the framework of governance may in fact allow commercial actors to use their financial leverage in ways that allow them to expand their
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authority beyond the economy and to become major players in the shaping of public policies (Jessop, 1998; Lipschutz and Rowe, 2005; Shamir, 2010; Swyngedouw, 2005).
Conclusion
Community involvement programs occupy centre-stage in the portfolio of many corporations who display and report upon their socially responsible performance. Typically, such programs tend to be portrayed as an element of companies’ schemes of self-regulation and risk management. Accordingly, many companies – aided by relevant consultancies and largely guided by the ‘business- case’ approach – have developed standard indicators that measure the scope and impact of corporate community involvement performance. Among such indicators, employee volunteering in general and the number of working hours invested in community programs in particular (i.e. company input) have become particularly important. Yet only a handful of studies to date have been concerned with the logic of design and practical deployment of corporate community involvement programs and, specifically, with the ‘output’ of such programs.
Responding to critical theoretical approaches, which hold that such indicators may not adequately capture realities on the ground, this article offered an in-depth ethnographic account of a specific community program. The overall conclusion of the study is that community programs are shaped in ways that retain an unequal balance of authority between corporations and stakeholders and that they tend to reflect commercial concerns rather than substantive attention to community needs. Ultimately, community involvement programs should be perceived as an element in an overall matrix of CSR that tends to reproduce corporate power rather than attenuate it and bring it close to social and public concerns. However, more case studies and comparative analyses are needed in order to further sustain the empirical findings of this article and their theoretical implications.
Acknowledgements The author is indebted to Ronen Shamir for his insightful comments. Thanks also go to the anony- mous reviewers and editor of Critical Sociology for helping to improve this article.
Appendix
Table 1. On-site observations
Data source Type of situation Dates
Day trips to locations where community programs were deployed
Two company-sponsored refuges for battered women
21.04. 05
Small town in the north of the country 18.05.05; 26.06.05; 15–16.08.05; 11.1.06 Small town 17.07.05; 22.06.06 Arab town 19–20.09.05 Suburb near Tel Aviv–Jaffa 24.05.06
Managerial meetings
Regional Managers’ meetings 10.5.05; 9.06.05 Human Resources departmental meeting 31.05.05 Involvement team meeting 2.08.05
Events and informal gatherings
Sales division annual gathering 16.06.05 Regional launch parties of AHL strategy 3.07.05; 17.07.05 Employee trainings 24.05.05; 30.05.05; 11.08.05; 15.02.06 Human Resources events for employees’ families 26.07.05; 4.08.05
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Notes 1. The study was conducted by the Global Reporting Initiative, the University of Hong Kong, and CSR Asia.
The purpose of the Global Reporting Initiative (GRI) is to create a level playing field for corporate reporting on social performance.
2. Coca-Cola Israel, legally registered as The Central Bottling Company, received the exclusive franchise in 1968 (Pendergrast, 1993: 291–2). Unlike other Coke bottlers around the world, the Israeli bottler is autono- mous in respect of the production and distribution of Coca-Cola products in Israel. Nevertheless, the world headquarters of the Coca-Cola Company retains primary responsibility for consumer marketing, brand promotion, and quality control in the Israeli plant.
3. Considerations included a suggestion to prompt the firm’s regional units to develop partnerships with elemen- tary schools around themes of active lifestyles. However, executives from the Sales Division objected on the grounds that delivery-truck drivers and forklift operators could not be expected to give lectures to school children and thus suggested the Active Playground project instead (conversation with a team member from the sales department).
4. The program did not require employees to volunteer unpaid working hours but only to volunteer for ‘community involvement’ work instead of performing their ordinary jobs. In addition, Coca-Cola estimated that it would also allocate a modest monetary sum to the playgrounds (roughly $8000 to each).
5. The Community Relations Coordinator employed an NGO specializing in developing community projects to assist in tailoring the employee volunteering program and at a later stage in creating partnerships with local governments.
6. The Coca-Cola people also reasoned that the global policy of Coca-Cola was to avoid marketing practices of targeting toddlers (observation at a small town in the north of the country).
7. On the intimate connection between corporate social responsibility and national causes and issues, see Barkay, 2008.
Table 2. On-site informal talks
Type of respondents Location Dates
Production employees Employee trainings 24.05.05; 30.05.05 Sales representatives Sales division annual gatherings 16.06.05 Volunteering employees & residents Volunteering days 15–16.08.05; 19–20.09.05
Table 3. Interviews
Type of interviewee Location/situation Dates
CEO Headquarter offices 30.05.05; 3.07.05; 31.07.05; 11.09.05 Marketing and Sales executives
Company offices 10.05.04; 12.04.05; 17.07.05; 10.05.06
Human Resources VP, directors & managers
Company offices 22.11.04; 5.05.05; 4.07.05; 26.07.05; 29.06.05; 28.07.05
CTO Company offices 5.05.05 Distribution drivers Joining a full working day 7.08.05 Union leaders Company’s plant 9.08.05 Service technician Employee’s home-town 9.01.06 Community Relations Coordinator (CRC)
During field missions 21.04.05; 10.05.05; 18.05.05; 26.06.05; 17.07.05; 20.09.05
Company Offices 10.11.04; 5.05.05; 20.04.05; 21.04.05; 4.05.05; 17.05.05; 23.06.05; 27.07.05; 6.09.05; 29.11.05; 14.02.06
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__MACOSX/Organisation theory/._Barkay (2011) When Business and Community Meet A Case Study of Coca Cola.pdf
Organisation theory/Ciafone (2012) If Thanda Matlab Coca Cola then Cold Drink Means Toilet Cleaner.pdf
If “Thanda Matlab Coca-Cola” Then “Cold Drink Means Toilet Cleaner”: Environmentalism of the
Dispossessed in Liberalizing India
Amanda Ciafone Macalester College
Abstract
With the sudden, almost ubiquitous reentry of The Coca-Cola Company to India during economic liberalization, the branded commodity became a sign of both aspirational global consumer-citizenship for India’s urban middle class and of corporate enclosure for those dispossessed of material and symbolic resources to fuel this consumption. Village communities around several of Coca-Cola’s rural plants, including in Mehdiganj, Uttar Pradesh, organized against the company’s operations, which they accused of exploiting and polluting common groundwater in the production of bottled drinks as an increasing expanse of the country fell into a crisis of water scarcity. This “environmentalism of the poor” has articulated a powerful critique of corporate globalization and privatization, illuminating the exploitation of the resources of the rural poor for the consumption of those on the other side of an increasingly widening economic divide.
For sixteen years, from 1977 to 1993, The Coca-Cola Company had forsaken business in India rather than concede to the postcolonial socialist state’s regu- lations on multinational corporations. But executives of The Coca-Cola Company continued to avidly eye India as “one of the world’s largest potential soft drink markets.”1 Its future, the company had long believed, lay in reaching developing markets and their growing populations of consumers. And in India the per capita consumption of carbonated drinks was a tiny fraction of that in the United States, with the possibility for the growth in profit demanded by the com- pany’s shareholders just as it had begun to slow in its developed western markets.2 In 1993, The Coca-Cola Company got its chance, dramatically reenter- ing India as the nation underwent economic liberalization. The history of Coca-Cola in India––its exile under state socialism in the 1970s, its high profile return in the free market 1990s, and its challenge from a peasant environ- mental movement in the 2000s––makes it helpful for thinking through the trans- formations and conflicts of the last quarter century. For those living it, The Coca-Cola Company’s reentry made it a highly visible manifestation of Indian neoliberalism and thus the target of popular frustration with its failings.
With the sudden, almost ubiquitous presence of Coca-Cola in India at the moment of liberalization, it became both a sign of aspirational global consumer- citizenship for India’s urban middle class and of corporate enclosure for those dispossessed of resources to fuel this consumption. Village communities
International Labor and Working-Class History No. 81, Spring 2012, pp. 114 – 135 # International Labor and Working-Class History, Inc., 2012 doi:10.1017/S0147547912000075
around several of Coca-Cola’s rural plants––most notably in Plachimada in the southern state of Kerala and in Mehdiganj in the northern state of Uttar Pradesh, the latter the focus here3––organized against the company’s oper- ations, which they accused of exploiting and polluting common groundwater in the production of bottled drinks as an increasing expanse of the country fell into a crisis of water scarcity. This movement has articulated a powerful cri- tique of corporate globalization and privatization, illuminating the exploitation of the resources of the rural poor for the consumption of those on the other side of an increasingly widening economic divide in the vaunted new free market- place of India. India’s rural poor have also catalyzed an impressive local, national, and transnational social movement, linking their struggles with others through Coca-Cola’s world system of capital, commodities, and culture that resulted in the creation of multinational pressure on the multinational cor- poration.4 In the 2000s, as The Coca-Cola Company was localizing its image in Indian culture and society, Indian activists organizing around Coca-Cola plants were globalizing their resistance.
Socialism’s Out, the Free Market––and Coca-Cola––Are In
While economic liberalization did not happen overnight, major changes came quickly in the 90s. In 1991 the Indian government found itself with rising exter- nal debt and declining foreign exchange reserves, threatening its ability to both pay back its debts and purchase foreign technology and materials perceived necessary for the country’s development. The newly elected Congress Party and its finance minister Manmohan Singh set out to make the Indian market- place attractive to foreign investors and corporations. In agreement with this new Indian economic program, the International Monetary Fund intervened in the crisis with loans conditional on economic reforms: fiscal austerity to curb government spending, privatization of state-owned industries, and deregu- lation of the Indian marketplace. With India’s membership in the World Trade Organization, the country overturned its abstruse regulatory “license raj”, reduced tariffs on imports, eased restrictions on multinational corporations doing business in India (including a law prohibiting multinationals from selling products under internationally-known trademarks), and encouraged foreign direct investment. In this context, global brands––Coca-Cola among the most prominent––became symbolic of India’s economic liberalization, as in articles with titles like “A Revolution Transforms India: Socialism’s Out, Free Market In,” which led with the narrative of Coca-Cola’s 1970s departure and 1990s return.5 Coca-Cola’s vice president (and future CEO), E. Neville Isdell, unambiguously celebrated the company’s reentry as “a concrete expression of our confidence in the Government of India’s measures to liberal- ize the Indian economy and welcome foreign investment.”6 And with more than a billion dollars spent on its Indian operations in its first ten years in the country, Coca-Cola was “one of the country’s top international investors.”7
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Unlike the international commodity chains from production to consump- tion of many global commodities, Coca-Cola’s products are typically sold in the same geographic areas where they are bottled by plants owned by a finan- cially related, but legally separate regional bottling corporation, shielding The Coca-Cola Company from the risks of direct ownership. Thus rather than import Cokes and the company’s other proprietary drinks into India from other locations, The Coca-Cola Company sought to establish a system of bot- tlers within the country. After several years of effort, it bought out the brands and bottling network of the largest Indian soft drink company, Parle. In the meantime, Coca-Cola launched an Indian subsidiary, Coca-Cola India Pvt., Ltd., to produce concentrate and market its line of beverages.8 But its efforts to organize a separate, consolidated bottler corporation ran into resistance from the independent bottlers who refused to merge or sell out to others.9
Coca-Cola thus decided to exert direct control over production, owning and managing about half of its Indian bottling operations itself through another sub- sidiary, Hindustan Coca-Cola Beverages Pvt., including bottling plants in Mehdiganj, Uttar Pradesh; Kala Dera, Rajasthan; and Plachimada, Kerala. The Indian government agreed to this arrangement with the stipulation that The Coca-Cola Company would divest forty-nine percent ownership of Hindustan Coca-Cola Beverages to Indian shareholders by 2002––a demand that never came to pass as just ten percent is currently Indian-owned.10 With greater control over its Indian operations, Coca-Cola set out to double its pro- duction capacity through expansion and modernization of its bottling system, which grew to twenty-five plants owned by the company and another twenty-five by franchisees.11 The company also invested heavily in broadening its “drink portfolio” in India by introducing its global brands and marketing others specific to South Asian markets, as well as a product poignantly represen- tative of the commodification of common resources: bottled water. In India, as in many global south countries where governments have not provided safe drinking water, bottled water companies are exploiting common water resources to cash in on the willingness of the middle and upper classes to choose the market option of paying significant sums for private drinking water rather than making demands on the state for investment in public water infrastructure. Before liberalization, the bottled water market in India had been miniscule with sales less than two million cases a year. But by 2005, Coca-Cola and several other bottled water manufacturers, led in sales by the Indian company Bisleri, were doing a business of eighty-two million cases per year.12
Thanda (Cold Drink) Comes To Mean Coca-Cola
While the material production of Coca-Cola in India became more international with the US-based corporation’s control of the bottling business, Coca-Cola advertising conversely attempted to adapt the representational production of the brand to local culture, or “glocalize” it, as advertising executives claimed.
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This was a departure from Coca-Cola’s recent global advertising campaigns with their standardized appeals to assumed universals declaring it was “Always Coca-Cola” everywhere in the world.13 The slick “Life Ho To Aisi” advertising campaign, meaning “Life As It Should Be” in evocative Hinglish, placed Coca-Cola in India’s global cities and the lives of its aspiring consumer world citizens. The commercials featured the likes of Bollywood star Aishwarya Rai singing out from her penthouse apartment to the sleek cityscape all around her, hailing the urban middle class with a celebration of both Coca-Cola and their opportunity to freely consume their way into the global “good life” in the new marketplace of international brands within India.14
But to grow profits more dramatically, The Coca-Cola Company sought to connect more deeply with “Indianness” and a broader swath of the Indian popu- lation by “speak[ing] the . . . language” of the “rural masses as well as the lower socio economic classes”15 who comprised the majority of the nation, but with little disposable income were infrequent consumers of the company’s products. Because, in India, “refreshment was real, earthy and unaffected by global trends,” in marketing-speak, and Coca-Cola wanted to be seen as a central part of it.16 In a massive advertising campaign that saturated media spaces from television to facades of buildings, the company mined popular rural and working class culture to construct the localness of its product for its primarily middle and upper class consumers with the repeated tagline “Thanda Matlab Coca-Cola” or “Cold Drink Means Coca-Cola.” The ads called on the immense popularity of Bollywood star Aamir Khan as he played up “mass sen- sibilities . . . [and] local lingo,” comically portraying various stereotypical regional Indian common men and their love of Coca-Cola.17
But the “Thanda Matlab Coca-Cola” campaign went even further, making the commonplace of Indian daily life and culture proprietarily Coca-Cola’s. The advertising aimed to impress upon the audience that the popular Hindi word “thanda”––and its rural colloquial usage meaning “cold drink” for all kinds of beverages like water, soda, lassi, or nimbu pani––was “generic for Coca-Cola”; when someone asks for “thanda” they really “mean Coca-Cola,” as the tagline says.18
Toward this goal, the television commercials progressively asserted thanda’s resignification as Coca-Cola. In the first ad, Aamir Khan’s Mumbai street-tough character asserts the association of Coca-Cola with thanda by explaining that when he orders a thanda he really means a Coke. In the
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second, Khan’s Hyderabadi shopkeeper instructs customers to ask for thanda to get Coca-Cola. And by the third, when three attractive urban girls on a road trip through the countryside thirstily stop to ask Khan’s Punjabi farmer for a thanda expecting water, he pulls the bucket up from his well to magically reveal glisten- ing, cold Cokes.19,20 This last commercial unconsciously articulated the hierar- chy of rural/extraction and urban/consumption characteristic of the Coca-Cola commodity chain in neoliberal India. In proclaiming that “Thanda Means Coca-Cola,” The Coca-Cola Company enclosed a whole symbolic commons of communication and drinking culture for its own––what once had meant water now “means” Coke––privatizing this collectively understood term for the Coca-Cola brand; it “made the almost universal rural word (thanda) . . . a hot catchphrase.”21 But as these commercials went to air, Indian villagers were actively organizing against these symbolic and material enclosures of the system of rural/extraction and urban/consumption of the Coca-Cola commodity, protesting the dispossession of their communities’ water by neighboring Coca-Cola plants.
Essential Ingredient: Corporate Expropriation of the Water Commons
To access reserves of water as well as cheap labor, The Coca-Cola Company located much of its production in rural communities outside of larger metropo- litan areas, as is the case of Mehdiganj outside of the city of Varanasi. This was in line with the Indian government’s shift from state- to market-led forces to fuel the economic development of rural India, as it disavowed previous rural econ- omic and social welfare policies and overlooked the lack of environmental regu- lations. In this context, state and local governments compete to attract corporations like Coca-Cola by creating industrial areas, Special Economic Zones, and financial incentives like tax exemptions to encourage industries to invest in “underdeveloped” or “backward” areas.22 Here the majority of resi- dents are poor farmers or landless agricultural workers who are under extreme economic and environmental stress, part of what has been called an agrarian crisis in India.23 The roots of this crisis are deep: Beginning in the 1960s the agricultural development of the “Green Revolution” fed India’s large population and reduced its vulnerability to famine but also over-exploited water and land with intensive irrigation and agrochemical application. Liberalization has since compounded this environmental toll on rural India, exacerbating disparities in economic and cultural power with the shift from statist development’s focus on poverty alleviation in rural India, to a market- directed consumerist paradigm catering to the growth of the middle and upper classes.24 Its unrestrained and uneven industrial growth with weak environmental and social protections has wrought “environmental degradation and social dislocation” that have disproportionately affected marginalized groups: Dalits and “backward classes” (lower caste peoples); Adivasis (indigen- ous peoples), the landless, rural, and urban poor.25 Higher costs for electricity (to run water pumps), seeds, fertilizers, and pesticides needed to cultivate
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environmentally degrading land, and the deregulation of the banking sector and subsequent credit crunch for farmers seeking loans to pay for these inputs, has led to extreme indebtedness.26 Environmentalists predict severe droughts and floods as monsoons become more erratic with climate change. Changes to the environment, especially those that affect water––a season without monsoon, a corporate neighbor draining groundwater reserves, degrading water quality, or a flood of industrial effluents on farmland––can put a farmer into crisis.
In Uttar Pradesh ninety percent of landholding farmers are considered “small and marginal,” having on average only a little more than an acre, while over forty percent, or 6.92 million households, in the state are in debt.27 At the same time, the second source of livelihood in the villages, the sari weaving industry for which the renowned Benarsi (Varanasi) silk saris are named, has declined as economic liberalization fills the textile market with cheaper, mass-produced, modern clothing. In Mehdiganj, farmers have cultivated more water intensive rice paddy in their search for economically viable crops. With infrequent electricity to the area, farmers run their water pumps, or rent time on neighbors’ pumps, to flood their lands with as much water as possible while the power lasts. As the primary use of land in areas like Mehdiganj, agri- culture is still the largest use of water, and Coca-Cola executives have argued that the farmers are sucking their own wells dry. But industrialization and urban- ization, in every place they occur, bring with them increased water use and the introduction of a heavy industrial water user like Coca-Cola throws off an already insecure system in agricultural areas.28 And while many areas of the state of Uttar Pradesh have experienced water shortages due to lack of monsoon––forcing farmers to rely more on the existing groundwater reserves that go without recharging rains––residents of Mehdiganj claim their problems began earlier with water levels dropping precipitously with the arrival of the plant. The community organization Lok Samiti reports that the number of wells that have dried since 2000 has increased fivefold compared to the decade before Coca-Cola’s arrival and nearly half of the wells they surveyed in the villages around the plant are dry.29
The Coca-Cola Company uses roughly three liters of water to produce each liter of soft drink or bottled water it sells. From 100-meter-deep borewells, each plant extracts hundreds of thousands of liters of groundwater a day to be pro- cessed, packaged, and sold as bottled water and soft drinks. During the heavy summer production months, which are also when farmers’ lands and wells become parched, a day’s extraction can be far higher.30 Villagers and activists say these practices of The Coca-Cola Company constitute “water mining.” Coca-Cola bottlers draw groundwater with little regulation, and at virtually no cost. An archaic Indian law gives landowners private property rights not only to their land but whatever groundwater lies underneath.31 Few states have enacted and implemented water resource legislation, even though national and state water policy statements acknowledge ever-increasing water scarcity and disparity in water resources and specify that drinking water and irrigation are higher priorities than hydropower or industrial uses in the planning of
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water resource management.32 Thus, The Coca-Cola Company was not required to provide assessments of the potential environmental impact on water resources of their proposed plants, and the company’s proprietary internal studies were focused solely “on ensuring a sustained supply of water for business operations.”33 The company needed only to receive permissions from the pan- chayat (elected village council), who were often eager to see Coca-Cola’s version of development, associated jobs, and additional tax revenues from a local plant. Rarely do agreements exist between Coca-Cola and a local pan- chayat with respect to limitations on their use of groundwater.34 While a cess is collected on water consumed by industry, the charges are so miniscule that heavy water users like Coca-Cola can draw groundwater virtually for free–– for example, the Mehdiganj plant pays around $700 for an entire year’s water consumption.35
The aquifers that lie under the Coca-Cola plants as well as neighboring vil- lagers’ lands are a natural resource commons, essential to both the biology of life and to biopolitical production, collectively owned and shared as it spans and dis- regards property demarcations. Exploitation or pollution of this shared resource disproportionately affects the rural poor who rely on it for their lives––for drink- ing, cooking, bathing––and their livelihoods––for irrigating their crops. But this water is increasingly out of their reach as groundwater levels drop. To irrigate their fields, poor farmers rent time on the electric pumps in the deeper wells of the larger landowners, exacerbating class divisions.36 Landless agricultural workers are the first to lose work from failed crops. Near the Coca-Cola plant in Mehdiganj, the Dalit Musahar community’s access to water is limited to a single hand-pump.37 Women in Mehdiganj frequently discussed the dispropor- tionate effect water scarcity had on their domestic work in water retrieval and cooking, drinking, and washing. They spent more time traveling longer distances to fetch water, standing in long lines at wells and pumps, which wore down their patience and resulted in “short fuses and quarrels,” before they had to arduously carry the water back to their homes. It was even worse when there was not enough water to wash and bathe. Some women spoke frankly about how “not having access to adequate water was a source of humiliation” that required them to ask neighbors with private borewells for water. They were often refused and forced “to swallow their pride and keep going back, and plead for water.”38
“Coca-Cola, Quit India”: Community Organizing against the Global Corporation
Within a decade of The Coca-Cola Company’s reentry to India, and in some areas within a few years of the establishment of new plants, a half-dozen com- munities accused the company of depleting groundwater through excessive water extraction and polluting reserves and neighboring lands in its disposal of industrial byproduct “sludge” material and effluent water.39 The first of these protest movements to gain public attention both in India and
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internationally emerged in the spring of 2002 when villagers in Plachimada, Kerala, began a permanent sit-in in front of the Coca-Cola plant that abuts their homes. Since it started production in 2000, the plant’s surrounding commu- nity grew increasingly frustrated watching truck after truck take bottled drinks to be sold across the state, while their fields failed to yield, the water tables dropped in their wells, and the remaining water tasted salty, bitter, and hard. Farmers were forced to shift from their previous water-intensive crops like paddy and coconut, resulting in vulnerability for landless agricultural laborers working the fields. The Plachimada protesters marched and held dharnas (sit-in hunger strikes) demanding the closure of the plant. They built a hut across the street from the plant to shield them from sun and rain, so they could continue their protest every day as they have done now for nearly a decade. The Plachimada protests arose from landless and poor peasants, mostly Adivasis from the Eravalar and Malasar communities, who lived in the settlement directly adjacent to the plant’s grounds. Their movement against The Coca-Cola Company had its roots in the decades-long struggles of Adivasis in Kerala for land and self-governance rights. By the spring of 2003, after garnering significant media attention, the villagers swayed the local politi- cal leadership to their cause, and the panchayat refused to renew Coca-Cola’s license and a year later the plant eventually shut down production. The Coca-Cola Company legally challenged the panchayat’s authority to limit the rights of private companies to extract local groundwater, and the case has made its way to the Indian Supreme Court. This first campaign inspired other villages in distant states like Uttar Pradesh to organize against their Coca-Cola plants to create multiple points of pressure against the company and demand a say in the nature of the development in their communities.
While Mehdiganj residents remember a sense of hope about the jobs and development that would come with the arrival of the bottling industry, the relationship between the plant and many segments of the community quickly soured. Almost immediately from its construction in 1996 while still a prospec- tive Parle bottler, the plant encountered resistance from those living closest to its walls, slowing the start of production.40 Residents alleged that the plant illeg- ally occupied common land owned by the village, including a local road used by the Kumhar (potter caste) community who live just behind the plant, and the village panchayat sued. The Parle bottler purportedly settled the dispute with political and economic pressure on the village panchayat,41 who accepted other land in trade.
Agitation emerged from inside the plant as well, as workers pressed for better wages, benefits, and job security, challenging the system of temporary work and labor contracting, and attempting to organize a union. Several months into the plant’s operation a group of workers began to organize to demand minimum-wage pay and benefits, inspired by the union at the nearby biscuit factory and armed with the labor code from meetings with the labor office in Varanasi. They won small wage increases from the plant. But they were still dissatisfied with their temporary status and seasonal work, with the
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company avoiding direct labor costs by outsourcing employment to a labor con- tractor. The plant employs only around 40 permanent workers, while around 200 are short-term, working full-time during the summer months of high soft drink sales and without jobs during the winter, no more than 120 days a year, making them ineligible for the rights and benefits of permanent employees.42 When workers began to formally organize a union, their registration was denied by the state, and Coca-Cola began firing those making demands. In response, in 2002 a multi-caste group of workers went on strike, effectively shutting down the plant for a week, going back into work when winning a demand from man- agement, then going back out on strike a few months later when demands were not met and leaders laid off. The plant discharged nearly 100 workers and, according to interviews, used a new contractor to hire replacement workers overwhelmingly from a single caste, Patel, causing friction in the community and physical altercations between the laid-off workers and the new hires. Coca-Cola responded by hiring new security guards, and the protests became violent. Charges of assault and violating the peace against four of the union leaders are still in the Varanasi courts. Still without a union and subject to the precariousness of short-term work, workers continued to be paid only some 66 rupees a day (about $1.65)43 for 120 days of work. Many of these wages leave Mehdiganj, according to residents who complain that the labor contractor replaced much of the original local workforce with people from outside the area.44
Grassroots efforts around the Mehdiganj plant’s environmental impact began around the same time, when farmers and neighboring residents challenged the plant’s routine disposal of manufacturing effluent wastewater into a nearby canal. The plant’s drainage pipe was disrupted by the construction of the Grand Trunk Road superhighway, a massive modernization project with funding from the World Bank to connect India’s four largest cities in a “Golden Quadrilateral” that––conveniently for Coca-Cola trucks––runs alongside the plant. Backed up by the construction, the plant’s drain flooded acres of surround- ing farmland with wastewater. Many of the farmers’ crops were destroyed and other residents complained of skin irritation from contaminated water. In response, they created the Gaon Bachao Sangharsh Samiti (Save the Village Struggle Committee). The group organized a dharna with over 50 people sitting in a hunger strike for eight days on the affected land, demanding compensation from the government for the damaged crops and closure of the plant.45 Leading Gaon Bachao Sangharsh Samiti were farmers with small to medium-sized land- holdings (at most a few acres) closest to the plant. Members of the Kumhar com- munity (landless, potter caste) joined in the protest, claiming that the effluent water that had reached their village was the cause of an outbreak of skin problems. As the plant continued operation, a broader swath of the village community began to complain that the water in their wells had taken on a reddish-yellow hue and tasted badly and, even more distressing, that the water level was visibly dropping.
These more vulnerable members of the villages mobilized against the company on a larger scale through a local community organization, Lok
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Samiti, or People’s Committee, which counts a few thousand active participants in the villages outside Varanasi and has taken on a variety of social and econ- omic justice issues. The committee was founded in 1999 by a young community member, Nandlal Prasad,46 who now works with a group of six full-time organi- zers to coordinate the group’s social work and grassroots organizing from an ashram in Mehdiganj. In 1994 Prasad had returned to his family home near Mehdiganj when he was forced to leave school at the age of 16 for financial reasons, joining the ranks of the sari weavers in the local handloom industry. Older and with more formal schooling, Prasad started to teach literacy classes in the evenings to his fellow child weavers. With strong community demand, he expanded the educational programs with the organization that would become known as Lok Samiti growing to run two primary schools and several education centers for workers in the agricultural and weaving industries, in which the group’s teachers and organizers have themselves studied and worked. Prasad developed strategies for community organizing by assisting Neeti Bhai, a Varanasi-based Catholic priest fighting for a “democratic secular society” and “social as well as structural change in favor of the poor and marginalized” of Varanasi through his community empowerment organiz- ation Lok Chetna Samiti.47 Soon Lok Samiti took on a range of social projects from Dalit and women’s empowerment groups, dowry-free marriage celebra- tions, community financial self-help societies, and inter-caste cultural programs addressing social issues like labor exploitation, political corruption, and gender-, caste-, and religion-based discrimination. The organization makes regular demands for transparency in local governance, for example, using the Right to Information Act to investigate political corruption and monitoring the rolls of the National Rural Employment Guarantee Act (NREGA) to guard against gender or caste favoritism.
Through this education and experience, Prasad and other organizers were deeply influenced by the thinking of Mohandas Gandhi, Gandhian Socialist Jayaprakash Narayan, and contemporary global-south environmentalisms. Gandhi’s concept of gram swaraj, or village self-rule, inspired the group’s com- mitment to promote self-governance, direct democracy, and bottom-up develop- ment in the village communities. In the 1970s Narayan would draw on this idea in calling for a “total revolution” of political, economic, and social orders through nonviolent class struggle, participatory democracy, and constructive work by villages through popular movements and committees of its people. Motivated by this ideal of a people’s committee by and for the village, Prasad decided not to register Lok Samiti as an NGO with the government, he explains, so that its power would not be granted by the state, but instead be derived from the people to hold the state to account. While Prasad and many of the activists of Lok Samiti take inspiration from Gandhi’s teachings, they also modify them for the current world of transnational economies and solidarities: While still empha- sizing the importance of thinking about the welfare of local communities in an increasingly global economy, the organizers expressed the ideal of swadeshi, not as economic self-reliance through the privileging of national products, but as “a
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call to the consumer to be aware of the violence he is causing by supporting those industries that result in poverty, harm to workers and to humans and other creatures,”48 and thus the valuing of less-exploitative production every- where. Villagers are also quick to add, in response to The Coca-Cola Company’s criticism that they are motivated solely by “anti-globalization” sen- timents to target a multinational: “We would protest against any company who is misusing the water,” Indian or foreign.49 Lok Samiti activists frequently quote Gandhi––“The earth provides enough to satisfy every man’s need, but not any man’s greed”––to communicate a materialist environmentalism focused on social justice. The movement in Mehdiganj, in its organizers’ own words, rejects the way “water is seen as an asset and a commodity by the Indian gov- ernment, the international institutions . . . and the multinational corporations.” Instead, residents assert that water is “an inalienable right which cannot be sold for profit” and requires the community’s say in its “participatory development.”50
National and Transnational Networks of Organizing Around the Global Commodity
The organizers of Lok Samiti developed this politics on the ground in Mehdiganj as well as through contact with similar struggles in India. Through their work in education and community organizing, its leaders became involved with the National Alliance of People’s Movements (NAPM), an alliance of disparate grassroots struggles that retain their autonomous organization and their diverse Marxist, Gandhian, and Ambedkarian51 politics while dedicated to cooperating toward an alternative and democratic “people based development” for India. This movement of movements of tribal, women’s, Dalit, minority, workers, and peasant struggles arose in the immediate wake of India’s economic reforms to make clear the connections between seemingly unrelated local struggles in experiences of national and international systems of privatization and liberalization:
villagers in different parts of India . . . trying to save their common natural resources like forests and pastures from privatization and exploitation for short- term profits . . . adivasis and other rural people . . . struggling to save their lands from submergence by dams or from being ravaged by large industrial projects . . . marginal farmers and landless labourers . . . fighting for land-rights and fair wages . . . traditional artisans whose livelihood has been undermined by the mechanized mass production of the modern economy . . . [those] toiling in the expanding metropolitan cities and living in sub-human conditions.52
NAPM’s central organizing principle, “the development of a people’s democ- racy based on people’s control over resources,” calls for participatory democ- racy and the decentralization of political and economic power to transform the nature of politics itself.53 NAPM also critiqued the intensifying ethnic and
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religious communalism in Indian politics.54 From its founding, NAPM expressed concern about the arrival of soft drink multinationals and their privatization of water. NAPM called for “A sustained and intense campaign against MNCs with the slogan ‘Not Pepsi/Coke––we want water.’ A vigorous campaign for Swadeshi [taking] actions like smearing the posters/hoardings [billboards] of Pepsi/ Coke.”55 When Plachimada residents began to protest against the company several years later, NAPM provided support––organizing marches, drawing media attention, and linking the local struggle with similar fights in other parts of India.
Through their involvement with NAPM, members of Lok Samiti connected their own problems of water scarcity and quality to the similar situation in Plachimada and developed a broader political analysis as well as critical language for challenging corporate water expropriation. Over the course of 2003, Mehdiganj residents, members of Lok Samiti and Gaon Bachao Sangharsh Samiti, and supporters from the NAPM and the Gandhian Socialist Samajwadi Jan Parishad (Socialist People’s Council) organized a sit-in, a hunger strike, and a non-violent march that ended with baton wielding police arresting seventy-six protestors and wounding several. They dumped sacks full of Coca-Cola’s byproduct sludge on pollution control regulators’ desks demanding that the plant’s license be revoked and that those affected by the pollution be compensated. In the same year NAPM launched a national march “against globalization and communalism” beginning from the Coca-Cola plant in Plachimada. Lok Samiti sent representatives to Plachimada and orga- nized a protest outside their own plant, linking the two locales in distant parts of the country through their common opposition to Coca-Cola. In the following years Lok Samiti focused more of its work on advocacy for water rights: they compiled data on the number of dried wells in the area, held conferences on water privatization, dug a community pond in Mehdiganj for public water use, organized “water stops” to provide free water and information about the struggle in sites like the Varanasi train station where people might otherwise buy Coca-Cola products, and called on the government to provide safe drinking water to the public. The closure of the Plachimada plant in 2004 buoyed the organizing in Mehdiganj and an increasing number of other communities with Coca-Cola plants. Mehdiganj activists began working with residents angered by the water use of the Coca-Cola plants in their communities of Ballia, Uttar Pradesh, and Kala Dera, Rajasthan––the latter, where the water is so over- exploited that the company has been advised to truck water in from outside sources for its own bottling or close the plant entirely56––and began to enact a network of places, concerns, and communities connected through the capital and commodities of The Coca-Cola Company.
These connections through Coca-Cola capital and commodities were sim- ultaneously local, national, and multinational, like the corporation itself, and activists began to mobilize them to increase the points of pressure on The Coca-Cola Company. When the persistent protests of grassroots committees of residents were met with inaction by the economic and political powers in
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their states as well as the distant nodes of power of the multinational corpor- ation in Gurgaon, India (the corporate edge city outside Delhi), and Atlanta, Georgia, USA, the movement reached out to national and international allies and NGOs. Through participation in NAPM and the new international venues for social movement exchange like the World Social Forum, activists from Plachimada and Mehdiganj have enlisted support from activists and NGOs engaged in related struggles: labor and human rights organizations fighting for Coca-Cola workers’ rights in Colombia (Colombian labor union Sinaltrainal and US-organizing group Campaign to Stop Killer Coke), North American environmental NGOs focusing on corporate water privatization (Corporate Accountability International and the Polaris Institute), international social justice groups amongst the South Asian diaspora (ASHA for Education), and United States-based alterglobalization activists concerned with corporate capitalism’s effect on the environment in India (the India Resource Center). Two hundred Mehdiganj residents traveled with Lok Samiti to Mumbai in 2004 to participate in the World Social Forum, where many villagers credited their experience of meeting other activists and marching in the streets with animating them to take direct action against the plant back home.
Drawing on the multinational system of the corporation itself, the U.S.- based India Resource Center sought to create new points of pressure closer to the centers of power of the corporation otherwise out of the reach of activists in India. The founder of the web-based non-profit and its lone full-time employee, Amit Srivastava, had organized around environmental justice causes in the United States and was researching and publicizing corporations’ environmental practices in international contexts for an NGO when he learned about the struggle in Plachimada in 2002.57 Srivastava soon focused almost solely on the villagers’ struggles, determined to garner them global atten- tion as the movements grew. His India Resource Center constructed itself as the transnational “platform” for the communication and representation of the Indian movements’ demands to international media and allies. It aimed “to mobilize a key constituency in the United States and around the world [to] take action in support of movements in India––by applying pressure in the home countries of the corporations where they are more susceptible to public pressure.”58 This included a strategy of venue shifting, or “the presentation of image and the search for a more receptive political venue” for a distant move- ment or issue.59 The India Resource Center epitomizes transnational advocacy networks, as described by Margaret E. Keck and Kathryn Sikkink, employing the tactics of: “information politics,” the quick and credible generation of infor- mation and testimony and the transferring of it to places where it will have a pol- itical impact; the mobilization of symbols, actions, or stories that provide a sense of a situation to audiences near and far as “symbolic politics”; “leverage poli- tics,” calling powerful actors to take action to affect a situation where distant or weaker members of a network are unable to have influence; and the “accountability politics” of holding powerful actors to their stated policies or principles.60 Maintaining frequent contact with the local groups and often in
126 ILWCH, 81, Spring 2012
India himself, Srivastava represented the Indian movements on the organiz- ation’s website, in major news sources, and in speaking tours to North American and European activist groups and colleges and universities.
Mobilized by the transnational advocacy against Coke, North American and European college and university students protested the corporation’s prac- tices in India and Colombia and challenged both the general sale of Coca-Cola products and Coca-Cola bottlers’ significant financial contracts for provision of beverages on their campuses––high profile business for the company. As of 2007, students at some 200 colleges and universities in the United States, Canada, Ireland, the UK, Italy, and India had protested against Coke, with 45 schools ending exclusivity contracts with Coca-Cola on their campuses.61
Arguably this international attention forced the company to begin to address public criticisms of its environmental practices through highly publi- cized corporate social responsibility initiatives. These initiatives include several water specific projects: reducing and recycling water used in the pro- duction process, installing rainwater recharging units in various area locations, and dispensing hand pumps so that residents can reach the dropping water table and drip irrigation systems to make farmers’ own water practices more effi- cient. The company has even pledged to become “water neutral” in India–– returning to nature as much water as it uses. While this corporate philanthropy has won over some members of the community, environmentalists and Mehdiganj activists are skeptical about the sustainability of the pledge. The environmental goal of water neutrality itself is suspect; unlike carbon neutrality, the science behind it is unproven at best (and exists through sponsorship and promotion by the likes of The Coca-Cola Company62) and may not improve the conditions of residents near the plant––putting water in one watershed does nothing to help water scarcity in another. Even if these initiatives help ease problems of water scarcity, they do not solve systemic environmental destruction. Thus, as Lok Samiti works to promote participatory democracy and self-governance in the villages, it also struggles to ensure that winning con- cessions from the company does not result in community dependence on the corporation to provide private solutions to public problems.
Ongoing challenges exist for the organizing in Mehdiganj. Class and caste differences have been difficult to bridge, and many local elites have sided with the company. Many plant workers, especially those from outside the local vil- lages, have not supported the organizing, which they view as a threat to their jobs. Some workers from the local villages express conflicted positions, needing employment at the plant but questioning the cost on their friends and families. Local workers frequently commented that they do not want their work at the plant to hurt their communities. In fact, many workers claim to not care whether the Coca-Cola plant closes: It only employs them for a part of the year, they say, so they have to rely on weaving or agricultural work regardless. They would prefer development that considers the villages’ needs, with a local industry that is less water intensive. Villagers who have protested several times now express frustration with their inability to close the plant,
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breeding further suspicion of corruption amongst local elected officials. Many acknowledge that water problems are becoming widespread in India with heavy irrigation and chemical application in agriculture. If education and regu- lation are necessary to change agricultural use of water to make life in rural India sustainable, they concede, so too is a reconsideration of the location of a water-intensive industry like Coca-Cola that aggravates water scarcity.
Most of the people of Mehdiganj are not buying Coca-Cola’s thanda at 10 rupees a bottle or the equivalent of a tenth of the average daily salary.63
Instead, water is extracted out from their communities and sent to the cities where growing middle class consumerism and its thirst for brands like Coca-Cola is quenched by the natural resources of a rural India already strained by agricultural crisis. But the Coca-Cola commodity also inadvertently brought the environmental crisis directly to the consumer classes. In 2003, the Indian environmental NGO Centre for Science and the Environment (CSE) released reports revealing “a deadly cocktail” of pesticide residues in bottled water and soft drinks produced by The Coca-Cola Company, Pepsi, and others.64 Tainted Cokes captured the attention of the media and the public, causing uproar throughout India’s broad political spectrum. The Hindu nationalist right attacked Coca-Cola as a contaminating foreign influence on traditional Indian culture and bodies. The middle and upper classes that had embraced the opening market experienced a consumerist crisis of confidence in the imagined quality of the com- modities produced by global corporations. The environmental and Marxist left criticized both the failures of the Indian state to address environmental degra- dation and exploitation by multinationals. The Indian Parliament prohibited the sale of soft drinks in its cafeteria, and several states launched bans and indepen- dent investigations of the products. Protestors ripped down Aamir Khan’s film posters and Coca-Cola quickly enlisted the actor for a television commercial in which he donned a white lab coat and inspected a bottling plant to personally vouch for the safety of its products. The controversy made clear that the urban middle classes would be unable to completely buy their way out of environmental scarcity and pollution.65 The pesticide scandal, although framed around consumer interests, drew wider national attention to the struggles of village communities against the company’s use of water resources.
Environmentalism of the Poor and Dispossessed
Villagers’ protests against Coca-Cola draw on a history of South Asian environ- mental politics based on social justice, or what Joan Martı́nez-Alier calls an “environmentalism of the poor,”66 in which villagers and activists have fought against the extraction and degradation of land, forest, water and air resources.67
These movements “powerfully foreground questions of production and distri- bution with human society . . . [organizing around] ‘the use of the environment and who should benefit from it,’” according to Indian environmental thinker Anil Agarwal.68
128 ILWCH, 81, Spring 2012
This environmentalism is an act of the “‘victims of development,’ the poor peasants and tribals who have thus far had to unwillingly make way for the dams, steel mills, and highways that dispossess[ed] them . . . intensified social inequalities as well as devastated the natural environment.”69 While over the last several decades these movements in India have challenged both state and private development plans (also frequently the combination of the two), the shift to the free market logic of the last twenty years has engendered protests against encroachments on the resources of village com- munities by transnational capital as well as the Indian “urban-industrial complex.”70 Thus, the effects of neoliberalism have galvanized a movement that unites an awkward and even sometimes antagonistic71 coalition of Indian Marxists and environmentalists to fight privatization, exploitation of resources, and pollution.
Mainstream media discourse may be dominated by middle-class conserva- tionism as well as a post-materialist environmentalism exemplified by the pro- motion of “green” capitalism through consumerist lifestyle and market choices. But the activism of Mehdiganj villagers is part of a wave of environmental move- ments motivated by social and economic justice in both the global south and north, taking the forms of organizing against environmental racism, for the pro- tection of environmental and occupational health, for native land rights, and against the export of environmental hazards to the developing world, to name a few. Unlike the “environmentalism of affluence” that focuses on enhancing the quality of life of the middle and upper classes, the environmentalism of the poor and dispossessed could be called an environmentalism of survival and liveli- hood and is “more radical in orientation, confronting structures of political-economic power that lie at the root of the ecological crisis.”72 These movements highlight capitalism’s imperative to expand its exploitation and its motivation to displace ecological externalities onto the least powerful members of society.73 Thus, unlike organizations that focus on specific environmental pro- blems separate from their social context, environmentalisms of the poor often identify these as the symptoms of the political-economic structure, broadening the critique to the system that produces those problems and inequality in the first place. At their best, then, these environmentalisms replace the “Not In My Backyard” orientation of middle class community organizing with “not in anyone’s backyard.”74
In the context of neoliberal globalization, then, “class-based and subaltern forms of environmental politics are becoming more relevant, not less so,” as soci- ologist Daniel Faber has argued.75 Environmental justice activism that evolves out of movements for social and economic justice, like that of Lok Samiti, may be some of the most powerful and politically sustainable modes of resisting environ- mental exploitation in the production of global commodities. “In fact, in recent years some of the most impressive environmental victories at the local level have been achieved by economic justice organizations oriented around multiple issues.”76 A deeper perspective on a community and commitment to a number of its issues also prevent a refetishizing of the global commodity as the primary
If “Thanda Matlab Coca-Cola” Then “Cold Drink Means Toilet Cleaner” 129
animator of politics, which sometimes leads activists to overlook the complex dynamics contributing to a commodity’s production as well as the local, unbranded, or non-consumer goods industries that might be as bad, if not worse, in their labor or environmental records. The environmental activism of economic justice organizations can channel the momentum from one issue cam- paign, around a global commodity for example, into other community struggles and move from a politics of critique to productive alternatives.
Reappropriating the Brand
Activists in Mehdiganj redeploy Coca-Cola’s symbolic capital––its ubiquity, iconi- city, and corporeality (as it is physically imbibed)––in various forms of cultural sub- version to reappropriate the brand for new political meanings and hail prospective consumers to the struggle. At protests, a group of female members of Lok Samiti carry earthen water jugs that signify at a number of levels. They are a form of protest of the corporate dispossession and commodification of water––each one painted with a different slogan (“Water is yours and ours”; “Coca-Cola will not work in the country of curd and milk”; “We need water, not Coke”; “Coca-Cola Quit India”). Carrying them for miles, the women make visible both the gendered domestic labor around water and the particularly trying effect its scarcity has on them. But the water vessels also enact a sustaining alternative system––throughout the protest they provide public water to thirsty participants, asserting the centrality of this common resource to individual and community survival.77
130 ILWCH, 81, Spring 2012
Lok Samiti’s cultural team creates street theatre and songs to raise aware- ness of social issues. With musicians from Kala Dera, it produced a CD, “Jahar Ba” (“There is Poison”), with several renditions of familiar folk tunes with lyrics adapted to tell of the enclosure and pollution of their communities’ water resources. The title song references the reports of pesticide-laden soft drinks as well as the relative unhealthiness of Coca-Cola in comparison to the tra- ditional Indian drink culture that it is progressively dislodging. And finally, more metaphorically, the song suggests that Coca-Cola consumption exhausts and pollutes Indian resources, reasserting the social relations and global circuits of capital that knit Mehdiganj into the Coca-Cola world system. The video accompanying the song enacts a reversal of the Coca-Cola commercial where Aamir Khan’s farmer happily provides the city girls with the thanda Coca-Cola from his well. Two village men sing the song to two modern-looking girls drinking sodas while directing the refrain to the entire community:
It is India my brothers Don’t make everything so free Then when foreigners come They will loot us.
After selling our water They give us poison She doesn’t know They are making us fools.
Discharging polluted water They have made us sick And have destroyed our wheat, paddy and entire agriculture.
They make today’s new generation sick. But she doesn’t know, Brother, she doesn’t know, That there is poison in it.78
Over the last decade Mehdiganj activists have developed a powerful envir- onmentalism of the poor in their local movement against the corporate dispos- session of water resources while globalizing their resistance through transnational advocacy networks. The company’s own globalization and localiz- ation efforts both enabled and demanded this activist reappropriative claim on the symbolic as well as the material commons being privatized by Coke. Thanda may have come to mean Coca-Cola through these efforts, but for those in the struggle for community livelihood and communal resources, as graffiti painted on the side of a Mehdiganj farmhouse neighboring the plant shouts to those who pass by, “Thanda means toilet cleaner.”79
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NOTES
I would like to thank the blind reviewer and the guest editors of this issue of International Labor and Working Class History, Mae Ngai and Molly Nolan, for their feedback and support. Thank you also to Raghvendra Upadhyay, Sridevi Shivarajan, Sujani Reddy, Miabi Chatterji, Rachel Wistuff, and the members of the Globalization and Culture Working Group at Yale University for their assistance in the research and writing of this article, and to the employees, residents, and activists who shared their knowledge, perspectives, and experiences with me.
1. “Coca-Cola Is Back in India,” The Coca-Cola Company News Release, October 24, 1993.
2. Jennifer Kaye and Paul A. Argenti, “Coca-Cola India,” Tuck School of Business at Dartmouth (2004), 2 – 3. According to Kaye and Argenti, The Coca-Cola Company’s sales growth in the United States slowed from 5 – 7% annually in the 1980s to only 0.2% through the 1990s.
3. This essay draws on fieldwork in Mehdiganj, including over 60 interviews as well as additional interviews with villagers and activists of Kala Dera, Rajasthan and Plachimada, Kerala. The history of the movement in Plachimada has been well-documented; see Ananthakrishnan Aiyer on the context of the larger agrarian crisis; CR Bijoy on the role of Adivasis in the struggle; K Ravi Raman and Sujith Koonan on legal implications of the court case against Coca-Cola; K.R. Ranjith and P.R. Sreemahadevan Pilla for popular and technical studies; business case studies from Terry Halbert and Sridevi Shivarajan (with whom I collabo- rated on several interviews in Kerala); and, of course, the activist literature including Anti-Coca-Cola Peoples Struggle Committee, Coca-Cola Quit Plachimada, Quit India: The Story of Anti-Coca-Cola Struggle at Plachimada in Kerala (Keralam, 2004).
4. This idea of a Coca-Cola world system is inspired by world systems theory and models of commodity chain analysis applied to cultural as well as material objects of study, as exemplified by Franco Moretti’s idea of a “one and unequal” world literary space; a cultural “system” influ- enced by international political and economic relations but with its own internal logic, valua- tions, power structure, and geography. Franco Moretti, “Conjectures on World Literature,” Debating World Literature, Christopher Prendergast, ed. (London, 2004) and Pascale Casanova, “Literature as a World,” New Left Review (January/February, 2005). On a less theor- etical level, The Coca-Cola Company itself refers to its global network of subsidiaries and bottlers as the “Coca-Cola system.”
5. Edward Gargan, “A Revolution Transforms India: Socialism’s Out, Free Market In,” The New York Times (March 29, 1992).
6. “Coca-Cola and Parle Join Hands in India,” The Coca-Cola Company News Release, September 21, 1993.
7. Coca-Cola India, “About Us,” http://www.cocacolaindia.com/aboutus/aboutus_ccindia. aspx [accessed 1/2009].
8. Sugeeswara Senadhira and Havis Dawson, “Raising India: Coca-Cola Company Re-enters Indian Market,” Beverage World (February 1, 1994).
9. Michael Blanding, The Coke Machine: The Dirty Truth Behind the World’s Favorite Soft Drink (New York, 2010), 235.
10. Ambarish Mukherjee, “To deny voting rights to Indian shareholders––Coke knocks at FIPB doors,” The Hindu Business Line (January 30, 2003); P. Balakrishna and B. Sidharth, “MNCs: Not above flouting rules,” The Hindu Business Line (April 9, 2003); “Indian Government Allows Coke to Buy Out Shareholders in Hindustan Coca-Cola,” The Hindu Business Line (November 25, 2005); Blanding, 236.
11. Kaye and Argenti, 4. Coca-Cola India, “About Us.” 12. For more on the bottled water industry in India, see Chandra Bushan, “Bottled Loot,”
Frontline 23 (April 8 – 21, 2006). 13. For more on changes to the advertising strategies of multinationals and efforts to loca-
lize products through advertising campaigns, see William O’Barr, Marcio Moreira, and Shelly Lazarus, “Global Advertising,” Advertising & Society Review 9 (2008) and William Mazzarella, Shoveling Smoke: Advertising and Globalization in Contemporary India (Durham, NC, 2003).
14. Boby Kurian, “Coca-Cola May Dump Life ho to aisi Campaign,” The Hindu Business Line (December 19, 2002); Kaye and Argenti, 6.
15. “Thanda Matlab Solitary EFFIE Gold: EFFIE Awards 2003,” Indiantelevision.com, August 22, 2003.
132 ILWCH, 81, Spring 2012
16. Ibid. 17. Ibid. 18. Sumita Vaid Dixit, “‘Thanda III’––Coke Scores on Naturalness,” AgencyFAQs,
September 30, 2002. 19. Aamir Khan as a Punjabi farmer in “Thanda Matlab Coca-Cola” television ad in 2003. 20. Dixit, “‘Thanda III’”; “Coca-Cola India’s Thirst for the Rural Market,” ICMR Center
for Management Research, June 18, 2009. 21. Shailesh Dobhal, “The Real Thing,” Business Today (May 23, 2004); Gouri Shukla,
“Prasoon Joshi: The ‘Thanda Matlab Coca-Cola’ Man,” Business Standard (May 5, 2003). 22. This was true of Plachimada, Kerala, and Kaladera, Rajasthan, where new plants were
built; the Mehdiganj, Uttar Pradesh, plant was a brownfield acquisition by Coca-Cola subsidiary Hindustan Coca-Cola Beverages Pvt. Ltd. of Kejriwal Beverages Pvt. Ltd., a Parle franchisee bottling plant.
23. Anthropologist Ananthakrishnan Aiyer argues that the struggles against Coca-Cola should be interpreted in the context of the larger “agrarian crisis” in “The Allure of the Transnational: Notes on Some Aspects of the Political Economy of Water in India,” Cultural Anthropology 22 (2007).
24. See Neeraj Vedwan, “Pesticides in Coca-Cola and Pepsi: Consumerism, Brand Image, and Public Interest in a Globalizing India,” Cultural Anthropology 22 (2007), 661 – 662.
25. Ibid. 26. Aiyer, “Allure of the Transnational,” 650 – 651. 27. Sunil Kumar, “Note on Farm Sector in Uttar Pradesh,” Department of Planning,
Government of Uttar Pradesh (October, 2005), 5. The average size of landholding for 90% of small and marginal farmers is about 0.55 hectares or 1.36 acres, and 89.35 million farmer households were reported to be indebted nationally.
28. The Energy and Resources Institute (TERI), Independent Third Party Assessment of Coca-Cola Facilities in India (2008), 205.
29. Chandrika R, To Protect Our Right Over Our Water, Lok Samiti, 2006, 5 – 6. 30. TERI, 206. Average daily intake for a plant is around 600,000 liters, but the plants have
withdrawn as much as 1.5 million liters a day during the summer months. 31. The Easement Act of 1882 as discussed in Ibid., 90. 32. Ibid., 220. A few states had instituted water policies of their own prior to this National
Water Policy, for example, Uttar Pradesh in 1999. 33. Ibid., 6. 34. The Mehdiganj plant pays the gram panchayat Rs 6000 ($136.36) in annual taxes and
Rs 2500 ($56.82) in license to operate fees. Ibid., 222. 35. For all the water it withdrew in Mehdiganj during 2005 – 2006, the plant paid a water
cess of just Rs. 31,573.00 or $717.57, with an average exchange rate of around Rs. 44.00/1 dollar in 2005 – 2006. Ibid., 223.
36. Interview with author, Mehdiganj, India, April 2, 2008. 37. Chandrika R, To Protect Our Right Over Our Water, Lok Samiti, 2006. 38. TERI, 216. These sentiments were echoed in several interviews by the author. 39. Struggles over water rights around Coca-Cola plants have taken root in Plachimada in
the state of Kerala, Kala Dera, in Rajasthan, Mehdiganj, in Uttar Pradesh, Ballia in Uttar Pradesh, Thane in Maharashtra, and Sivaganga in Tamil Nadu, to name the most visible.
40. The Parle franchise, Kejriwal Beverages Pvt. Limited, was bought by Hindustan Coca-Cola Beverages Limited in 1999. Several articles on the history and organizing in Mehdiganj can be found on the India Resource Center’s website, www.indiaresource.org.
41. Although the issue was “purportedly settled before the acquisition of the property by Coca-Cola . . . [it] resurfaced subsequently and, as per records, is yet to find a final settlement,” according to the independent review by TERI. TERI, 222. More detail provided through inter- views in Shira Wolf’s thesis, “Thanda-Hearted Matlab, Coca Cola in India: A Case Study in Mehandiganj Village of Environmental and Community Impact of the Grassroots Movement,” University of Wisconsin, April 15, 2004.
42. Author interviews with plant management. See also Blanding, 230. This labor organiz- ing is all the more remarkable given the informal labor arrangements and underemployment many of the workers experienced as sari weavers and agricultural workers.
43. Wage figures from 2004 as cited in Georgina Drew, “From the Groundwater Up: Asserting Water Rights in India,” Development, 51 (2008): 38.
If “Thanda Matlab Coca-Cola” Then “Cold Drink Means Toilet Cleaner” 133
44. Interview with Siaram Yadav, Mehdiganj, India, April 4, 2008. See also http://www. indiaresource.org/campaigns/coke/2004/cokemehdiganj.html
45. Interview with Ram Narayan Patel, Mehdiganj, India, April 2, 2008. 46. Nandlal Prasad is called Nandlal Master by Mehdiganj residents. 47. Interviews with Nandlal Prasad, Mehdiganj, India, March-April, 2008. For more, see
Dana van Breukelen’s thesis “Marching in the Spirit of Gandhi: A Case-Study into Gandhian Elements of the Lok Samiti Movement in Mehediganj, India,” Vrije Universiteit Amsterdam (2006).
48. M. K. Gandhi in conversation with Ramachandran, October 10/11, 1924. http://www. bombaymuseum.org/ahimsa/sec5/swadeshi.html. Interviews with Nandlal Prasad, Mehdiganj, India, March-April, 2008.
49. Interviews, Mehdiganj, Uttar Pradesh, February-May, 2008. 50. Chandrika R, Mehdiganj 15 – 16. Interviews with Nandlal Prasad, Mehdiganj, India,
March-April, 2008. 51. Bhimrao Ramji Ambedkar was an early to mid-twentieth century Dalit scholar and
political leader who challenged the social discrimination of the caste system. 52. National Alliance of People’s Movements, “National Alliance of People’s
Movements,” (1996). http://www.proxsa.org/politics/napm.html. 53. Ibid. quoted in Christine Keating, “Developmental Democracy and Its Inclusions:
Globalization and the Transformation of Participation,” Signs: Journal of Women in Culture and Society 29 (2003): 428.
54. Rajni Bakshi, “‘Development, Not Destruction’: Alternative Politics in the Making,” Economic and Political Weekly, 31, 5, February 3, 1996. Keating, 427 – 428.
55. NAPM. 56. TERI, 22. 57. Steve Stecklow, “Virtual Battle: How a Global Web of Activists Gives Coke Problems
in India,” The Wall Street Journal (June 7, 2005). 58. “About India Resource Center,” http://www.indiaresource.org/about/index.html
[accessed November 22, 2009]. 59. Derived from the legal terminology of “venue shopping” used by political scientists
Frank R. Baumgartner and Bryan D. Jones as cited in Margaret E. Keck and Kathryn Sikkink, Activists Beyond Borders: Advocacy Networks in International Politics (Ithaca, NY, 1998), 18.
60. Keck and Sikkink, 16 – 25. 61. “Colleges, Universities and High Schools Active in the Campaign to Stop Killer Coke,”
http://www.killercoke.org/active-in-campaign.htm. 62. A concept paper sponsored by The Coca-Cola Company outlines ways to legitimize
terminology and practices like “water neutrality” and “water offsets.” Winnie Gerbens-Leenes, et al., “Water Neutrality: A Concept Paper,” November 20, 2007.
63. Kaye and Argenti, 6. 64. Sunita Narain at press conference, quoted in Raju Bist, “India’s Cola Controversy
Widens,” Asia Times (August 8, 2003). 65. For more, see Vedwan, “Pesticides in Coca-Cola and Pepsi.” 66. A phrase from Joan Martı́nez-Alier used in Ramachandra Guha’s, How Much Should
a Person Consume?: Environmentalism in India and the United States (Berkeley, 2006), 59. Joan Martı́nez-Alier, “Retrospective Environmentalism and Environmental Justice Movements Today,” Capitalism, Nature, Socialism, 11 (June 2000), 45 – 50.
67. Guha, 57 – 70. Some of the most prominent Indian examples are the struggles of the Chipko forest dwellers against logging and for rights to land, Keralan fisherfolk’s challenge to coastal development and unsustainable fishing methods, and the Narmada Bachao Andolan’s movement against the construction of the Narmada Dam and the flooding of 425 villages (an early NAPM mobilization which brought to national and international attention the leader Medha Patkar, who has been a visible part of the anti-Coca-Cola organizing).
68. Guha quoting Indian environmental thinker Anil Agarwal (and CSE founder) in Ibid., 59.
69. Ibid., 70. 70. Ibid., 63. 71. Ibid. C R Neelakandan interview with author, Ernakulam, India, March 21, 2008.
134 ILWCH, 81, Spring 2012
72. Daniel Faber, Capitalizing on Environmental Injustice: The Polluter-Industrial Complex in the Age of Globalization (New York, 2008), 237.
73. Ibid., 236. 74. Ibid., 237. 75. Ibid., 228 – 231; 236. 76. Ibid., 233. 77. Photograph by author, “Right to Water National Conference and Protest Against
Coca-Cola,” Mehdiganj, Uttar Pradesh, March 30, 2008. 78. Lok Samiti, Jahar Ba (circa 2005). 79. “Thanda matlab toilet cleaner” was popularized by television yogi Swami Ramdev
who appropriated Coca-Cola’s advertising tagline to make it a catchphrase to dissuade his prac- titioners from consuming soft drinks (as well as fast food, foreign beauty products, etc.) using both health discourse and more exclusionary rhetoric of bodily purity and swadeshi nationalism.
If “Thanda Matlab Coca-Cola” Then “Cold Drink Means Toilet Cleaner” 135
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Organisation theory/Gill (2007) Coca Cola Labor Restructuring and Political Violence in Colombia.pdf
‘Right There with You’ Coca-Cola, Labor Restructuring and Political Violence in Colombia
Lesley Gill American University, Washington, DC
Abstract ■ The article examines how state terrorism operates alongside neoliberal capitalism and has reconfigured labor relations and generated new forms of oppositional politics. Focusing on the struggles of Colombian Coca-Cola workers, the article first considers how neoliberal restructuring and political violence have fragmented social relationships and aggravated inequalities among workers and between them and the Coca-Cola Company. This is a process that is based on widespread impunity. The article then examines how trade unionists have struggled against the degradation of work and the violation of their human rights by internationalizing their struggle against Coca-Cola and building broad alliances that extend beyond the workplace. Finally, it considers the problems, possibilities and new tensions that emerge from the union’s internationalism. Keywords ■ human rights ■ impunity ■ neoliberalism
As the tentacles of the Coca-Cola Company stretched around the world in the 20th century, the corporation’s fizzy, dark brown soda became synonymous with a sugar-coated version of US-led globalization. Yet behind the glitz and the bubbles, the world of Coca-Cola was fraught with tension. The company, which arose out of the Jim Crow South, adhered to traditions and business practices that sprouted from its southern roots. The multinational’s mostly Georgia-born executives agreed, in 2000, to pay nearly $200 million to settle a class-action lawsuit brought by 2000 African-American employees who charged the company with discrimi- nation (Hayes, 2004: 256–62). Elsewhere, farmers in India – the fastest- growing market for Coca-Cola – accused the company of draining public groundwater and ruining agriculture in their villages. In Mexico, the corporation aggravated class divisions among indigenous peoples in the state of Chiapas by granting concessions to religious elders, who distributed Coca-Cola during festivities that once used cane alcohol in ceremonies dedicated to the gods (Nash, 2006). And in Colombia, workers at several bottling plants alleged that management colluded with illegal paramilitary organizations to threaten and murder trade unionists.1 Their charges echoed those of Guatemalan workers, who challenged the multi- national’s ferocious anti-union policies in the 1970s and 1980s, and who
Article
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coined the slogan ‘Coca-Cola has the flavor of blood’ to urge consumers not to drink it (Levenson-Estrada, 1994: 202).
These claims and accusations are deeply ironic in light of the company’s assertion that ‘Whatever is true in your life, Coca-Cola is right there with you’. They raise questions about how neoliberal capitalism reconfigures the social relations of work and the organization of pro- duction, and how political violence and personal insecurity give rise to new forms of labor regulation. They also encourage us to think about what kinds of oppositional politics are possible at the dawn of the 21st century. Several scholars have explored how the reorganization of production and the emergence of new understandings of class, gender and ethnicity are reshaping the terrain of political struggle (see, for example, Collins, 2003; Kasmir, 2005; Nash, 1989). Yet researchers have devoted less attention to how state terrorism operates in some settings as the handmaiden of neoliberal capitalism, fragmenting social relationships, abetting the for- mation of new ‘democracies’ in which working people have fewer rights and protections, and generating new forms of resistance.2
Harvey employs the concept of ‘accumulation by dispossession’ to describe the ways that states and powerful international institutions dis- mantle, co-opt or appropriate pre-existing social achievements in order to make productive assets available to corporations at low cost. It encompasses a range of phenomena, including the suppression of labor unions; the privatization of state, common and collective property rights; the com- modification of culture and heritage; biopiracy; and the management of credit and debt (Harvey, 2003: 137–82). Harvey argues that accumulation by dispossession is a continuous process of ‘enclosing the commons’ that has accelerated under neoliberalism (Harvey, 2003, 2005; see also DeAngelis, 1999). Drawing on Harvey’s formulation, this article examines how neoliberal state policies, corporate restructuring, and intense repression have reshaped the nature of work, unionism and collective action among Colombian Coca-Cola workers.3 Colombia is an important place to examine these issues. As many Latin American nations, led by Venezuela, have modified or moved away from neoliberalism, Colombia remains an import- ant neoliberal outpost in South America, with its unaccountable security forces that are backed by US military aid and available to repress oppo- sition from a growing number of dispossessed people. Colombia is also emerging as a key battleground where labor activists from many countries are fighting for the future of working people everywhere.4
The article first considers how, since the 1990s, the struggle between the Coca-Cola Company and SINALTRAINAL – the National Food and Beverage Workers’ union that organizes Coca Cola workers5 – over accumu- lation by dispossession has intensified. The struggle turns on the definition of rights and entitlements, how they are distributed and who decides. Three separate but interrelated processes have shaped the dispossession of Coca-Cola workers. They are (a) the enactment of a series of neoliberal
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state policies that mandated economic deregulation, lower tariff barriers and a new labor code that permitted the ‘flexibilization’ of labor; (b) a corporate strategy that draws on these policies and includes the use of subcontractors, an increase in the number of part-time employees with no benefits and the elimination of unionized jobs through plant closures; and (c) the intensification of right-wing paramilitary violence against workers from which the Coca-Cola Company benefits, and in which, unionists say, it is complicit.
These processes are based on widespread impunity, an aspect of power that allows state officials and corporate executives to enact policies and invoke definitions of legality that benefit multinational corporations and drive working people into poverty without suffering negative consequences themselves. Impunity also permits them to enforce these policies and laws by calling on armed groups to repress workers whose daily struggles to better living and working conditions threaten the neoliberal order that sectors of the state and the Coca-Cola Company desire. It has eroded the economic and social securities that workers won as the result of previous class struggles, and that once formed the basis of a relatively stable labor force in which male workers received a ‘family wage’, yearly bonuses, job security and benefits. The ties that bind workers to each other and to the Coca-Cola Company have weakened, and new divisions have emerged. Not surprisingly, union membership has dropped and workers’ ability to make claims on the company has diminished.
Impunity therefore forces Coca-Cola workers to contend with both the chaos and the order that political violence and neoliberal restructuring create in their lives. They must constantly replace devastated social networks, build new relations of solidarity and recreate the institutional forms that represent these ties to ensure their daily survival.6 They must also heal the fractures that the violence creates within their own families. The marginalization of women from SINALTRAINAL and the Coca-Cola labor force hampers unionists’ efforts to find solutions to the chaos that disrupts working people’s lives. Wives and female companions are less well situated to appreciate how they can influence the political and economic agendas that facilitate assaults on SINALTRAINAL and their families. Women tend to experience unionism and the militancy of their husbands in family-centered ways, and they may blame husbands for violent attacks on relatives. Not surprisingly, new tensions and anxieties have arisen within union households that working people have difficulty handling or discussing. These pressures and worries point to the impending ruptures that people must face in situations where effective alternatives do not exist, and where people cannot change what is happening to them.7 They describe the profound turmoil that impunity creates among working people.
The article then explores how SINALTRAINAL, debilitated by economic restructuring and terrorized by political violence, wages a battle
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against accumulation by dispossession and impunity by internationalizing its struggle and forging what Moody (1997) describes as ‘social movement unionism’. Social movement unionism is a concept that extends union activism beyond the workplace to include other organizations of working people, such as public sector workers, neighborhood associations and social movements, in a fight against social and economic inequality. Such broad- based activism has long characterized certain sectors of the Colombian labor movement (for example, Delgado, 2006), as well as unions elsewhere at particular historical junctures (for example, Eley, 2002; Seidman, 1994), but it has not figured in the activities of broad sectors of the Colombian and US labor movements, which have tended to focus on narrow, bread- and-butter issues. Although this strategy appeared to work – at least for a limited number of workers in certain industries – economic restructuring and new, government-supported trade agreements have given corporations more power over their workforces. Social movement unionism arises from the recognition that increasingly powerless industrial unions constitute a dwindling minority of the working class, and that extensive political alliances beyond the shop floor are necessary for working people to overcome the decline in working and living conditions (Fantasia and Voss, 2004; Moody, 1997).
SINALTRAINAL’s leadership has internationalized its conflict with the Coca-Cola Company as a human rights issue through the development of new relationships with trade unions, student organizations, lawyers, soli- darity groups and intellectuals in various countries, and it has also forged alliances with various beleaguered groups in Colombia. Through these alliances, SINALTRAINAL seeks to overcome the social fragmentation and chaos generated by years of violence and economic turmoil. The union advances a human rights agenda that blends a demand for the individual right to life with a class-based concern for economic justice. SINALTRAINAL thus sidesteps the elitism of some mainstream human rights activism, which says little about the inequalities and forms of dispossession generated by neoliberalism,8 and it avoids the disillusionment with human rights expressed by many poor and working-class Latin Americans for whom ‘human rights’ constitute little more than unfair state protections for thieves (see, for example, Snodgrass Godoy, 2005; Goldstein, forthcoming). Yet it has little to say about the particular vulnerabilities of working-class women. The article examines the problems, possibilities and new tensions that emerged from the union’s internationalism.
Neoliberalism, political violence and Coca-Cola in Colombia
Neoliberalism arrived relatively late in Colombia. This was because, unlike many debt-ridden Latin American countries that experienced severe economic decline in the 1980s, Colombia had not borrowed large sums of money, and its economy remained relatively healthy during a regional
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economic crisis that marked the 1980s as the ‘lost decade of development’. In addition, powerful industrialists, especially in Medellín, continued to back protectionist trade policies and opposed the enactment of a neoliberal trade regime. By the end of the 1980s, however, splits appeared in the protectionist ranks and a consensus on the liberalization of the economy began to emerge. Powerful new conglomerates within the financial, agro- export and telecommunications sectors came to dominate the economy and advocate a free-trade agenda. They were joined by a small but in- fluential group of neoliberal, Colombian-trained economists who con- stituted a pool of experts that advised successive Colombian governments on economic issues.9
US pressure and the Colombian government’s desire to receive US military aid to combat newly powerful drug cartels and a growing guerrilla insurgency also prompted the turn to neoliberalism. Drug lords had launched an urban bombing campaign to deter the government from extraditing suspected cocaine traffickers to the United States, and the country’s oldest guerrilla group – the Revolutionary Armed Forces of Colombia (FARC) – had grown into a well-armed force with thousands of fighters by taxing the lucrative profits flowing from Colombia’s burgeoning coca fields. The administration of César Gaviria (1990–94) agreed to ‘open’ the Colombian economy to foreign investment in exchange for a substan- tial cut of the $2.2 billion Andean Initiative that was proffered by President George Bush, Sr. (Leech, 2004).
The advent of neoliberalism and the end of the Cold War presented the Coca-Cola Company with new possibilities for global expansion. The collapse of Soviet and Eastern European communism opened vast new swaths of territory for the expansion of Coca-Cola, while falling trade barriers and government deregulation in Latin American, Asia and Africa permitted higher prices, reduced taxes on the imported brown syrup that forms the basis of the soft drink, and larger package sizes. The Coca-Cola Company launched an aggressive campaign to buy out local bottlers whose limited autonomy had long frustrated the desire of Atlanta-based corpor- ate executives for uniform policies and strategies to guide the corporation’s global operations. It purchased family-operated franchises – or drove them out of business – and then dismantled their operations and incorporated them into a few large ‘anchor bottlers’, which would theoretically produce soft drinks more efficiently and at lower cost for the company’s burgeon- ing empire. By 1999, there were 11 anchor bottlers, including Coca-Cola Enterprises in the United States, South Africa’s SABCO and Mexico’s FEMSA. As local franchises came under the control of the anchor bottlers, jobs disappeared and unproductive plants closed (see Hayes, 2004: 140–59; Pendergast, 2000: 333).
The company initially granted the Miami-based bottler PANAMCO control over the Colombian market. PANAMCO acquired 17 of the 20 Colombian franchises by the mid-1990s, and it then merged with a large Mexican bottler, FEMSA, in 2002. The new FEMSA-PANAMCO hybrid
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became the Coca-Cola Company’s anchor bottler for Latin America, where it controlled 40 percent of sales. In 2003, FEMSA executives shut down production lines in 11 of their 16 bottling facilities and concentrated the manufacture of soft drinks for the domestic market in five ‘megaplants’ in the cities of Bogotá, Barranquilla, Bucaramanga, Calí and Medellín. This decision led to the firing or the forced retirement of nearly 3000 workers, and it was facilitated by new labor legislation that granted employers the right to hire workers for limited periods, terminate their services briefly and then rehire them for another short period, depriving them of job security and benefits.
The transformations at Coca-Cola reflected the broader recon- figuration of the Colombian economy. Cuts in tariffs and investment laws that promised to treat foreign capital the same as national capital opened the country to world competition and threw the economy into a nose-dive. Deregulation and the reduction of tariff barriers exposed domestic industries to unbridled competition from highly capitalized multinational corporations, and the flood of cheap imports wiped out many small and medium-sized Colombian businesses. The proportion of salaried workers dropped from 37.1 percent of the workforce in 1992 to 30.7 percent in 2000. At the same time, the privatization of state-owned enterprises eliminated public-sector unions, and, together with the elim- ination of state subsidies and cuts in public services, aggravated unemploy- ment. The agricultural sector, which once exported a surplus, contracted, and the country became an importer of basic grains. Only the ‘informal economy’ expanded. Drug trafficking or the unlawful cultivation of coca leaves became the only viable economic alternative for many people (ENS, 2002).
Not surprisingly, considerable resistance accompanied these trans- formations. The opposition of unions and peasant organizations intertwined with an enormous increase in common crime and an intensifying civil war. In the last five years of the 20th century, thousands of Colombians died and over 2 million people were displaced from their homes (Rossiasco, 2003). Most of the 28,000 annual murders in recent years arose from rampant urban violence and the economic injustice that fed it (Leech, 2004), but political violence claimed the lives of thousands of unionists, peasants, human rights advocates, left-wing political party members, lawyers and journalists. Right-wing paramilitaries targeted labor leaders with particular ferocity.
Some 4000 trade unionists of the Central Unitaria de Trabajadores (CUT) – the country’s largest trade union confederation – died between the CUT’s formation in 1986 and 2003, and human rights organizations blamed paramilitaries for the vast majority of the assassinations.10 Para- militaries murdered nearly all of the confederation’s founders. Hundreds of other unionists were threatened, forced into exile, displaced from their jobs, attacked, detained, tortured and kidnapped. Most of the rights violations were connected to specific labor conflicts, such as strikes, protests
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and contract negotiations, in which selective assassinations, arbitrary arrests, detentions, unlawful raids and anonymous threats were tools of labor management. Targeted and discriminate violence led not only to the death, exile and displacement of hundreds of Colombian workers. It also contributed to a climate of anti-unionism in which trade unions were associated with guerrilla insurgencies and unable to exercise their right to free association. Union membership nationwide fell from 12 percent of the workforce in the mid-1990s to 3.2 percent in 2004 (ENS, 2002), and Colombia earned a reputation as the most dangerous country in the world to be a trade unionist.
Paramilitarism has a long history in Colombia,11 and contemporary groups have diverse origins: some emerged as the private armies of well- known drug traffickers for whom they resolved disputes; others organized to protect ranchers from left-wing guerrillas in the conflicted Magdalena Medio region; still others grew out of legal self-defense groups established by President Alvaro Uribe when he was governor of Antioquia province (Palacios, 1990; R. Vargas, 2004). A series of political transformations in the 1980s spurred the growth and national-level coordination of these disparate entities. The emergence of the left-wing Patriotic Union political party, and the unification, in 1986, of the trade union movement under the umbrella of the CUT symbolized the resurgent power of social movements. At the same time, the decentralization of political power, including the first mayoral elections in 1988, opened political space at the local level for pre- viously excluded social groups, and peace talks with the FARC initiated by President Belisario Bentancur (1982–8) raised expectations about the incorporation of the insurgents and their demands within the political system. These developments threatened traditional elites and newly rich drug traffickers-turned-landlords, who feared that the balance of power would shift to favor the insurgents and their sympathizers. They also worried the armed forces, who strongly opposed peace talks with the guerrillas, and prompted closer collaboration between regional elites, sectors of the armed forces and disparate paramilitary groups in an in- tensifying ‘dirty war’ against the guerrillas and social movements seeking to reform Colombian society (Romero, 2003). The primary victims of this dirty war were civilian non-combatants, including trade unionists, teachers, peasants and human rights advocates.
The paramilitaries became a loosely knit, national force in 1997, when former drug cartel enforcer Carlos Castaño united various regional entities under the umbrella of the Autodefensas Unidas de Colombia (AUC), and the paramilitary–military relationship emerged from what Human Rights Watch (HRW) calls a ‘strategy of impunity’ in which:
. . . supposedly phantom paramilitaries that the military claims it can neither identify, locate, nor control take the blame for massacres and forced disappear- ances, allowing the military to evade responsibility . . . for tactics taught, employed, and supported by the armed forces, but which they do not openly endorse. (HRW, 1996: 61)
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Although the government began to negotiate the demobilization of some groups in 2002, it demonstrated little interest in holding commanders accountable for serious human rights crimes, dismantling their operations or providing reparations to victims.12 Because paramilitaries targeted the supposed support base of guerrilla groups and only rarely attacked the state and its security forces, critics argued that what the government means by ‘ending hostilities’ is not clear (Garcia-Peña, 2005); indeed, paramilitaries have continued to kill and ‘disappear’ civilians, even after the enactment, in 2005, of the controversial ‘Justice and Peace Law’ and the highly public ‘demobilizations’ of various groups.
Unlike the insurgents of the FARC and the National Liberation Army (ELN), the paramilitaries do not oppose the activities of multinational corporations. As Richani observes, ‘This allows for an affinity between the AUC and foreign companies, particularly those invested in areas of conflict’ (2005: 130). What this ‘affinity’ means is not always clear, but journalist Steven Dudley (2004: 201) notes that paramilitary commanders repeatedly told him that they protected the business interests of international corpor- ations and had built bases near Coca-Cola bottling plants. It is therefore not surprising that paramilitaries have taken aim at SINALTRAINAL – an affiliate of the CUT known for its socialist orientation – for over a decade and continue to pose a threat to its members. They have murdered eight Coca-Cola workers and threatened, kidnapped and harassed dozens of others. When union leaders refuse to give in to the intimidation, the para- militaries may go after their relatives. SINALTRAINAL understands the attacks as an effort to exterminate the union. The Coca-Cola Company acknowledges the human rights violations, but officials explain away the violence as a product of Colombia’s intractable civil war.13 Unionists, however, argue that murdered workers are not the product of random violence. The deaths, they say, are the result of a calculated and selective strategy carried out by sectors of the state, allied paramilitaries and the Coca-Cola Company to weaken and eliminate trade unions.14
Coca-Cola and labor restructuring in Colombia
When the Coca-Cola Company set out to reorganize its bottling operations in Colombia and elsewhere in the 1990s, it did not enjoy the luxury of some global firms – especially those in the garment industry – that could scour the world for the cheapest labor to manufacture goods primarily for North American and European consumers. The company sold soft drinks to millions of people in some 200 countries. To do so efficiently and to avoid high transportation costs, it had always engaged the practices, traditions and organizations of the workforces in countries where Coca-Cola was bottled, distributed and consumed. In Colombia, this meant inserting itself within the complex dynamics of local politics and the patterns of violence
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that affected the regions where bottling plants operated. In cities such as Bucaramanga and Barrancabermeja, company officials had to contend with militant SINALTRAINAL locals, whose leaders emerged from rich traditions of leftist politics and activism, and who fought company policies despite repeated threats to their lives. In the northeast Colombian town of Carepa, however, labor unions were overwhelmed by a paramilitary offens- ive in the 1990s. The paramilitaries seized control of the Urabá region, where Carepa is located, and they decimated the SINALTRAINAL affiliate in 1996. They did so, according to SINALTRAINAL, with the complicity of company officials. Union leaders say that average wages in the plant then dropped from $380 a month to $130.
As the Coca-Cola Company consolidated and reconfigured a vast bottling network around fewer ‘anchor bottlers’ with broad geographical reach, it took a hard-line approach to Colombian workers that ruptured previous understandings about what constituted proper labor–management relations. Several long-time workers characterized the company in the 1970s and early 1980s as ‘like a family’, but the new management tactics were remi- niscent of the company’s take-no-prisoners strategy in Guatemala a decade earlier (see Levenson-Estrada, 1994). The company refused to recognize collective bargaining rights, as it closed plants and consolidated production. It stopped contracting laborers directly to avoid paying the ‘family’ wages and benefits that had enabled workers to lead relatively comfortable lives for many years. It pushed long-time workers into retirement by offering them increased severance payments in exchange for their agreement to quit, and it outsourced hiring to over 50 so-called cooperatives, or third parties, that dispensed short-term contracts to workers, who, in some cases, had been downsized from the firm. New and rehired workers received low wages and few, if any, benefits.
By 2005, unionized employees accounted for scarcely 7 percent of the Coca-Cola workforce in Colombia, and they found themselves divided among a handful of unions with different strategies for dealing with the company. The Coca-Cola Company took advantage of Colombian law, which permitted the formation of multiple unions within a single enter- prise, to aggravate divisions between union activists and company loyalists. It did so by encouraging a company union alternative to independent worker organizations. The unions representing Coca-Cola workers ranged from independent SINALTRAINAL – the largest and most militant, with a membership that included 314 (45 percent) of the roughly 700 unionized laborers15 – to SINALTRAINBEC – a company union with only 38 members in two plants – and SICO – a paramilitary-sponsored union that arose on the ashes of SINALTRAINAL in the town of Carepa. The company took every opportunity to promote SINALTRAINBEC and SICO as the legiti- mate voice of Coca-Cola workers, and it even brought the president of SINALTRAINBEC to its 2005 shareholders meeting in Wilmington, Delaware. Not surprisingly, tension developed between these unions, and
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new divisions also emerged between the dwindling number of older, union- ized workers with stable employment contracts and a new majority of ‘flexible’ workers with no representation and no benefits.
As the company closed production lines in several cities, its human resource department organized week-long meetings in local hotels where company personnel coerced workers with direct contracts to sign buy-out deals and offered them seminars on micro-enterprise creation. One employee from Girardot likened the experience to being in a ‘concen- tration camp with food’. He explained that after a worker signed a severance agreement, company officials removed the individual from the hotel to isolate those who remained and increase the pressure on them to negotiate with the firm.16 Most workers understood that their re- employment prospects were dim in a contracting economy, and few wanted to sacrifice the benefits and the security that they once enjoyed at Coca- Cola for the risks of managing a micro-enterprise. Yet the vast majority succumbed to company pressure and accepted the agreements to leave their jobs because they saw no alternative. There were exceptions, however.
When the Coca-Cola Company ceased producing soft drinks in Villavicencio in 2002, eight union workers refused a financial settlement from the company and demanded that it find new jobs for them. The conflict wound up in court. As the Colombian judiciary deliberated on the matter, these men continued to report for work and receive a paycheck, but they spent the eight-hour shift sitting in a kiosk outside the company cafeteria with nothing to do. They pointed to former workmates who had lost everything in bad investments or who struggled long hours to keep small businesses afloat. Their observations reflected the comments of a worker in Bucaramanga who commented that:
Today, Coca-Cola tries to fire people anyway that it can. But why would anyone who is 50 or 55 years old quit? The company knows that there is no place in Colombia that would hire such an individual today. So what is the person supposed to do – sell raffle tickets?17
Another noted that, with a history of union involvement, an individual’s re-employment options decreased even further. Yet the Villavicencio Eight managed to prevail and, after three years of biding their time in the corporate kiosk, they retained their jobs when a Colombian court ruled in their favor in 2006. Their case was not typical, however.
With the departure of unionized workers and those directly employed by the company, a new group of subcontracted employees entered the bottling plants in the 1990s. Hired through various ‘cooperatives’, or subcontracting firms, these workers represented a younger generation of new laborers, as well as downsized workers obliged by economic circum- stances to return to the Coca-Cola workforce under new working conditions. They quickly discovered that the living and working conditions once charac- teristic of the Coca-Cola workforce had grown ever more precarious.
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Subcontracted laborers earned a quarter of the wages received by their unionized counterparts. They worked up to 16 hours a day and had little control over tasks and assignments. They also bought their uniforms, paid for transportation to work, and made their own contributions to a social security fund, all of which were benefits that the company once provided to everyone. According to one person in the town of Bucaramanga:
Today, at the company, you enter the plant at five in the morning, and at five- thirty, there are 40 or 50 people at the door hoping to get an hour or two of work. And, if they get work, they then have to support their family with what they make in a couple of hours.18
As SINALTRAINAL challenged the company’s policies with street demonstrations, hunger strikes and legal maneuvers, local leaders were subjected to arbitrary arrests and imprisonment, and they confronted an onslaught of threats, assassination attempts and harassment directed against them by paramilitary groups. For example, after repeated threats to his life, a worker in Barranquilla was forced to leave town in 1997, after an intruder broke into his house and attempted to murder him. And, in 2000, in the city of Cúcuta, paramilitaries kidnapped another Coca-Cola worker who had participated in a demonstration against the company. In Cartagena, in 2002, an individual who identified himself as a paramilitary called the home of a SINALTRAINAL leader and spoke to the worker’s 10-year-old daughter who answered the telephone. He told the little girl that if her father did not leave town, the paramilitaries would murder him. The worker estimated that the union local denounced at least 11 additional threats over the next two years. The complaints that SINALTRAINAL filed with authorities for these and other violations accumulated in a file that grew fatter by the month, but perpetrators were rarely arrested for the crimes and there were never any convictions. The violence, and the widespread impunity that facilitated it, hastened the reorganization of labor relations in Coca-Cola bottling plants.
The departure of long-time unionists through buy-outs and forced retirement, and the increase in the number of temporary workers, eroded the ties of familiarity that once bound workers to each other, and fed the fears of unionized workers that paramilitaries operated in their midst. These fears were well founded. Despite tight security and an extensive surveillance system in the bottling plants, paramilitary graffiti frequently appeared on plant walls and signed death threats materialized in workers’ lockers, but verifying fears about suspicious workmates could be extremely difficult. Unionists had no way of resolving the gnawing doubts and anxieties that limited their ability to organize opposition to company policies. Even when they observed managers conversing with known para- militaries, they could do very little (see Gill, 2005).
SINALTRAINAL leaders increasingly found themselves caught in a social ‘order’ that had come unhinged. Unable to protect their families or safeguard union members, they struggled with threats to their own lives
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that left them hemmed in by bodyguards and transformed into what Steven Dudley (2004) vividly describes as ‘walking ghosts’. One man recounted the unbearable lack of privacy when ‘one bodyguard is sleeping in the bed next to you and another one accompanies you to pee’.19 All desired to live normal lives – playing soccer, going out with their wives and children without fear of attack, and walking down the streets of their neighborhoods without the constant presence of bodyguards – but such a life had long ceased to be possible for them. Dedication to the union and the memory of murdered friends kept labor leaders going, but their union activism left them exposed to continuous threats and plagued by ulcers, insomnia, and anxiety. Caught between life and death, union leaders could do little more than denounce the threats and labor code violations and then watch as the state and the Coca-Cola Company did nothing.
The violence directed against Coca-Cola workers extends beyond the workplace into the homes of unionists. Paramilitaries pressure union leaders, who often benefit from the protection of bodyguards and armored cars, into renouncing their positions by targeting vulnerable family members. The psychological consequences of these attacks are devastating to both individuals and families. Threatened families become isolated from neighbors and friends, who fear for their own safety if they are seen associ- ating too closely with targeted individuals. This social isolation comes at a time when vulnerable individuals most need the support and understand- ing of others. The violence also provokes feelings of guilt and impotence among male unionists, who feel responsible for family members whom they are unable to protect, and it stokes anger among relatives, who may blame unionists and SINALTRAINAL for their difficulties. It is not unusual for wives to fault their husbands and the union for the harassment, murder or kidnapping of relatives, the inability of children to enjoy normal child- hoods, and the severe restrictions that the threat of violence places on their social activities. In 2004, for example, as Coca-Cola workers in seven cities participated in a hunger strike to protest the closure of several bottling operations, paramilitaries in Bucaramanga sent a message to local SINALTRAINAL president Efraín Guerrero by killing his brother- and sister-in-law and their son. The murders were an enormous tragedy for Guerrero and his wife, who adopted a nephew orphaned by the attack, and they generated intense familial pressure on Guerrero and recriminations about his union activities.
Because wives and female companions do not have access to the insti- tutional and collective spaces available to men, they have greater difficulty comprehending the attacks on their families as the result of specific agendas that they can change. Women do not work in the production and distribution of Coca-Cola. They participate minimally in SINALTRAINAL, and they are not part of the daily negotiation of labor politics and oppo- sition to the Coca-Cola Company. Not surprisingly, women understand union politics and the labor militancy of their husbands in individual and
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family-centered ways. They worry that men will lose their jobs, and they are constantly afraid that their husbands will be injured or killed, leaving a wife alone to fend for the children. These anxieties are heightened by the fact that labor leaders spend a lot of time away from home, attending meetings, traveling around the country, and speaking abroad, sometimes for months at a time. Although women’s angst points to their vulnerability within the process of political struggle, women understand that withdrawing from SINALTRAINAL will neither remove their husbands from paramilitary hit lists nor make their families any safer, and they appreciate that a husband’s resignation from Coca-Cola does not present a viable economic option for their families, given the degraded nature of Colombia’s neoliberal economy. Union families must therefore deal with constant fear and un- certainty in the absence of alternatives, and they must cope with feelings of desperation, hopelessness and anger that are difficult to manage alone.20
The security forces understand their dilemmas and are quick to exploit them. For example, in August 2006, a SINALTRAINAL member was murdered in Barrancabermeja, an oil town in the conflicted Magdalena Medio region. The police chief immediately suggested that the murder arose from a domestic dispute, because the assailant was related to the dead man’s spouse, and he did not hesitate to share his speculations with the local newspaper, which placed the police theory on the front page, implying that the murdered unionist had abused his wife. What the police and the newspaper failed to mention, however, was that the victim had received numerous death threats because of his union activities, and that the assassin was a soldier attached to an army base in the neighboring town.
Internationalizing the struggle
The violence directed against SINALTRAINAL members and their families undercut men’s abilities to protect and provide for their relatives, and the deterioration of working conditions at Coca-Cola convinced union leaders that SINALTRAINAL’s very existence was at stake. Pervasive impunity precluded any hope of justice for the deaths and harassment of union members, and it left paramilitary organizations intact and empowered to continue terrorizing union activists and sympathizers. Widespread fear undermined SINALTRAINAL’s ability to organize workers, who worried about what could happen if they associated too closely with the combative union, and the rise of subcontracting aggravated economic insecurity, eroded union membership and limited the utility of the strike as a weapon of resistance.
The irony of neoliberal restructuring, and the impunity-driven violence that accompanied it, was that these processes limited the usefulness of plant-level labor struggles and compelled workers to join forces with others to tackle larger objectives, which many SINALTRAINAL leaders had long
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advocated. Faced with an increasingly desperate situation, SINALTRAINAL decided to internationalize its struggle against Coca-Cola by seeking the support of trade unions, student organizations, lawyers, solidarity groups and intellectuals abroad. Through these connections, it circumvented the Colombian state, its corrupt judiciary, and local Coca-Cola managers and built an international movement that framed the labor conflict as a human rights issue and a battle against impunity.
SINALTRAINAL’s internationalism overcame the dichotomy present in much mainstream human rights discourse in which individual rights take precedence over concerns for equality. Despite ongoing political activism around the right to water, housing, HIV/AIDS drugs and so forth, some human rights organizations, especially in the United States, condemn only the most abhorrent acts of cruelty, such as murder, torture and rape, while leaving routine economic exploitation unacknowledged. Denouncing heinous human rights violations is certainly crucial and important work. Yet limiting the discussion of human rights to only extreme forms of violence sets up a distinction between unacceptable violence and quotidian, normal- ized acts of oppression, and it restricts efforts to understand their relation- ship.21 As Harvey notes, ‘the limited objectives of many rights discourses . . . makes it all too easy to absorb them into the neoliberal frame’ (2005: 178) and neoliberalism’s exclusive concern with the individual. The internation- alism of SINALTRAINAL sets forth an expanded conceptualization of human rights that combines a demand for security and the individual right to life with the class-based goal of economic equality.
In the United States, the union’s international struggle had various interlocking dimensions, including a lawsuit filed in 2001 against the Coca- Cola Company in US federal court, a ‘corporate campaign’ initiated in 2003 to pressure the Coca-Cola Company in multiple ways, and student activism to remove Coca-Cola beverages from university campuses. The lawsuit represented the opening gambit in the United States. The center- piece of the legal case that SINALTRAINAL and its allies – the Pittsburgh- based US Steel Workers and the Washington-based International Labor Rights Fund – built against the corporation was the 1996 assassination of union local president Isidro Gil. On the morning of 5 December 1996, two paramilitaries riding a high-powered motorcycle shot Gil as he stood in the doorway of a bottling plant in the town of Carepa. Another member of the union’s directorate, Luis Adolfo Cardona, barely evaded an attempt on his life the same day when paramilitaries tried to kidnap him. The para- militaries then broke into the union’s offices, looted files and set fire to the premises, prompting fearful workers to flee town. As the mayhem unfolded, a company supervisor approached a member of the union directorate and informed him of a meeting proposed by the paramilitaries in which unionists would be given ‘another chance to keep working in the factory’. Those who attended were shown a hit list of presumed subversives and issued with a warning: to keep their jobs, they would have to abide by
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the paramilitaries’ rules, which made no allowance for SINALTRAINAL. The paramilitaries subsequently occupied the plant, where they wrote letters of resignation on the company’s computers, forced workers to sign them, and then faxed the letters to SINALTRAINAL’s national head- quarters in Bogotá. SINALTRAINAL thus ceased to exist in Carepa, and the entire directorate was displaced from town.
Shaken union leaders regrouped in Bogotá and lodged a complaint with the Ministry of Labor, where they eventually met with a company repre- sentative. According to one of those present, the men were told that ‘the paramilitaries have control of the plant . . . and [workers] would not get anything from them . . . [she told us that] if we wished, we could go to Carepa and talk to them personally’. The company then refused to reassign union leaders to safer plants, and the workers were subsequently fired for ‘abandoning their place of work’.22
The lawsuit filed against Coca-Cola in US federal court charges that the corporation and its Colombian bottler collaborated with paramilitaries to murder and terrorize workers in several cities, and it draws on the Alien Tort Claims Statute, an obscure 18th-century law that allows foreigners to bring suit against US citizens for the most heinous human rights violations, such as genocide, torture and extrajudicial killings.23 The Coca-Cola Company denies any responsibility for wrongdoing because, it claims, the corporation neither owns nor controls the Colombian bottlers and is there- fore not liable for actions that occurred in the bottling plants. Hiding behind layers of subcontracting is a common defense used by global corporations. It allows them to claim that they do not employ workers and that subcontractors are the sole employers, and thus enables them to avoid any responsibility for providing minimum wages, health care, safe working environments or negotiating in good faith with labor unions. The SINALTRAINAL lawsuit challenges this strategy. Unionists and their lawyers note that the parent company regulates all aspects of production and distri- bution of the soft drink in Colombia and cannot be distinguished from the local bottlers.24
By targeting the labor practices of the Coca-Cola Company, the lawsuit casts a shadow on the sparkling image of Coca-Cola, an image that Coke executives, like their counterparts in Nike, McDonalds and other global corporations, have invested millions of dollars to create. Known as ‘branding’, this corporate image-making technique equates particular commodities with positive cultural experiences and entangles them with consumers’ identities. The practice took off in the 1990s, and, according to Klein, ‘what makes nineties-style branding different is that it takes . . . associations out of the representational realm and makes them lived reality. So the goal is not merely to have child actors drinking Coke in a TV commercial, but for students to brainstorm Coke’s next ad campaign in an English class’ (2002: 29). Yet because the reputations of ‘branded’ commodities are closely tied to the companies that sell them, corporations
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become vulnerable when evidence emerges that a product’s carefully crafted image has little in common with the working conditions in which it is manufactured.
As the initial publicity surrounding the lawsuit died down, New York City-based Corporate Campaign Inc. assumed the task of keeping alle- gations about Coca-Cola’s labor practices in the public eye and placing the Colombian events within the broader context of Coca-Cola’s treatment of its workforce around the world. Its director, veteran labor activist Ray Rogers, believed that ‘withholding your labor is only one way to fight back’.25 He developed a ‘corporate campaign’ to diminish the soft drink’s cachet among US consumers and to support the demands of SINALTRAINAL. The corporate campaign concept emerged from Rogers’ successful, 1970s organizing drive to unionize the J.P. Stevens Company in the US South. It combined a variety of tactics, such as targeted consumer boycotts, pressure on interlocking business and financial sectors to isolate the corporation, and broadening the issues beyond labor relations to moral and social matters. For example, Rogers targeted Sun Trust Bank, the Coca- Cola Company’s main creditor. He exposed the interwoven directorates of the corporation and the bank, and then used the allegations of human rights violations to encourage large investors – especially labor unions – to close their accounts with Sun Trust. Together with United Students Against Sweatshops, Rogers also supported an initiative to remove Coca-Cola products from colleges, universities and the halls of organized labor, and he developed a series of anti-Coca-Cola leaflets and glossy posters. One poster featured dead unionists floating in a glass of Coke with a slogan that read ‘Undrinkable, Unthinkable’. Another displayed the feet of a corpse with a tag hung on one toe that said ‘union leader’ and came with the slogan: ‘Ice Cold: Killer Coke Can’t Hide Its Crimes in Colombia’.
The United Students Against Sweatshops (USAS) represented a third – and increasingly important – ally of SINALTRAINAL. Born out of campus struggles in the 1990s to hold giant apparel manufacturers accountable for their labor practices abroad, USAS initiated a campaign to pressure universities to cut, or refuse to renew, contracts with the Coca-Cola Company as a way to pressure the corporation to change its labor practices. One of its national coordinators, Camilo Romero, played a key part in organizing student opposition to Coca-Cola and in promoting the concerns of SINALTRAINAL in the United States. A sociology major from the University of California–Berkeley, Romero could not only speak to US students in their own terms, but his Colombian roots and appropriately accented Spanish, complete with a range of slang expressions, enabled him to develop close relationships with many SINATRAINAL leaders, whom he accompanied on speaking tours of the United States.
SINALTRAINAL and its various international supporters thus set out to turn the Coca-Cola brand into a sign of barbarity. The union and its supporters held ‘public meetings’ in Atlanta – site of the Coca-Cola Company’s corporate headquarters – Brussels and Bogota, where noisy
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demonstrators condemned the multinational’s policies, and the idea of a boycott against Coca-Cola emerged. SINALTRAINAL leaders campaigned at World Social Forums in Brazil, India and Venezuela. They also participated in frequent international speaking tours in the United States and Europe, where they addressed audiences in high schools, labor unions and universities. These tours removed them temporarily from the violence in Colombia and allowed them to recount their harrowing stories to sympathetic groups.
By 2005, their efforts started to pay off. Although the lawsuit continued its slow journey through the legal system, student activism and the corpor- ate campaign had gained traction. Some 16 US colleges and universities, and five in Ireland, Canada and Italy, had responded to the call to boycott by canceling contracts with the Coca-Cola Company. And, in the United States alone, there were active student campaigns in many institutions (Blanding, 2005). The student activism did not go unnoticed by company officials, who began to send representatives from corporate headquarters in Atlanta to college campuses to defend the company’s battered reputation and to reassure nervous administrators. Under pressure from all sides, several university officials floated the idea of establishing a commission to conduct an independent investigation of the company’s labor practices in Colombia. Although many in the anti-Coke movement interpreted the administrators’ move as an attempt to stall the boycott momentum, they agreed to go along with the proposal.
At a meeting in Chicago in July 2005, USAS students, several university administrators, spokespersons from Coca-Cola and representatives from the labor movement met to discuss the formation of a commission. Reaching an agreement proved extremely difficult. Over the next several months, the company dragged its feet by failing to meet deadlines, and blocked efforts to promote a genuinely independent investigation, insist- ing that the commission not investigate the murders of trade unionists in its Colombian bottling plants and demanding that anything uncovered by an investigation be inadmissible in the ongoing court case. The process, according to students, also enabled company officials to make deceptive, unchallenged claims to university administrators about the Coca-Cola Company’s efforts to address human rights abuses, even as new evidence of abusive practices was emerging in Turkey. USAS accused company repre- sentatives of negotiating in bad faith and withdrew from the discussions. The momentum for a commission then began to dissipate and, by the end of the year, New York University and the University of Michigan had cut contracts with the soft drink producer and handed the anti-Coke movement its biggest victory. Yet by April 2006 the University of Michigan had allowed Coke back on campus, pending the outcome of a workplace evaluation that the International Labor Organization agreed to undertake at the request of Coca-Cola.
From the students’ perspective, the anti-Coca-Cola campaign aimed to do more than break consumer addiction to Coca-Cola. The boycott
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constituted part of a broader agenda to promote ‘ethical contracting’ by college and universities. SINALTRAINAL, for its part, hoped to educate citizens in the United States and Europe about labor conditions in Colombia, to incorporate people from various walks of life into a trans- national movement against neoliberalism and to end impunity in Colombia. As part of this program, SINALTRAINAL organized, in 2004, a ‘Caravan for Life’, in which international activists from the anti-Coke campaign in the United States, Europe and Latin America visited Colombia, traveled to different regions of the country, and reported critically on the social, politi- cal and economic conditions that they found. Activists then returned home to continue the task of organization and education. Such events served a number of purposes: they focused Colombian media attention on issues it preferred to ignore; they strengthened ties between SINALTRAINAL and its international supporters; and they gave SINALTRAINAL’s foreign backers the social, cultural and political knowledge to carry out solidarity work in their home countries. By constructing transnational solidarity networks, leaders hoped that international pressure would strengthen their bargain- ing position locally, limit the violence directed against workers and focus attention on the unwillingness of the Colombian state to hold paramilitaries accountable and provide reparations to victims. As SINALTRAINAL’s presi- dent Javier Correa explained, ‘International solidarity is fundamental for us right now. We are unable to exist as a union or organize independently without it.’26 Although SINALTRAINAL’s internationalism was promoted by the lack of justice and accountability in Colombia, it flowed easily from the union’s vision of itself and its fight for justice.
SINALTRAINAL leaders describe their orientation as ‘classist’, and some of its leaders characterize the organization less as a union than a social movement. Since its emergence in the 1980s from a more docile, company union, SINALTRAINAL has concerned itself with a broad array of social, political and economic issues that affect poor people throughout Colombia. For example, the union proposes a national food security plan that includes an agrarian reform, the nationalization of monopolies, free access to agri- cultural credit and self-sufficiency in basic food crops.27 It offers concrete solidarity to neighborhood organizations and displaced peasants who have taken up residence in the cities, and it backs the struggles of public sector unions against the drive to privatize. SINALTRAINAL also accommodates representatives from an array of peasant, worker and international organiz- ations in its Bogotá headquarters when they have business in the capital. Over evening beers and early morning breakfasts, activists exchange experi- ences, offer assistance and report on events in different parts of Colombia and the world. In these ways, SINALTRAINAL commits itself to a wider social and political struggle against accumulation by dispossession that affects an array of people.
The union’s international activism forces unionists to confront new tensions, however. As SINALTRAINAL marshaled evidence in 2000 for a
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lawsuit against Coca-Cola, labor leaders had to decide which cases of rights violations to privilege. Coca-Cola workers had experienced anti-union violence for many years. Although Isidro Gil’s assassination was not the first time paramilitaries or state security forces attacked SINALTRAINAL members, US labor lawyers were reluctant to contextualize the human rights violations in reference to long-term class struggles with the Coca-Cola Company or the violent history of 20th-century Colombian capitalism for fear of diluting the case. The lawsuit, despite its potential benefits to the plaintiffs, focused on individual cases of rights violations and could not by itself provide more than a partial solution to widespread exploitation. Moreover, based on legal advice from US attorneys, unionists concluded that the assassination of Gil and several other violations that occurred the same year were more likely to attract international attention and galvanize popular support for the union than older instances of rights violations, and they tailored their presentations abroad and to visiting labor delegations to reflect SINALTRAINAL’s ‘recent history’. Yet, despite the merits of this approach, the exclusion of pre-1996 history, especially the quotidian economic battles that workers constantly fought with the corporation, misrepresented SINALTRAINAL’s stormy relationship with the Coca-Cola Company, and it downplayed or silenced the suffering of some of the union’s oldest members.
Building an international movement brought other risks and pitfalls. On the one hand, developing transnational alliances highlights the human rights violations suffered by workers and increases pressure on the Coca- Cola Company to account for abuses and better protect its workforce. The warm reception given to leaders abroad and the enthusiastic delegations of human rights activists that the union receives in Colombia fill workers with optimism and boost union morale. Perhaps most importantly, however, SINALTRAINAL leaders maintain that some of them are still alive because of the letters, faxes and emails sent to corporate and government officials by international activists who denounced the deplorable violence targeted against unionists. On the other hand, promoting international solidarity raises the stakes for the union and its leaders. The Coca-Cola Company has responded to the union’s lawsuit by filing slander charges against SINALTRAINAL leaders in a Colombian court, obliging them to waste precious time and money defending themselves, and by forcing workers to listen to managers read statements that characterize the union’s charges as ‘reckless’. In carefully coded language, company officials also imply that SINALTRAINAL is little more than a guerrilla organization. ‘SINALTRAINAL’, according to one Colombian spokesperson, ‘only wants conflict. It is anti-[government], anti-globalization, anti-[government] security plan, and anti-Plan Colombia.’28
Forging transnational alliances also obliges union leaders and their international allies to deal with new challenges that, as Edelman (2005) notes, include different histories, problems, languages, political orientations
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and leadership styles. The networks that activists create within and between countries are often very ephemeral and do not always work. For example, ongoing communication via the Internet and email is difficult when individuals are unable to speak the other’s language. Moreover, the US-based alliance of students, labor unions, lawyers and corporate campaigners is fraught with tension between white, old-Left labor activists and a younger generation of Latino campus organizers. In Colombia, the time-consuming work of international organizing pulls SINALTRAINAL leaders away from their biggest and most basic struggles that continue to take place in Colombia. Unionists know that SINALTRAINAL must reverse the loss of members and grow if it is to wield any power with the Coca-Cola Company. Indeed, organizing temporary workers, addressing the pressing needs of rank-and-file members and responding to the latest company outrages are immediate concerns that require the constant attention of labor leaders.
Some in the rank-and-file question SINALTRAINAL’s commitment to transnational activism and the boycott of Coca-Cola products. They believe that if the boycott strikes a blow against the company’s share of the soft drink market, working people like themselves, who bottle and distribute the beverage, are most likely to suffer. Colombia’s main trade union con- federation, the Central Unitaria de Trabajadores (CUT), holds the same position and has not supported SINALTRAINAL. In the United States, some members of the US Steel Workers’ Union and the Teamsters Union, whose members distribute Coca-Cola products, share similar views, and, until recently, they have been less enthusiastic about the boycott than condemn- ing the human rights violations addressed in the court case. To a certain degree, such sentiments explain why North American and European college students are the most vigorous backers of the boycott, and they are used by the company to exploit divisions among its critics. As one Colombian spokesperson insisted, ‘Several affiliates [of SINALTRAINAL] are not happy with how the national leadership is handling the anti-Coca Cola campaign. [This is because] SINALTRAINAL is putting at risk the jobs of the people . . . while the national leaders tour the world.’29
Even under the best circumstances, organizing non-union workers is a daunting task that requires great discretion and the creation of clandestine networks. It demands person-to-person contact inside and outside the work- place, and the painstaking toil of cultivating rank-and-file leaders in each bottling plant. SINALTRAINAL has adopted a policy that permits any worker, regardless of their contract, to join the organization, and SINALTRAINAL leaders have pressured the company to pay subcontracted workers the same wages as direct hires. In this way, the leadership tries to demonstrate to subcontracted, non-unionized employees that a union can bring advantages to them. SINALTRAINAL leaders also understand that the rank-and-file must play a part in setting the union’s agenda if workers are going to invest their time and energy into the organization. Nevertheless,
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organizing the unorganized, developing union democracy and promoting leadership accountability is extremely complicated in the world of Colombian Coca-Cola workers, where violence is the solvent of trust and peaceful efforts to improve workers’ lives are repressed with extreme brutality. Violence and fear undermine internal debate and corrode the democratic potential of elections.
Conclusion
The case of SINALTRAINAL demonstrates all too clearly how political violence and the intensification of accumulation by dispossession have generated new ruptures and vulnerabilities in the lives of Coca-Cola workers and their families. Many Coca-Cola workers experience daily life less as a cohesive, relatively predictable unfolding of events than as an untenable, anxiety-ridden existence that episodically descends into social psychosis. As neoliberalism has aggravated economic insecurity, political violence has isolated people from each other and opened up new possi- bilities for capital accumulation by creating chaos in workers’ lives and exposing them to new forms of exploitations. Workers’ living conditions illustrate how men and women must construct an array of social relation- ships to contend with both the havoc of daily life and the particular order sought by the Coca-Cola Company and the Colombian state. They also demonstrate the complexities of rebuilding social life and viable unions in situations where people have little control over what is happening and enjoy few alternatives.
As union leaders contend with the transformations wrought by the violent restructuring of labor relations in Colombia and simultaneously try to build international alliances, they are pulled in many directions. Unionists endure the impossible dilemmas that fear and violence generate within their families, but they are particularly alarmed by the erosion of male bonds of solidarity and sociality brought on by the turbulent re- structuring of the Coca-Cola labor force. The degradation of work at Coca- Cola diminishes the strength of SINALTRAINAL, and its ability to make demands on the company and the Colombian state. It corrodes men’s ability to protect and provide for their families, but potentially opens up new possibilities for rethinking traditional notions of masculinity.
As SINALTRAINAL leaders have internationalized their struggle against the Coca-Cola Company, they have forged alliances that present new opportunities and new challenges. Male unionists evaluate the struggle in terms of their ability to build new transnational ties, institutional alliances and social collectivities, but women assess the price of union activism more in terms of increasing isolation and family dysfunction. How to confront the profound changes wrought by the political and economic violence of neoliberalism is a question that working people will continue
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to develop and refine. At stake are the kinds of relationships, institutions and forms of solidarity that they are able to build. Also at stake are the ways that working people can use these relationships and institutional forms to overcome the social fragmentation and the forms of accumulation by dispossession associated with neoliberalism, and to advance a conceptual- ization of rights that unites social justice and economic equality for both men and women.
Acknowledgements
I would like to thank the following people for their helpful comments on earlier versions of this article: Leigh Binford, Jo-Marie Burt, Marc Edelman, Angelique Haugerud, Camilo Romero and several anonymous reviewers.
Notes
1 For more discussion of these cases, see: www.killercoke.org, www.cokewatch.org and www.indiaresource.org (consulted October 2006).
2 See Friedman (2003), Grandin (2004), Hollander (1997), Narotzky and Smith (2006) and Winn (2004) for more discussion of the interconnections between political violence and capitalism.
3 The analysis is based on fieldwork conducted in Colombia during the summers of 2004, 2005 and 2006. I interviewed Coca-Cola workers in seven Colombian cities: Bogotá, Barrancabermeja, Cartagena, Bucaramanga, Barranquilla, Girardot and Villavicencio. These interviews included union leaders, unionized and non-unionized members of the rank and file, and former Coca-Cola workers who currently work in the informal sector. The analysis also draws on interviews with anti-Coca-Cola activists in the United States conducted during 2005.
4 See Chomsky (forthcoming) for an interesting discussion of new international labor activism between left-wing sectors of the US and Colombian labor movements.
5 SINALTRAINAL also organizes workers in Nestlé and several other firms in the food and beverage industry.
6 The discussion of impunity draws on Gill (2004: 163–97). See also Sider and Smith (1997) for an interesting discussion of power and processes of differentiation.
7 See Sider (2003: 44–58, 320–4) for an interesting discussion about how silences define the loss of coherency in working people’s lives. According to Sider, a series of actual and impending ruptures increasingly shape working people’s lives in situations where there are no viable alternatives or answers to what is happening to them. In such situations, people have great difficulty talking about the impossible dilemmas that they face, and, he suggests, silence ‘names the sense of an unavoidable, impending, potential rupture’ between today and tomorow (2003: 322).
8 See, for example, Ross (2004). For a critique of mainstream human rights organizations and their conceptualization of rights, see Chandler (2002).
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9 For discussion on the internal debates surrounding neoliberalism, see, for example, M. Vargas (1993) and Suárez (1994).
10 Although left-wing guerrilla groups are also charged with human rights violations, these violations are not as numerous as those committed by the para- militaries, nor have guerrilla groups systematically targeted labor unions. Colombia’s union leaders figure prominently on paramilitary hit lists because of their left-leaning politics and their criticism of neoliberalism and the policies of multinational firms.
11 The roots of contemporary Colombia violence emerge from the period known as ‘La Violencia’ (1946–53); see Roldan (2002).
12 The controversial ‘Justice and Peace Law’ passed in 2005 grants demobilized paramilitaries reduced sentences of five to eight years, even if they have committed serious human rights violations. It also provides no mechanism to compel combatants to provide information about the offences that they have perpetrated, the assets that they have acquired illegally and the decades-long support that they have received from the Colombian security forces.
13 See the Coca-Cola Company’s web page, www.cokefacts.org, for its defense against charges of conspiring with paramilitaries to violate the rights of its workers.
14 The Coca-Cola Company is not the only multinational corporation that allegedly maintains ties to paramilitaries. According to Richani (2005: 130), the Drummond Corporation, British Petroleum, Occidental Oil, Silver Shadow and Defense Systems Ltd. also have links to illegal paramilitary organizations.
15 Data on union membership was provided by SINALTRAINAL. 16 Interview with Coca-Cola worker, Girardot, Colombia, July 2005. 17 Interview with Coca-Cola worker, Bucaramanga, Colombia, 28 May 2004. 18 Interview with Coca-Cola worker, Bucaramanga, Colombia, 28 May 2004. 19 Interview with Coca-Cola worker, Barrancabermeja, Colombia, 26 May 2004. 20 Tinsman (2002) discusses similar gender conflicts between men and women
in Chilean rural labor politics during mid-20th-century struggles against the latifundia system.
21 For more on the limitations of human rights practice and discourse, see Harvey (2005: 175–82) and Binford (2004).
22 The description in the previous two paragraphs comes from Gill (2005). 23 The charges laid out in the lawsuit are available at the International Labor
Rights Fund in Washington, DC. 24 In a recent study on the Coca-Cola Company, New York Times reporter
Constance L. Hayes (2004) describes how the Coca-Cola Company wrested control away from the bottlers in the 1990s and made any distinction between the Atlanta-based giant and its local bottlers a fiction.
25 Interview with Ray Rogers, New York City, 22 August 2005. 26 Interview with Javier Correa, Bogotá, Colombia, 7 July 2005. 27 For a description of this plan, see: www.SINALTRAINAL.org 28 Interview with Pablo Largacha, Coca-Cola public relations manager, 12 July
2005, Bogotá, Colombia. Plan Colombia was a $1.3 billion mostly military aid program begun under the Clinton administration. Although the military aid has continued under different names during the Bush administration, the US- backed anti-drug and anti-guerrilla program is still widely referred to as Plan Colombia.
29 Interview with Pablo Largacha, Coca-Cola public relations manager, 12 July 2005, Bogotá, Colombia.
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■ Lesley Gill is currently conducting research on how political violence and neoliberal restructuring are transforming the ways that Colombian Coca-Cola workers understand unionism, work and collective action. She is the author of several books, including most recently The School of the Americas: Military Training and Political Violence in the Americas (Duke University Press, 2004). Address: Department of Anthropology, American University, Washington, DC 20016, USA [email: [email protected]]
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Toward a critical framework for understanding MNE operations: Revisiting Coca-Cola’s exit from India
C. Gopinath Suffolk University, USA
Anshuman Prasad University of New Haven, USA
Abstract The exit of Coca-Cola from India in the 1970s has been extensively used in IB textbooks as illustrating the challenges faced by MNEs in difficult political/regulatory environments. In this article, we use critical hermeneutics to challenge the conventional understanding and interpretation of the event. Instead, an understanding of the macro-economic and historical context suggests that the company had other options available to it and may have lost a valuable opportunity due to inflexible policies. IB textbooks should be wary of falling prey to naïve managerialism and instead provide a critical understanding of the operations within a larger context to their readers.
Keywords Coca-Cola, country exit, country risk, international business (IB), MNE operations, multinational enterprises, political/regulatory environment, textbooks
This article seeks to develop a critical framework for understanding multinational enterprises (MNEs) and national governments that overcomes the naïve managerialism of widely used inter- national business (IB) textbooks produced in the West. Toward that end, we specifically focus upon the frequently-cited incident of Coca-Cola Company’s exit from the Indian market in the 1970s. This case has repeatedly been held up in the mainstream Western IB literature as a manifestation of poorly conceived protectionist policies in India. Our article, however, strongly challenges such
Corresponding author: C. Gopinath, Associate Professor, Sawyer Business School, Suffolk University, 8 Ashburton Place, Boston, MA 02108, USA. Email: [email protected]
Article
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an interpretation of the Coca-Cola case. In so doing, the present article’s analysis leads to a signifi- cant revision of existing IB knowledge about Coca-Cola’s exit from India, while simultaneously underscoring the importance of adopting a critical perspective for understanding not only MNE operations, but also Western IB textbooks, generally speaking.
International business (IB) and other management textbooks are not only repositories of the sedimented knowledge of the field, they also play an important role in preparing future managers. Interestingly, however, during recent years a number of scholars have questioned the perspective being presented in management textbooks in general (Cummings and Bridgman, 2011; McLaren et al., 2009), as well as in IB textbooks more specifically (Coronado, 2012; Fougère and Moulettes, 2011; Tipton, 2008). For instance, Cummings and Bridgman (2011) have critiqued management textbooks’ general neglect of the history of management knowledge, and suggested that greater historical awareness among management students would likely encourage them to be more creative managers in the future. Similarly, on the basis of their critical analysis of a large number of North American management textbooks published since 1940, McLaren et al. have offered important insights about the role of socio-political context in ‘the social construction and dissemi- nation of management knowledge’ (2009: 388).
Within the IB field, on the other hand, Coronado (2012) has critically interrogated popular Western textbooks’ problematic representations of Latin American national cultures, and the role of such representations in constructing, what she calls, the ‘neocolonial’ manager. Along similar lines, Fougère and Moulettes (2011) offer a postcolonial critique of discussions of culture in mainstream IB textbooks in the West. Their study suggests, among other things, that notwith- standing the IB textbook’s repeated calls for cultural sensitivity, the treatment of other cultures in those textbooks is generally characterized by cultural insensitivity rather than sensitivity. In a similar vein, Tipton’s study of IB textbooks has identified a range of ‘serious weaknesses’— including ‘errors of fact … errors of interpretation, and … problems with definitions and applica- tion of theories of cultural difference’—in those textbooks’ discussion of culture (2008: 7). Broadly paralleling the endeavours of past scholarly critiques of management and IB textbooks, one of our objectives in this article is to understand how certain simplistic and misinformed interpretations of Coca-Cola’s exit from India continue to persist in mainstream IB textbooks. Among other things, therefore, this article seeks to alert scholars to the importance of developing a self-reflexive and critical orientation toward the ‘knowledge’ being disseminated by major IB textbooks.
The conceptual approach adopted in this study is situated in the twin scholarly traditions of political economy and postcolonial theory. While on the one hand, political economy has provided us with a useful perspective in this article for critically analysing the actions of Coca-Cola Company in the context of economic, political and regulatory developments in India, on the other hand, postcolonial theory has proved to be of value for examining certain issues of cultural repre- sentation relevant to the present case. It may be useful to note here that the scholarly traditions of political economy and postcolonial theory seem to exist in a unique relationship which, while often being somewhat tense, is also highly productive in intellectual terms (Lazarus, 2004; Prasad, 2003, 2012; Spivak, 1999). Not surprisingly, therefore, researchers from a variety of fields have made increasing calls for creatively combining the insights of these two traditions for purposes of in-depth critical inquiry (e.g. Chari and Verdery, 2009; Loomba et al., 2005). Indeed, an important example of such a call is to be found within the pages of this very Journal itself. Specifically, writ- ing their introduction to the special issue on ‘Postcolonialism’, Organization 2011, the Special Issue Editors explicitly called for ‘deepening and broadening’ postcolonial inquiry in organization
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studies by means of, among other things, developing ‘critique via political economy’ (Jack et al., 2011: 281). Accordingly, the present article may be seen as an instance of critical organizational research informed by a postcolonial sensibility that draws significantly upon the insights of political economy. For purposes of data analysis, this article utilizes the methodology of critical hermeneutics. The usefulness of critical hermeneutics for this research has been discussed later in the methodological section of the article.
We focus upon Coca-Cola in this article for a number of reasons. As all of us are well aware, descriptions of corporate actions are quite commonly used to illustrate concepts in textbooks, and publishers frequently advertise that their books are ‘packed with examples’. These examples seek to show how theory works in the ‘real world’. Examples are drawn, most often, from the experi- ence of MNEs for two reasons. First, the field of IB has generally focused on the activities of MNEs as they have led internationalization of business and thereby provided the environment for scholars to study. Second, there is publicly available information about the activities of MNEs and textbook authors can find examples more easily to draw upon.
Coca-Cola is an MNE that is frequently referred to in IB textbooks owing to the extent of its internationalization. Of 694 companies listed in the Company Index in the Griffin and Pustay (2007) book, only two companies are cited more frequently than Coca-Cola. It earns more revenues and profits overseas than in its home country. Moreover, operating in over 197 countries, the company’s main product, the cola soft-drink, also serves to illustrate a product that is almost the same all across the world. All in all, as Rugman and Hodgetts’ (1995) analysis of Coke’s vari- ous corporate characteristics (e.g. production and distribution, strategic orientation, international partnerships, etc.) indicates, the company may be seen as the quintessential MNE.
Coca-Cola, thus, is widely viewed as an example of a company that genuinely illustrates internationalization in its various forms and serves as an exemplar of international management. We chose Coca-Cola’s exit from India as a specific issue of interest for our study because the event is frequently mentioned in a number of IB textbooks as an illustration of the many challenges of doing international business. Moreover, the example continues to be cited in textbooks even 30 years after the event suggesting that it has achieved a certain level of acceptance among educators in the field.
Set against the preceding backdrop, our objective in this article is to develop an enhanced critical understanding of Coca-Cola’s exit from India, as well as of major IB textbooks’ interpretations of that event. The rest of this article consists of four sections. First, we discuss our use of critical hermeneutics as the methodology for the present article. Second, we outline salient details regard- ing Coca-Cola’s exit from India, and sketch out how Coke’s exit has generally been interpreted in IB textbooks. Next, we present our critical analysis of the business situation under consideration and, in so doing, considerably enrich the current understanding and knowledge about Coke’s exit from India. Finally, we conclude with a brief discussion of implications.
The methodology of critical hermeneutics
During past years, there seems to have been a marked growth of hermeneutics oriented research in several business-related scholarly fields, such as accounting (Francis, 1994; Llewellyn, 1993), business communication (Phillips and Brown, 1993; Prasad and Mir, 2002), management informa- tion systems (Butler, 1998; Klein and Myers, 1999), marketing (Arnold and Fischer, 1994; Hirschman, 1990), organizational behaviour and theory (Gabriel, 1991; Mercier, 1994), and so forth. In this connection, moreover, Noorderhaven has pointed out that hermeneutics may well be
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especially valuable for the field of IB because the hermeneutic approach ‘does justice to the challenges formed by the unique character of international business … as a field’ (2004: 84). Noorderhaven (2004: 84) identifies the concept of distance in its two senses—namely, (a) ‘the geographical, social, political, economic, cultural and linguistic distance’ between the actual actors involved in international business transactions, and (b) the distance between researchers and their objects of research which invariably involve ‘a social reality which is much more distant to them than if they were studying domestic organizations or management processes’—as indicative of the unique character of the field of international business. At a fundamental level, therefore, IB research requires a methodology that would help scholars bridge the said distance. According to Noorderhaven (2004), hermeneutics is precisely such a methodology. The various methodological elements that enable hermeneutics-oriented research to meaningfully bridge the aforesaid distance will be outlined below during the course of our discussions in this section of the article.
Hermeneutics originally emerged as an approach for interpreting complex religious, legal and literary texts. During recent years, however, hermeneutic scholars have significantly broadened the meaning of the term, text, to include not only written documents, but also social and economic practices, culture and cultural artifacts, institutional activities and structures, and so on (Ricoeur, 1971). Hermeneutics, hence, now serves qualitative/critical management research as a valuable methodology, allowing scholars to interpret not only documents, but also the much wider range of ‘texts’ spanning a variety of micro- and macro-level organizational practices and phenomena (Gabriel, 1991; Noorderhaven, 2004; Prasad, A. 2002; Prasad, P. 2005).
Although the origins of hermeneutics may be traced back to ancient Greece, the conceptual archi- tecture of contemporary hermeneutics has been fashioned primarily by the intellectual efforts of major modern European philosophers like Schleiermacher, Dilthey, Heidegger, Gadamer, Habermas and Ricoeur (Bleicher, 1980; Ormiston and Schrift, 1990; Palmer, 1969). Space considerations here do not permit a detailed discussion of hermeneutics, which may be found in various other sources cited in this article (e.g. Noorderhaven, 2004; Prasad, 2002). In brief, the hermeneutic approach to interpretation—or, to be more precise, the critical hermeneutic approach to interpretation—is based upon five major methodological concepts: (a) hermeneutic circle, (b) hermeneutic horizon, (c) interpretation as dialogue and fusion of horizons, (d) non-author-intentional view of textual meaning and (e) the significance of critique in interpretation. Taken together, these five elements enable IB researchers to (1) bridge the distance which, as we noted earlier, Noorderhaven (2004) has identified as a unique characteristic of international business, and also (2) allow scholars to develop a critical understanding of the phenomenon under investigation
The concept of hermeneutic circle proposes that ‘the part [can only be] understood from the whole and whole from … its parts’ (Palmer, 1969: 77). In other words, any text—such as a cor- porate document or an organizational event (‘the part’)—can only be understood by situating the said text within the overall totality of its cultural and historical context (‘the whole’), and under- standing ‘the whole’ only takes place by means of understanding the various ‘parts’ that constitute the ‘whole’. For management researchers, therefore, the concept of hermeneutic circle emphasizes the crucial importance of context and history in interpreting any organizational phenomenon. The concept of hermeneutic horizon, on the other hand, draws attention to the fact that (a) similar to the embeddedness of a text in its own cultural and historical context, any person undertaking to interpret a given text is likewise embedded in her/his own context and (b) that the interpreter’s historico-cultural context is never precisely the same as that of the text being interpreted (Prasad, 2002; Prasad and Mir, 2002). Hence, according to the hermeneutic approach, interpreting and understanding a text involves a dialogue (between the text and the interpreter of the text) that seeks to achieve a fusion and integration of the respective horizons of the text and that of the
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interpreter. Such a fusion of horizons ‘requires … the … suspension of [the interpreter’s unproductive] prejudices’ (Gadamer, 1975: 266).
The nature of hermeneutic interpretation as a fusion of horizons, however, involves also a pro- found recognition that the interpretive act is irrevocably rooted in the present, and is necessarily mediated via the hermeneutic situatedness of the interpreter in the present. According to the her- meneutic perspective, therefore, interpretation does not imply an attempt to reconstruct or recover the intended meaning of the text’s author. In other words, hermeneutic interpretation subscribes to a non-author-intentional view of meaning, and holds that ‘the meaning of a text [always] goes beyond its author’ (Gadamer, 1975: 264). The need to critically suspend unproductive prejudices and the rejection of author-intentionality alert us to the importance of the critical dimension in hermeneutics. Hermeneutic interpretation requires both a self-critical orientation on the part of the interpreter, as well as a critical stance toward the ‘text’ being interpreted. This aspect of critique in hermeneutic interpretation may sometimes be facilitated by recourse to various critical scholarly perspectives (e.g. Marxism, neo-Marxism, feminism, postcolonialism, etc.), with the result that hermeneutics comes to be transformed into critical hermeneutics. As already indicated in our intro- duction, the critical element in the present research is provided by this article’s mobilization of insights from the intellectual traditions of political economy as well as postcolonial theory.
As the foregoing discussion suggests, documents and texts often serve as key data elements in (critical) hermeneutic research. For purposes of data collection and analysis, we began our study by scrutinizing a number of popular IB textbooks for references to Coca-Cola’s exit from India. In all, our research identified 18 textbooks, representing those that have been published by major publishers and/or have gone through repeated editions. Four textbooks were subsequently dropped from the study because they had no reference to the Coke exit, leaving 14 textbooks in our final data pool. We then followed up and accessed the specific citations (newspaper and/or journal references) that the authors of these textbooks had provided in connection with their discussion of this event. Thereafter, we extended our document search to the Academic Universe (Lexis/Nexis) data base for references to the Coca-Cola episode in prominent news sources like the Wall Street Journal, New York Times and Business Week. Alongside, we also conducted a similar search in the accessible archives of The Hindu and Times of India, two of the leading newspapers in India.
In order to deepen our understanding of Coke’s exit, we examined India’s FERA legislation (discussed below). We also undertook a Google Scholar database search of journal articles that mentioned the subject, and looked at articles dealing with multinationals in Third World countries, as well as articles that examined exit of MNEs (whether or not such articles specifically referenced the issue of Coke’s exit from India). In addition, our research also involved interviews with two senior Government of India officials (now retired)—one from the Ministry of Industry and the other from the Ministry of Finance— who were responsible for dealing with the Coca-Cola issue in the 1970s.
We wrote to Coca-Cola Company in Atlanta, requesting copies of relevant internal documents. In their reply, the company’s Executive Counsel stated that ‘the company does not maintain cor- respondence from that time period’ in its Atlanta office and will, in due course, try to send any relevant information the company might still have in its Indian office. However, the company has been unable to send us any materials thus far and, conceivably, the relevant materials have not been retained in the company’s Indian office either. Hence, our research mainly confines itself to pub- licly available materials. In the next section of the article, we first provide some brief background information about Coca-Cola’s exit from India, and then review how Coke’s exit has been com- monly interpreted in widely-used IB textbooks.
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Coca-Cola’s exit from India
Coca-Cola first began operating in the Indian market in 1956. In 1973, the Indian parliament passed the Foreign Exchange Regulation Act (FERA), which came into effect on January 1, 1974. The act sought to regulate payments and dealings in foreign exchange for the purpose of ‘conserva- tion of the foreign exchange resources of the country and the proper utilization thereof in the inter- ests of the economic development of the country’ (FERA, 1973). The various sections of the act laid out rules relating to who was authorized to deal in foreign exchange, the conditions under which money could be changed, regulations about making payments in foreign exchange for imports, how money received from exports was to be accounted for, and so on. Section 29(2)(a) of the Act (and accompanying guidelines) required that foreign companies that owned more that 40% equity in their Indian operations get the permission of the Reserve Bank of India to continue in business (Nayak et al., 2005). Four levels of foreign equity participation were permitted under FERA. First, trading companies and manufacturing companies not using sophisticated technology (e.g. Coca-Cola) were required to restrict foreign equity holding to 40% of total equity. Second, ‘high-tech’ companies could retain foreign equity up to a maximum of 74% of the total. Third, multi-activity companies in both high-tech and trading businesses could retain 51% foreign equity. Fourth, purely export oriented companies were permitted to retain 100% foreign equity (FERA, 1973; Negandhi and Palia, 1988).
Faced with the stipulations of FERA, some 63 foreign companies in India that did not want to dilute their equity decided to wind-up operations by 1980–1981. In contrast, over 1000 foreign companies complied with FERA. The Government of India (GOI) allowed majority holdings in the case of over 100 enterprises. Many who chose to stay by diluting equity, where necessary, benefited as it allowed them to raise fresh capital at a time when access to capital markets was restricted, and also enabled them to raise market shares (Athreye and Kapur, 2001; Nayak et al., 2005; Subramanian, 2002, 2007).
In accordance with FERA, Coca-Cola Export Corporation (which was 100% US owned and operated a branch in India) was asked to sell 60% of the equity to Indian nationals. In response, Coca-Cola made a counter offer stating that two companies be formed: one company with 40% equity to be in charge of bottling and distribution, and a separate company—termed a technical or administrative unit, in which the US parent firm would retain 100% equity—to be responsible for importing the concentrate used in making the soft drink, and to exercise control over the other company. This proposal was found unacceptable by the GOI. These facts were extensively reported in the press.
Independent of the requirement of dilution of equity, Coca-Cola (along with all other companies that needed to import materials) was required to obtain every quarter a license to import the con- centrate needed for the soft drink. At about the same time as the equity dilution issue was under negotiation, a new official took charge of the GOI office responsible for approving import licenses. In accordance with extant government regulations that covered import of food items into the coun- try, he required Coca-Cola to report to GOI the specific ingredients used in the concentrate and/or have the product safety tested in the government food laboratories as a condition for grant of import license. Coca-Cola refused to do so (Mahadevan, 2007). The company then decided to withdraw from India.
Current interpretations of Coca-Cola’s exit from India
Our review of existing interpretations of Coca-Cola’s exit draws upon discussions of the event appearing in a set of 14 popular IB textbooks widely used in the United States and elsewhere.
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218 Organization 20(2)
In general, IB textbooks aim to provide a causal explanation for Coke’s exit, and often frame their discussions around certain concerns the firm is said to have had about losing its secret formula for the Coca-Cola concentrate. For instance, according to Wild et al. (2010), ‘Coca- Cola … left India when the [Indian] government demanded that it disclose its secret formula as a requirement for doing business’ in India (p. 329). Similarly, Peng (2009) asserts that the com- pany withdrew because the ‘Indian government … demanded that Coca-Cola share its secret formula’ (p. 161; see also Peng, 2011: 10), and Holt and Wigginton (2002) declare that the company exited from the Indian market because ‘India attempted to gain access to Coke’s highly guarded formula for its syrup’ (p. 75). Likewise, Griffin and Pustay (2007:43) argue that:
… as a condition for remaining in the country, the Coca-Cola company was retroactively required in the 1970s to divulge its secret soft drink formula. Coca-Cola refused and chose to leave the market.
Somewhat distinct from the aforementioned accounts, which seek to portray Coke’s withdrawal as a fairly direct result of GOI’s demand that the company share its concentrate’s secret formula, other textbooks offer an explanation for Coca-Cola’s exit that relies more upon the FERA require- ment for dilution of foreign equity and the supposed risks such dilution posed for the company’s intellectual property rights involving its secret concentrate formula. For instance, Deresky (2006: 318) argues that:
In the regulatory environment of the late 1970s, foreign companies operating in any non-priority sector in India could not own more than 40% stake in the venture. Coca-Cola ran its operations through a 100% subsidiary. After the company refused to partner with an Indian company and share its technology it had to stop its operations and leave the country. (emphasis added)
Similarly, Hill (2011a: 84; 2011b: 79) provides the following clarification for Coke’s exit:
… in the 1970s when the Indian government passed a law requiring all foreign investors to enter into joint ventures with Indian companies, US companies … [like] Coca-Cola closed their investments in India. They believed that the Indian legal system did not provide for adequate protection of intellectual property rights, creating the very real danger that their Indian partners might expropriate … intellectual property … .(emphasis added)
In other words, authors like Deresky (2006) and Hill (2011a, 2011b) do not make the argument that Coca-Cola withdrew from India because the GOI demanded that the company divulge Coke’s secret formula. Rather, their contention seems to be that GOI enacted new legislation (namely, FERA) requiring Coca-Cola to reduce its foreign equity and enter into joint venture with an Indian firm, and that Coca-Cola was unwilling to do so because partnering with an Indian firm put Coke’s secret formula at risk. Explanations that follow this line of reasoning are offered also by some other textbooks (e.g. Czinkota et al., 2005; Punnett and Ricks, 1997), as well as by certain scholarly articles (e.g. Encarnation and Vachani, 1985). Tallman (2009: 30) refers to a ‘loss of proprietary resources’ for the company. In our review, Hodgetts et al. (2006: 32), stood out from the other textbooks by referring to the exit as having been caused by ‘a change of rules’ in the country and not providing any interpretation.
In certain cases, the aforesaid explanations are accompanied by references to specific reports published in US newspapers during the 1970s that seem to support the textbooks’ contentions. A representative sample of those newspaper reports is given below.
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Gopinath and Prasad 219
… [the Government of India demanded that] … Coca-Cola deliver the secret of 7X [beverage concentrate] … . (Wall Street Journal, Editorial, August 10, 1977)
The Government [of India] has asked Coca-Cola to surrender its secret syrup formula to an Indian- controlled concern or get out by next April. (New York Times, August 25, 1977)
… Indian Government demands … a controlling interest in the company and … full disclosure of the soft drink formula so that Indian manufacturers can produce the beverage. (New York Times, August 31, 1977)
… the Company [is required to] … transfer … the formula for its concentrate to Indian shareholders or cease operations in India. (New York Times, September 5, 1977)
In sum, IB textbooks’ explanations for Coke’s exit do seem to run in tandem with US newspaper accounts published at the time, that contend that Coca-Cola withdrew either because (a) the GOI demanded that the company reveal its secret concentrate formula or (b) because the GOI demanded that the company dilute its equity to 40% of total, and become a junior partner in a joint venture with an Indian firm that would hold the remaining 60% equity.
At this juncture, it becomes important for purposes of analysis to pay close attention to some of the finer empirical details of the business situation under consideration. When we do so, we find that the two basic assumptions—namely, (a) GOI’s alleged demand for the secret concentrate formula and (b) GOI’s supposed requirement that Coca-Cola become a junior partner in a joint venture—which provide the foundation for various accounts appearing in US newspapers as well as IB textbooks, are unwarranted and cannot be justified. A careful examination of the empirical details indicates that (a) the GOI neither demanded the secret concentrate formula for itself nor did GOI insist that an Indian partner be given the formula, and (b) that the GOI did not require Coca-Cola to become a junior partner: in other words, the 60% equity required to be held by Indian shareholders as per FERA could be widely dispersed among the Indian public, leaving effective control in the hands of Coca-Cola (Encarnation and Vachani, 1985; FERA, 1973; Mahadevan, 2007; Negandhi and Palia, 1988; Subramanian, 2007).
Clearly, therefore, many popular textbooks’ explanations of Coke’s exit seem to rely upon mis- taken statements of important ground-level facts and, as a result, may be seen as seriously limited. However, in addition to recognizing the significance of such errors, we can develop deeper insights into the limitations of the IB textbooks’ interpretations by examining the somewhat restricted way in which these textbooks tend to define the context for their analysis of the event. As noted earlier, hermeneutics emphasizes the importance of overall context and history for purposes of adequately interpreting organizational activities. From the hermeneutic perspective, therefore, IB textbooks’ interpretations are rather limited because these textbooks invariably choose to proceed with their analysis within a narrowly defined context, specifically, only the context of political and regulatory changes taking place in India at that time. Table 1 summarizes our analysis of the ways in which major IB textbooks portray Coke’s exit.
Table 1 identifies (a) the specific chapters and/or major sections, as well as (b) the sub-section and/or paragraph under which popular IB textbooks generally place their discussions of this inci- dent. As the table indicates, these textbooks mostly locate Coca-Cola’s exit within the context of the regulatory or political environment of the country, the changes occurring within this environ- ment and the risks such changes might pose for foreign firms. Once the context has been so defined, the explanations being offered by the textbooks follow certain specific trajectories. These include claims such as Coke withdrew from India because of (a) GOI’s demand for the secret concentrate
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220 Organization 20(2) T
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m en
ts . …
I n
so m
e ca
se s,
de m
an ds
o f th
is t
yp e
ha ve
le d
to f ir
m s’
p ac
ki ng
t he
ir b
ag s.
Fo r
ex am
pl e,
C o ca
-C o la
le ft
I nd
ia w
he n
th e
go ve
rn m
en t
de m
an de
d ac
ce ss
t o
w ha
t th
e fir
m c
o ns
id er
ed t
o b
e co
nf id
en ti al
in te
lle ct
ua l p
ro pe
rt y’
2. D
er es
ky 2
00 6,
p.
31 8
(C as
e w
ri tt
en b
y IC
FA I)
C as
e: ‘P
ep si
’s e
nt ry
in
to I nd
ia ’
Le tt
er t
o P
ep si
‘In t
he r
eg ul
at o ry
e nv
ir o nm
en t
o f t
he la
te 1
97 0s
, f o re
ig n
en te
rp ri
se s
o pe
ra tin
g in
a ny
n o n-
pr io
ri ty
s ec
to r
in In
di a
co ul
d no
t o w
n m
o re
t ha
n a
40 %
s ta
ke in
t he
v en
tu re
s. C
o ca
-C o la
r an
it s
o pe
ra tio
ns t
hr o ug
h a
10 0%
su
bs id
ia ry
. A ft er
t he
c o m
pa ny
r ef
us ed
t o p
ar tn
er w
ith a
n In
di an
c o m
pa ny
an
d sh
ar e
its t
ec hn
o lo
gy , i
t ha
d to
s to
p its
o pe
ra tio
ns a
nd le
av e
th e
co un
tr y’
3. G
ri ffi
n an
d Pu
st ay
, 20
07 , p
. 4 3
G lo
ba l m
ar ke
tp la
ce s
an d
bu si
ne ss
ce
nt er
s/ T
he
m ar
ke tp
la ce
s o f A
si a
In di
a/ p
ro fil
e ‘U
nt il
19 91
, I nd
ia d
is co
ur ag
ed fo
re ig
n in
ve st
m en
t, lim
it in
g fo
re ig
n o w
ne rs
to
m in
o ri
ty p
o si
ti o ns
in I nd
ia n
en te
rp ri
se s
an d
im po
si ng
o th
er o
ne ro
us
re qu
ir em
en ts
. F o r
ex am
pl e,
a s
a co
nd it io
n fo
r re
m ai
ni ng
in t
he c
o un
tr y,
th e
C o ca
-C o la
c o m
pa ny
w as
r et
ro ac
ti ve
ly r
eq ui
re d
in t
he 1
97 0s
t o
di vu
lg e
it s
se cr
et s
o ft
d ri
nk fo
rm ul
a. C
o ca
-C o la
r ef
us ed
a nd
c ho
se t
o
le av
e th
e m
ar ke
t’ 4.
H ill
, 7 e
d. , 2
01 1a
, p.
84 N
at io
na l d
iff er
en ce
s in
p o lit
ic al
e co
no m
y Fo
cu s
o n
m an
ag er
ia l
im pl
ic at
io ns
/r is
ks ‘W
he n
le ga
l r is
ks in
a c
o un
tr y
ar e
hi gh
, a n
in te
rn at
io na
l b us
in es
s m
ay
he si
ta te
e nt
er in
g in
to a
lo ng
-t er
m c
o nt
ra ct
o r
jo in
t- ve
nt ur
e ag
re em
en t
w it h
a fir
m in
t ha
t co
un tr
y. Fo
r ex
am pl
e, in
t he
1 97
0s w
he n
th e
In di
an
go ve
rn m
en t
pa ss
ed a
la w
r eq
ui ri
ng a
ll fo
re ig
n in
ve st
o rs
t o e
nt er
in to
jo in
t ve
nt ur
es w
it h
In di
an c
o m
pa ni
es , U
S co
m pa
ni es
s uc
h as
IB M
a nd
C o ca
-C o la
cl
o se
d th
ei r
in ve
st m
en ts
in In
di a. T
he y
be lie
ve d
th at
t he
In di
an le
ga l s
ys te
m
di d
no t
pr o vi
de fo
r ad
eq ua
te p
ro te
ct io
n o f i
nt el
le ct
ua l p
ro pe
rt y
ri gh
ts ,
cr ea
ti ng
t he
v er
y re
al d
an ge
r th
at t
he ir
In di
an p
ar tn
er s
m ig
ht e
xp ro
pr ia
te
th e
in te
lle ct
ua l p
ro pe
rt y
o f t
he A
m er
ic an
c o m
pa ni
es ––
w hi
ch fo
r IB
M a
nd
C o ca
-C o la
a m
o un
te d
to t
he c
o re
o f t
he ir
c o m
pe ti ti ve
a dv
an ta
ge ’
5. H
ill , 8
e d.
, 2 01
1b ,
p. 79
N at
io na
l d iff
er en
ce s
in p
o lit
ic al
e co
no m
y/
Fo cu
s o n
m an
ag er
ia l
im pl
ic at
io ns
Im pl
ic at
io ns
fo r
m an
ag er
s/ r
is ks
[T ex
t sa
m e
as H
ill (
20 11
a: 8
4) ; s
ee a
bo ve
]
(C on
tin ue
d)
at RMIT UNIVERSITY on December 14, 2014org.sagepub.comDownloaded from
Gopinath and Prasad 221
N o.
B o o k
C ha
pt er
/ m
aj o r
se ct
io n
Se ct
io n/
p ar
ag ra
ph
co nt
ex t
Q uo
te
6. H
o dg
et ts
, e t
al .,
20 06
, p . 3
2. G
lo ba
liz at
io n
an d
w o rl
dw id
e de
ve lo
pm en
ts
In di
a ‘In
t he
m id
1 97
0s , t
he c
o un
tr y
ch an
ge d
it s
ru le
s an
d re
qu ir
ed t
ha t
fo re
ig n
pa rt
ne rs
h o ld
n o m
o re
t ha
n 40
% o
w ne
rs hi
p in
a ny
b us
in es
s. A
s a
re su
lt ,
so m
e M
N C
s le
ft I nd
ia .’
7. H
o lt a
nd
W ig
gi nt
o n
20 02
, p.
75
G o ve
rn m
en t
re la
ti o ns
a nd
po
lit ic
al r
is k/
Pr o fil
e
D o ug
la s
D af
t, C
EO /
ex pe
ri en
ce o
f cr
is es
‘G o iz
ue tt
a an
d C
o ca
-C o la
a ls
o e
xp er
ie nc
ed m
o re
t ha
n a
fe w
c ri
se s.
Ea rl
y o n,
I nd
ia a
tt em
pt ed
t o g
ai n
ac ce
ss t
o C
o ke
’s h
ig hl
y gu
ar de
d fo
rm ul
a fo
r it s
sy ru
p. I n
w ha
t w
as c
al le
d a
bl at
an t
fo rm
o f po
lit ic
al b
la ck
m ai
l, In
di an
o ffi
ci al
s an
d in
ve st
o rs
w an
te d
tr ad
e se
cr et
s in
r et
ur n
fo r
C o ca
- C
o la
’s li
ce ns
in g
ri gh
ts t
o b
o tt
le a
nd m
ar ke
t in
I nd
ia ’.
‘G o iz
ue tt
a st
o o d
hi s
gr o un
d, a
nd C
o ke
w it hd
re w
f ro
m I nd
ia u
nt il
ag re
em en
ts c
o ul
d be
re
ac he
d w
it ho
ut c
o rr
up ti o n
o r
po lit
ic al
a va
ri ce
’ 8.
Pe ng
, 2 00
9, p
.1 61
En te
ri ng
fo re
ig n
m ar
ke ts
/ In
st it ut
io n
ba se
d co
ns id
er at
io ns
R eg
ul at
o ry
r is
ks /
ex pr
o pr
ia ti o n
‘T he
g o ve
rn m
en t’s
t ac
ti cs
in cl
ud e
re m
o vi
ng in
ce nt
iv es
, d em
an di
ng a
hi
gh er
s ha
re o
f pr
o fit
s an
d ta
xe s,
an d
ev en
c o nf
is ca
ti ng
fo re
ig n
as se
ts ––
in
o th
er w
o rd
s, ex
pr o pr
ia ti o n.
T he
I nd
ia n
go ve
rn m
en t
in t
he 1
97 0s
, f o r
ex am
pl e,
d em
an de
d th
at C
o ca
-C o la
s ha
re it
s se
cr et
fo rm
ul a, s
o m
et hi
ng
th at
t he
M N
E di
d no
t ev
en s
ha re
w it h
th e
U S
go ve
rn m
en t.
A t
th is
t im
e,
th e
M N
E ha
d al
re ad
y in
ve st
ed s
ub st
an ti al
s um
s o f re
so ur
ce s
(c al
le d
su nk
co
st s)
a nd
o ft
en h
as t
o a
cc o m
m o da
te s
o m
e ne
w d
em an
ds ; o
th er
w is
e it m
ay f ac
e ex
pr o pr
ia ti o n
o r
ex it a
t a
hu ge
lo ss
( as
C o ca
-C o la
d id
in
In di
a) …
. C o ca
-C o la
, f o r
ex am
pl e,
a gr
ee d
to r
et ur
n to
I nd
ia in
t he
1 99
0s
w it h
an e
xp lic
it c
o m
m it m
en t
fr o m
t he
g o ve
rn m
en t
th at
it s
se cr
et
fo rm
ul a
w o ul
d be
u nt
o uc
ha bl
e’ 9.
Pe ng
, 2 ed
., 20
11 ,
p. 1
0. G
lo ba
liz in
g bu
si ne
ss A
n in
st it ut
io n
ba se
d vi
ew ‘P
ri o r
to 1
99 1,
I nd
ia ’s r
ul es
s ev
er el
y di
sc ri
m in
at ed
a ga
in st
fo re
ig n
fir m
s. A
s a
re su
lt , f
ew fo
re ig
n fir
m s
bo th
er ed
t o s
ho w
u p,
a nd
t he
fe w
t ha
t di
d ha
d a
ha rd
t im
e. F
o r
ex am
pl e,
in t
he 1
97 0s
, t he
I nd
ia n
go ve
rn m
en t
de m
an de
d th
at C
o ca
C o la
e it he
r ha
nd o
ve r
th e
re ci
pe fo
r it s
se cr
et
sy ru
p, w
hi ch
it d
o es
n o t
ev en
s ha
re w
it h
th e
U S
go ve
rn m
en t,
o r
ge t
o ut
o f In
di a. P
ai nf
ul ly
, C o ca
C o la
c ho
se t
o le
av e.
I ts
r et
ur n
to I nd
ia s
in ce
th
e 19
90 s
sp ea
ks v
o lu
m es
a bo
ut h
o w
m uc
h th
e ru
le s
o f th
e ga
m e
ha ve
ch
an ge
d in
I nd
ia ’
T a b
le 1
. (C
o nt
in ue
d)
at RMIT UNIVERSITY on December 14, 2014org.sagepub.comDownloaded from
222 Organization 20(2)
T a b
le 1
. (C
o nt
in ue
d)
N o.
B o o k
C ha
pt er
/ m
aj o r
se ct
io n
Se ct
io n/
p ar
ag ra
ph
co nt
ex t
Q uo
te
10 .
Pu nn
et t
an d
R ic
ks ,
19 97
, p .1
88 T
he p
o lit
ic al
en
vi ro
nm en
t o f in
te rn
at io
na l
bu si
ne ss
/ In
te gr
at iv
e ap
pr o ac
he s
to
po lit
ic al
r is
k m
an ag
em en
t
C ho
o si
ng t
he
ri gh
t co
m bi
na ti o n/
pr
o te
ct io
n o f fir
m
sp ec
ifi c
ad va
nt ag
es
‘C o ca
-C o la
c o ns
id er
s it s
‘s ec
re t
fo rm
ul a’
fo r
pr o du
ci ng
t he
s pe
ci al
t as
te
o f C
o ke
a k
ey c
o m
po ne
nt t
o it
s su
cc es
s an
d pr
o te
ct s
th is
s ec
re t.
T he
co
m pa
ny h
as b
ee n
w ill
in g
to fo
rg o fo
re ig
n in
ve st
m en
ts in
c o un
tr ie
s su
ch
as I nd
ia b
ec au
se t
he in
ve st
m en
t w
o ul
d pu
t th
e se
cr et
fo rm
ul a
at r
is k.
T
he p
o te
nt ia
l o f pr
o fit
ab le
o pe
ra ti o ns
w as
n o t
en o ug
h o f a
be ne
fit t
o
o ffs
et t
he r
is k
as so
ci at
ed w
it h
lo ss
o f su
ch a
n im
po rt
an t
fir m
- sp
ec ifi
c ad
va nt
ag e’
11 .
R ug
m an
a nd
H
o dg
et ts
, 1 99
5,
p. 5
54
D o in
g bu
si ne
ss in
no
n- tr
ia d
na ti o ns
/ A
si a
an d
th e
Pa ci
fic
In di
a/ p
ro fil
e ‘P
ri o r
to 1
99 0,
t he
g o ve
rn m
en t
ha d
do ne
li tt
le t
o p
ro m
o te
m ul
ti na
ti o na
l in
te re
st . P
o lit
ic s
o ft
en p
re va
ile d
o ve
r ec
o no
m ic
in te
re st
s an
d m
an y
M N
Es
fo un
d th
ei r
de al
in gs
w it h
th e
go ve
rn m
en t
to b
e ti m
e- co
ns um
in g
an d
fr us
tr at
in g. F
o r
ex am
pl e,
b o th
I B
M a
nd C
o ca
-C o la
le ft
I nd
ia in
t he
la te
19
70 s
ra th
er t
ha n
ac ce
de t
o t
he g
o ve
rn m
en t’s
d em
an d
th at
t he
y re
du ce
th
ei r
m aj
o ri
ty h
o ld
in gs
t o 4
0% ’
12 .
Sh en
ka r
an d
Lu o,
20
04 , p
.1 85
Po lit
ic al
a nd
L eg
al
En vi
ro nm
en t
/ M
ea su
re m
en t
o f
po lit
ic al
r is
k
O w
ne rs
hi p
ri sk
‘M ild
er fo
rm s
o f o w
ne rs
hi p
ri sk
in cl
ud e
pr es
su re
t o w
ar d
o r
a fo
rm al
ch
an ge
in in
ve st
m en
t ru
le s
th at
fo rc
e fir
m s
to r
ed uc
e th
ei r
st ak
e (e
.g .
sh ar
in g
o w
ne rs
hi p
w it h
a lo
ca l f
ir m
). In
t he
e ar
ly 1
97 0s
, t he
I nd
ia n
go ve
rn m
en t
es ta
bl is
he d
su ch
r ul
es t
ha t
re su
lt ed
in a
s tr
at eg
ic s
hi ft
to
w ar
d un
re la
te d
di ve
rs ifi
ca ti o n
an d
ev en
tu al
ly t
o t
he e
xo du
s o f m
an y
fo re
ig n
M N
Es ’
13 .
Ta llm
an , 2
00 9,
p.
3 0.
G lo
ba l S
tr at
eg y
as
a R
es o ur
ce B
as ed
St
ra te
gy
Le ve
ra gi
ng r
es o ur
ce s
an d
ca pa
bi lit
ie s
‘T hr
ea ts
o f a
lo ss
o f pr
o pr
ie ta
ry r
es o ur
ce s
ha ve
in t
he p
as t
le d
fir m
s to
ex
it m
ar ke
ts ––
C o ca
C o la
f ro
m I nd
ia , I
B M
f ro
m M
ex ic
o, fo
r in
st an
ce ’
14 .
W ild
e t
al .,
20 10
, 5
ed , p
. 3 29
A na
ly si
ng
in te
rn at
io na
l o pp
o rt
un it ie
s/
A ss
es si
ng t
he
na ti o na
l b us
in es
s en
vi ro
nm en
t
G o ve
rn m
en t
re gu
la ti o n/
D iv
ul gi
ng
in fo
rm at
io n
‘F in
al ly
, g o ve
rn m
en ts
c an
a ls
o r
eq ui
re t
ha t
co m
pa ni
es d
iv ul
ge c
er ta
in
in fo
rm at
io n.
C o ca
-C o la
( w
w w
.c o ca
co la
.c o m
) ac
tu al
ly le
ft I nd
ia w
he n
th e
go ve
rn m
en t
de m
an de
d th
at it
d is
cl o se
it s
se cr
et C
o ke
fo rm
ul a
as a
re
qu ir
em en
t fo
r do
in g
bu si
ne ss
t he
re . C
o ca
-C o la
r et
ur ne
d o nl
y af
te r
th e
In di
an g
o ve
rn m
en t
dr o pp
ed it
s de
m an
d’
at RMIT UNIVERSITY on December 14, 2014org.sagepub.comDownloaded from
Gopinath and Prasad 223
formula, (b) as a result of a new GOI requirement that all foreign investors enter into joint ventures with Indian companies, (c) owing to the emergence of some new risk close to that of nationalization/ expropriation of assets, (d) on account of political blackmail, (e) due to corruption and political avarice in India or (f) in consequence of lax intellectual property rights (IPR) protection under Indian legal conditions, and so on (Table 1).
We have already noted that the first two claims in the preceding list cannot be supported on the basis of empirical details relating to the event. But what about some of the other claims? For instance, did the GOI’s actions amount to some kind of attempted nationalization, as Peng’s (2009) textbook suggests when it observes: ‘Coca-Cola’s experience in India is not isolated. Numerous governments in Africa, Asia and Latin America have expropriated assets through nationalization’ (p.161). Or did the GOI’s actions amount to political blackmail, and was there corruption involved? Holt and Wigginton (2002: 75) assert that the GOI’s action ‘was called a blatant form of political blackmail’, but do not provide the necessary reference to a source. The same authors’ discussion alludes also to ‘corruption or political avarice’ (Holt and Wigginton, 2002: 75). And was IPR protection inadequate in India? Indian laws seem to have been in con- formity with the global IPR regime prevailing at the time but, in view of recent changes, the old regime might be seen as insufficient by some.
Irrespective of the actual substance of many of these claims, however, what is clear is that IB textbooks generally tend to regard the Indian political/regulatory environment as a key problem. Not surprisingly, perhaps, this tendency can sometimes result in unjustifiable claims being made. For instance, viewing the regulatory changes of that time as a major problem, Shenkar and Luo (2004: 185) assert that those changes led to an ‘exodus of … foreign MNEs’ from India (emphasis added). As noted earlier, following the enactment of FERA, 63 or so foreign MNEs withdrew from India while more than 1000 foreign companies stayed in the country: not exactly an ‘exodus’. However, Shenkar and Luo’s inference of an ‘exodus’ is plausible if the starting point of analysis is the assumption that FERA, inherently, was a significant problem and was viewed as such by an overwhelming number of foreign MNEs.
However, rather than attempting to either substantiate or refute various claims documented above—a somewhat fraught enterprise, in any case, in view of the nature of some of the claims—it might be useful to examine the persistent tendency in IB textbooks to interpret Coke’s exit only as a result of problems/inadequacies/risks that are said to characterize India’s political/regulatory environment. What could be some of the implications of this tendency? What might account for the tendency to see India’s political/regulatory environment as beset by serious problems? How might our understanding of the event shift if we decide to move away from the limited way in which IB textbooks define the context for their analysis? The next section of the article addresses some of these issues and, in so doing, seeks to develop an enhanced critical understanding of Coca-Cola’s exit from India.
Toward a critical understanding of Coca-Cola’s exit
One of the important motivations driving the present study is the desire for a more comprehensive and critical understanding of Coca-Cola’s exit from India. With that end in view—and in line with (a) the concept of hermeneutic circle, which holds that interpretation emerges via a circular move- ment between ‘text’ and ‘context’ and (b) the notion of interpretation as a fusion of the hermeneutic horizons of the ‘text’ and of the interpreter—it is necessary to define the context for our analysis at multiple levels of increasing comprehensiveness and, in so doing, to work toward expanding and broadening our own hermeneutic horizons (Gadamer, 1975; Noorderhaven, 2004; Prasad, 2002).
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Hence, in this section of the article, we will move beyond the limited context of proximate political/regulatory environment (within which IB textbooks’ discussions of Coke’s exit are commonly confined), and develop a more broad-based, inclusive, nuanced and critical understand- ing of Coca-Cola’s exit from India. In particular, our analysis will focus upon the following three broader levels of context: (a) the larger macro-economic context of India during the 1970s, (b) the longer-term historical context of India’s economic development and (c) the cultural context as regards the place occupied by India within wider Western/American consciousness. Moreover, while the first two levels of context—which are primarily economic in nature—will be analysed in this article from a scholarly vantage point largely located in the domain of political economy, our analysis of the third (i.e. cultural) level of the broader context will also draw upon Edward Said’s (1978) contributions to postcolonial theory. In what follows, we will briefly outline some of the key aspects of each of these higher levels of context, and analyse the significance of such broadened delineation of context for enhancing our understanding of Coca-Cola’s exit.
Indian macro-economy during the 1970s
The FERA legislation (discussed earlier) had been enacted under a general situation of deteriorating macro-economic conditions in India. The first half of the 1970s was marked by serious economic difficulties for India: average annual GDP growth rate, which had registered 4.8% during 1966– 1971, fell precipitously to 3.3% during 1971–1976 (Nayar and Paul, 2003). This steep decline was triggered by a number of factors, including the economic burdens relating to the Indo-Pakistan War of 1971 and the influx of some 10 million refugees into India from Pakistan, as well as the dramatic escalation of oil prices by OPEC (Organization of Petroleum Exporting Countries) in 1973. Developments like these resulted in deep problems for the Indian economy and, in particular, created grave strains on the foreign exchange resources of the country.
In the early 1970s, the developing shortage of foreign exchange led to considerable policy emphasis on import restriction/substitution and export promotion, and serious concerns were expressed about large amounts of foreign exchange flowing out of the country owing to foreign MNE operations involving payments for imports as well as repatriation of dividends. This was also a time when different aspects of MNE behaviour in developing markets (e.g. shipping of old technology, employing only expatriates at managerial levels, monopolistic practices, etc.) led to a generalized reputation of MNEs as being exploitative. Governments of many develop- ing countries argued that there was a genuine need to control and regulate MNEs in order to encourage the growth of indigenous business enterprises. These sentiments were shared by sig- nificant sections of Indian policy makers. The enactment of FERA took place within these very developments involving a deteriorating economy, growing foreign exchange shortage, and increasing antipathy toward foreign MNEs.
When we broaden the context to include India’s macro-economy during the 1970s, it becomes possible to recognize FERA as GOI’s response to a specific problem (namely, escalating foreign exchange shortages), and move beyond the tendency displayed by IB textbooks to consider this legislation itself as the problem, and as a mere manifestation of GOI’s desire to increase control over MNEs. In other words, understanding the macro-economic context helps us realize that regulatory changes of the period were intended to address a serious economic problem, rather than simply increase GOI’s control over MNEs merely for the sake of greater control. Indeed, the fact that FERA itself permitted majority foreign equity holding for specific categories of MNEs suggests that control, on its own, need not be seen as the guiding objective of this legislation. Moreover, this element of FERA also helps us understand that exit was not Coke’s only option
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under the situation; with somewhat greater ingenuity and flexibility, the company had a range of options for continuing its operations in India. These aspects of the situation, however, tend to be ignored in IB textbooks’ interpretations because of their limited definition and understanding of the overall context.
Interestingly, Encarnation and Vachani (1985) have examined how a set of MNEs responded to FERA. Their analysis points out that, rather than quitting like Coca-Cola, those firms that contin- ued operating in India often benefited through protected markets, succeeded in lowering capital costs by improving the equity base, continued to retain control through wide distribution of new equity and entered into useful diversification of business. From this perspective, Coca-Cola, while undoubtedly a company faced with changes in the political/regulatory environment, may also be seen as a company that lost an opportunity due to somewhat inflexible corporate policies.
The historical context of India’s economic development
In the 1750s, when Britain began its century-long process of Indian conquest, India’s economy produced roughly 25% of total global output; by the time India won back its independence in 1947, the Indian economy accounted for just about 2% of the global economy (Huntington, 1996). This extraordinary collapse of Indian economy between the 18th and 20th centuries was the result of a policy of Indian de-industrialization, economic neglect and colonial plunder pursued by Britain (Guha, 2007). It is interesting to note, moreover, that Britain’s conquest of India was largely accomplished by a private company, the East India Company.
After independence, the country sought to reverse its long economic decline, and the GOI assumed a key role in directing Indian economic development by instituting a system of cen- trally-coordinated national economic planning. This model of planned economic development yielded positive results and the country’s annual GDP growth rate, which had stagnated under 1% before independence, climbed to an average of about 4.8% during the period 1966–1971 (Nayar and Paul, 2003). The Indian model of economic development emphasized the creation of a significant industrial base for the country, with particular focus upon heavy industries, development of scientific and technological capabilities, and economic self-reliance (Guha, 2007; Nayar and Paul, 2003). Moreover, partly in view of certain conditions unique to India, the GOI decided also that the public sector would assume direct responsibility for industrial development in many strategically important sectors of the economy.
Despite its focus on the public sector, the Indian developmental model also involved a signifi- cant role for the private sector. Hence, it needs to be emphasized that the Indian model of a mixed economy (i.e. a mix of public and private sectors) was substantially different from the economic model adopted by ‘communist’ countries like the erstwhile USSR, which prohibited private enterprise altogether. In pursuit of its policy of developing a mixed economy, the GOI classified industries into different categories, some of which (e.g. atomic energy, defense, etc.) were reserved for the public sector, others (e.g. chemicals, pharmaceuticals, etc.) that were open to both sectors, and yet others (e.g. consumer products, food, soft drinks, etc.) that were generally for the private sector alone. Coca-Cola Company, hence, operated in a sector of the economy in which the GOI, by virtue of its explicitly-stated policy, had little interest in promoting public sector ownership. On the other hand, in several other industries (e.g. banking, insurance, coal, petroleum, etc.) the GOI promoted significant public sector participation including, where necessary, nationalization of private sector enterprises.
This overview of the historical context is useful for deepening our understanding of the event. Among other things, the historical context helps us develop a better appreciation of the role of
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nationalization in India’s economic policy. Specifically, it appears that nationalization, while indeed an important part of the Indian model, was generally confined to sectors of considerable strategic importance. Therefore, there would seem to be little justification for interpreting Coke’s Indian experience as being parallel to that of a firm being nationalized, unless the analyst assumes that a soft drink company was a company of strategic significance for India’s economy in the 1970s. Such an assumption, however, is difficult to sustain in light of the relative sophistication achieved by the Indian economy by the 1970s. Hence, Peng’s (2009) conclusion that Coke’s experience in India has its parallel in various acts of expropriation of MNE assets in ‘Africa, Asia and Latin America’ (p.161) does not seem tenable.
Moreover, the historical context also draws attention to the fact that FERA’s differential treat- ment of different types of industries (e.g. priority, non-priority, etc.) was broadly in step with the role accorded to different categories of industries in India’s post-Independence economic policy. Hence, GOI appears to us in the form of a rational actor taking actions that are broadly consonant with a long-term policy set in place at Independence. For such an actor to be engaging in ‘political blackmail’ to get the formula for a soft-drink syrup—as Holt and Wigginton (2002) suggest— seems somewhat improbable. What this suggests is that researchers may need to steer clear of interpretations that view Coke’s exit as a response either to increased risk of nationalization or alleged political blackmail.
India in Western cultural consciousness
Recent postcolonial theoretic scholarship in a range of academic fields, including IB, has pointed out that Western cultural perceptions of the Third World have been significantly shaped by the long history of European colonial domination of the world (Jack and Westwood, 2006; Özkazanç-Pan, 2008; Prasad, 2003). For instance, Said (1978) has drawn attention to the ideological discourse of ‘Orientalism’—developed in tandem with European colonial expansion—as a key influence in molding Western cultural understandings of various Eastern countries and regions. According to Said (1978), ‘Orientalism’ as a Western ideological discourse provides an epistemological frame- work, as well as a cultural ‘style of thought’ (p. 2), that systematically regards (a) the East and the West as binary opposites, (b) considers the West as superior to the East, (c) views the East as a constant source of danger and (d) perceives the East to be weighed down by a host of negative attributes such as backwardness, corruption, irrationality, lawlessness, and the like.
Not surprisingly, views like these have long circulated in the United States as well, and have deeply conditioned American cultural perceptions of the Third World, including those about India. For instance, President Theodore Roosevelt himself wrote glowingly about British colonization of India as ‘one of the mighty feats of civilization, one of the mighty feats to the credit of the white race’ (Roosevelt quoted in Nayar and Paul, 2003: 94–95) and, for various reasons, the United States was not at all ‘enthusiastic’ about India’s independence (Nayar and Paul, 2003: 67). Moreover, barring brief improvement during the late 1950s and early 1960s, the place occupied by India in American/Western cultural consciousness seems to have significantly deteriorated after Indian independence (Nayar and Paul, 2003).
Considerations of space prevent us from discussing various developments (e.g. Indian eco- nomic policies, Cold War geo-politics, Vietnam War, etc.) that apparently contributed toward the aforesaid deterioration (Guha, 2007; Nayar and Paul, 2003). In any event, American/Western cultural understanding of India after India’s independence was set on a path of steady decline; Western media reports largely offered unfavourable views of Indian economy, society and politics; and America and the West generally came to see only ‘the bleak side of India’ (Nayar and Paul, 2003: 97).
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Hence, by the first half of the 1970s, India seems to have become entrenched in American/ Western cultural consciousness in a rather negative light. This was reflected in the way India came to be portrayed in Western textbooks, media, and scholarly writings. Indeed, the prestigious Asia Society’s review of 300 textbooks being used in US schools during 1974–1975 revealed that the textbooks’ depiction of India ‘was the most negative of all Asian countries’ (Asia Society, 1976; quoted in Nayar and Paul, 2003: 95). The stereotypical depictions of India at the time included representations of India as a land of rampant corruption, political turmoil, disorder and absence of rule of law, under-development and economic failures, and as a country that was mystical and ‘other-worldly’ but also ‘soft’ on ‘communism’ (Guha, 2007).
Expanding the context of our analysis to encompass elements of the wider Western cultural consciousness is useful for further enhancing our understanding of Coke’s exit. Noorderhaven (2004) notes that adopting the hermeneutic perspective in IB research implies that ‘practitioners of international business … [need to be] regarded as [practicing] hermeneuticians’ (p. 96). This entails the necessity of understanding international managers’ interpretations of the external environment and the business situation they are confronted with. We suggest here that recognizing the mediating influence of Western cultural consciousness on Coca-Cola’s managers’ interpretations of the external environment in India helps us gain deeper insights into the firm’s decision to withdraw from the country.
For instance, the Western cultural view of India as a country where there is absence of rule of law implies that its government might be seen as prone to taking capricious actions. Hence, as far as Coca-Cola is concerned, the letter and spirit of any law (e.g. India’s IPR law) loses its sanctity, and the company’s decisions would likely be mediated by the belief that it cannot rely upon Indian courts of law to uphold its legitimate IPR relating to the syrup formula. Similarly, if India is culturally seen as economically ‘irrational’—or as a country where ‘politics often prevailed over economic interests’, to quote the Rugman and Hodgetts (1995: 554) textbook—then Coca- Cola would likely believe that conducting reasonable discussions and negotiations with the GOI might be exceedingly difficult. Likewise, to the extent that Coca-Cola’s managers saw India as ‘socialistic’, they likely regarded nationalization to be an uncompromising ideological goal for the Indian government and, moreover, they might have been highly apprehensive that the GOI could arbitrarily expropriate the company’s assets without due compensation.
Once we factor in the mediating role of the aforesaid cultural consciousness, it may no longer be a matter of surprise that the GOI’s requirement that the concentrate be made locally in India was interpreted by Coca-Cola as attempted expropriation of the company’s intellectual property; sale of equity to the Indian public was interpreted as handing over control to a majority Indian partner; and the GOI requiring a detailing of the drink’s ingredients for food safety testing pur- poses was interpreted as the government requiring that the concentrate formula be divulged. In sum, the cultural lens provided by stereotypical Western understandings of India likely helped create within the Coca-Cola Company an amplified perception of political/regulatory risk and, consequently, exit from India came to be seen as the only viable option for the firm. Indeed, such stereotypical understandings may be said to have played an important role also in the various newspaper accounts and textbook discussions.
Discussion
In this article, we have sought to develop a more critical and comprehensive understanding of MNE operations and national governments through an analysis of Coca-Cola’s exit from India during the 1970s, and in this process, also provided a critical revision of popular Western IB
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textbooks’ interpretations of this event. Current IB textbooks seem to contend not only that (a) the company withdrew because of increased risks/problems in India’s political/regulatory environment in those years, but also (b) that Coke might have been left with no option other than to quit the Indian market. In other words, IB textbooks make the case that the company’s decision was strategically correct. Our critical analysis, on the other hand, questions the interpretation offered in mainstream IB textbooks, and proposes that the option to exit from India was not the only option available to the firm, and that in deciding to quit, the company could also be said to have lost a valuable opportunity as a result of inflexible policies.
It needs to be noted, moreover, that Coca Cola’s re-entry into India in 1993—pursuant to the liberalization of the Indian economy in 1991—seems to have been seen in certain quarters as a further vindication of the narrow managerialist interpretation of the firm’s exit offered in IB textbooks. Our critical re-examination of the record, hence, provides an important corrective, suggesting that Coke’s exit from India in the 1970s needs to be viewed as having been signifi- cantly mediated by elements of Western cultural consciousness, combined with an inadequate appreciation of India’s broader macro-economic and long term historical contexts.
This study has a number of important implications for management and international business. To begin with, the study emphasizes the crucial significance of history and the wider economic, political, and cultural context for developing a more complete and informed understanding of organizational actions, processes, events and so forth. As this article has sought to demonstrate, current IB textbooks’ interpretations of Coke’s exit turn out to be inadequate largely as a result of those textbooks’ decision to focus exclusively on the immediate context of political/regulatory changes in India, and to summarily ignore important aspects of wider context and history. Management and IB researchers, hence, need to recognize that developing a comprehensive and well-rounded understanding of organizational phenomena requires that such phenomena be seen as deeply embedded in much larger contexts and histories.
However, it needs to be emphasized here that becoming familiar with the larger contexts and histories of organizational phenomena is not an easy task, particularly for those IB scholars who may be required to have dealings in their research with different countries having widely divergent cultures, histories, local categories for configuring the social world, ‘modes of organizing’ (Ibarra- Colado, 2006: 474), and so on. Following Spivak (2003), we would like to suggest that becoming familiar with the broader context and history of a country/culture different from one’s own requires serious effort aimed at developing an ‘idiomatic understanding’ of the country/culture in question. Such an ‘idiomatic understanding’—which may often necessitate extended intellectual prepara- tion directed at learning that ‘other’ society’s culture, history, politics, language(s), and so on— requires also a deep commitment to non-Eurocentric thinking, and genuine respect for difference. Consequently, we believe that developing the kind of understanding suggested above may be especially difficult for Western IB scholars for a variety of reasons including, for instance, the pressures of a ‘publish or perish’ academic ‘research industry’, as well as the Eurocentrism and provincialism that seem to pervade large sections of Western culture and academe (Prasad, 2003, 2012; Said, 1978; Spivak, 1999). This implies that Western IB scholars may need an extra degree of caution and considerable added effort while conducting research that deals with non-Western countries and cultures.
Our article also suggests the need for a concerted program of IB research designed to critically revisit all other present and/or future business cases (especially, perhaps, the cases dealing with ‘Third World’ countries) in mainstream IB textbooks. This article has examined the limitations of IB textbooks in the context of only one single case. Many other similar studies, however, are needed to fully cover the spectrum of business cases discussed in IB textbooks. Such a program of
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critique is necessary not only for underscoring the need for much greater scholarly rigor and caution in contemporary IB research, but also for pedagogical purposes. Briefly stated, this kind of critical examination of business cases would seem to be essential for alerting students to be on guard against the Eurocentrism and other limitations of IB textbooks, and for adequately preparing today’s business students for a rapidly globalizing and transforming world.
Kuhn (1970), in his analysis of history of science, points out that textbooks in their descrip- tions of theories and concepts establish a paradigm that serves the purpose of normal science for a while, explaining events and allowing for interpretation, till a new scientific revolution chal- lenges the established paradigm. Similarly, it could be argued that mainstream IB textbooks in the West adhere to a particular paradigm of MNE operations in the ‘Third World’, and viewed Coke’s exit from India through the prism of that particular paradigm. As suggested in our discussion, Said’s (1978) notion of Orientalism appears to be an important element of that paradigm, under which alleged political risks and dangers in the Third World are often viewed as compelling triggers for MNE behaviour. Our analysis, however, suggests that a more compre- hensive understanding of context might be valuable in developing a relatively moderate assess- ment of such perceived threats. Our study, hence, has certain parallels with studies of government intervention in ‘Third World’ countries, which argue for the need to develop a nuanced notion of ‘political risk’ and to look at the perspective of governments involved (e.g. Makhija, 1993; Poynter, 1982).
In the process of examining IB textbooks, we found certain errors relating to statements of empirical details surrounding Coke’s exit. We were able to ascertain one possible source of those errors, namely, newspaper reports cited by the authors. In addition, similarities in comments across some textbooks lead us to speculate as to one more plausible explanation for recurring errors. Loewen’s (1995) analysis of persistence of errors in US history textbooks suggests that one author often takes her/his cue from another, and the same (or similar) erroneous statements survive and continue to circulate through future textbooks. It is possible that a similar dynamic might have obtained also in the case of IB textbooks examined in our study.
It might be useful here to comment also on the role of textbooks in knowledge creation. Textbooks are an attempt to bridge the gap between theory and practice when they provide description of theory and examples to illustrate the theory. In this process, however, apart from playing a role in transmitting knowledge, they may also be seen as creating knowledge, and by their choice of illustrations and description of events, promoting/establishing a certain view of the world. Authors of textbooks always seek to provide examples to illustrate the concepts being discussed. This can be an extremely difficult task when writing on international topics since these often deal with countries, cultures and contexts with which the authors may have little or no familiarity.
There is, thus, need for great care in choice of illustrations and comments. It is easy enough for errors to persist and seemingly take a life of their own, as shown by Tipton (2008) who found persistent errors on the topic of cultural difference in 19 widely used IB textbooks. Harzing (2002), in her review of referencing errors in general, and references to her expatriate study in particular, comments that textbooks and professional journals should be expected to maintain academic standards of citation and referencing. Harzing cautions us that the implications of inaccurate ref- erencing are serious for academics and practitioners alike. For instance, certain reports from 2002 claiming that Coke was ‘banned from India’ in the 1970s may be seen as continuing, even after a lapse of several years, the rather limited understanding of the event. This suggests the need for considerable self-reflexivity on the part of authors of IB textbooks.
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Note
An early version of this article was presented at the Academy of International Business Meeting, Milan, Italy, 2008.
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529–62. Rugman, A. and Hodgetts, R. M. (1995) International Business. New York, NY: McGraw Hill. Said, E. W. (1978) Orientalism. New York, NY: Random House. Shenkar, O. and Luo, Y. (2004) International Business. New York, NY: John Wiley. Spivak, G. C. (1999) A Critique of Postcolonial Reason. Cambridge, MA: Harvard University Press. Spivak, G. C. (2003) Death of a Discipline. New York, NY: Columbia University Press. Subramanian, K. (2002) ‘Coca-Cola’s Continuing Saga on Equity’, The Hindu 10 June, p. 16. Subramanian, K. (2007) Former Director, Department of Economic Affairs, Ministry of Finance, Government
of India. Personal interview, 5 September. Tallman, S. (2009) Global Strategy. Chichester: John Wiley. Tipton, F. B. (2008) ‘Thumbs-up is a Rude Gesture in Australia: The Presentation of Culture in International
Business Textbooks’, Critical Perspectives in International Business 4(1): 7–24. Wall Street Journal (1977) ‘Coke is Right’, August 10, p. A14. Wild, J. J., Wild, K. L. and Han, J. C. Y. (2010) International Business 5 ed. Upper Saddle River, NJ: Pearson.
Biographies
C. Gopinath (PhD, University of Massachusetts Amherst) is Associate Professor, Sawyer Business School, Suffolk University, Boston, MA. He held executive positions in industry prior to his aca- demic career. His areas of interest cover strategic management and international business and he is currently researching executive attitudes to globalization. His work has appeared in leading journals including Journal of International Business Studies, Management International Review, Journal of Management, Journal of Business Ethics and Long Range Planning. His books include: Strategize! Experiential Exercises in Strategic Management (2010, with J. Siciliano, Cengage/ SouthWestern) and Globalization––A Multidimensional System (2008, Sage). His fortnightly column American Periscope on management and international business appears in Business Line, a business daily published from India. Address: Sawyer Business School, Suffolk University, 8 Ashburton Place, Boston, MA 02108, USA. Email: [email protected]
Anshuman Prasad is Professor of Management and University Research Scholar at the College of Business, University of New Haven. Before moving to academe, he worked as an executive in the commercial banking sector for several years. He brings an interdisciplinary orientation in his scholarship, which deals with such issues as postcoloniality and globalization, workplace diversity and multiculturalism, corporate legitimacy, resistance in organizations and epistemology. His research has appeared in a number of major scholarly outlets. He is the editor of Against the Grain: Advances in Postcolonial Organization Studies (LIBER/Copenhagen Business School Press) and Postcolonial Theory and Organizational Analysis: A Critical Engagement (Palgrave Macmillan) and a Co-editor of Managing the Organizational Melting Pot: Dilemmas of Workplace Diversity (Sage). Currently, he is working on a book on globalization. Address: College of Business, University of New Haven, 300 Boston Post Road, West Haven, CT 06516, USA. Email: [email protected]
at RMIT UNIVERSITY on December 14, 2014org.sagepub.comDownloaded from
__MACOSX/Organisation theory/._Gopinath and Prasad (2013) Revisiting Coca-Colas exit from India-2.pdf
Organisation theory/Moses and Vest (2010) Coca Cola and PepsiCo in South Africa.pdf
Coca-Cola and PepsiCo in South Africa: A Landmark Case in Corporate Social
Responsibility, Ethical Dilemmas, and the Challenges of International Business
CHARLES THURMAN MOSES Department of Management, Clark Atlanta University School of Business,
Atlanta, Georgia, USA
DONALD VEST Department of Marketing, Clark Atlanta University School of Business,
Atlanta, Georgia, USA
Complex webs of social and ethical responsibilities often make following one’s business nose challenging, if not impossible. This case examines the actions of Coca-Cola and PepsiCo, as each sought to dominate the burgeoning soft drink market in South Africa in the years before—and immediately after—the end of that country’s apartheid era.
KEYWORDS competitiveness, corporate, ethics, globalization, international business, social responsibility
‘‘Blacks invest $15 million in Pepsi venture: South African firm will be black-owned and black-managed- New Age Beverages’’—Black Enter- prise, December 1994
‘‘After a decade of corporate homage to the anti-apartheid move, Pepsi-Cola [is] expected to enter South Africa in political and commercial triumph—the liberation soft drink.’’—The New York Times, December 9, 1994
‘‘PepsiCo Bottling Operation in South Africa Closes; Prominent Black Americans among Investors’’—Jet magazine, June 16, 1997
Address correspondence to Dr. Charles Thurman Moses, Department of Management, Clark Atlanta University School of Business, 223 James P. Brawley Dr., Atlanta, GA 30314, USA. E-mail: [email protected]
Journal of African Business, 11:235–251, 2010 Copyright # Taylor & Francis Group, LLC ISSN: 1522-8916 print=1522-9076 online DOI: 10.1080/15228916.2010.509166
235
INTRODUCTION
Coke and Pepsi, the two best known soft drink brands in the world, have slugged it out in 100 countries over the last 100 years. The stakes are always high: primacy in another front in the fast-paced, but enor- mously lucrative global ‘‘cola wars,’’ where success is typically measured in mere fractions of cents. Yet the 1997 failure of New Age Beverages (NAB), an ambitious joint venture involving PepsiCo International, black businesses in South Africa, and prominent African Americans, may go down as one of the more well-intentioned, yet misguided ventures in modern business annals. ‘‘It was an important and noble experiment,’’ said a PepsiCo spokesperson, ‘‘but in the end the challenges were just too great.’’
1
NAB was arguably conceived as an extension of PepsiCo’s views on hiring and doing business with minorities in the United States. Cognizant of South Africa’s half-century of social, political, and economic oppression, PepsiCo officials wanted—in addition to besting Coca-Cola—to make their venture a showpiece for progressive business practices learned at home. Yet, from the outset, investors in the venture disagreed about the ends of the deal: some saw it in high-flown terms—the perfect opportunity to make a statement about the prospects for a rosy future in a post- apartheid South Africa. Their voices were well known in America. Others, seasoned veterans of the bruising battle between Coca-Cola and PepsiCo, were less sanguine: This was to be just another front in a protracted struggle.
In the United States and elsewhere, Coca-Cola’s symbolic status as one of the top world brands placed it high on the ‘‘get list’’ of corporate social responsibility advocates, shareholder activities, and others. The company was frequently threatened with boycotts and other punitive actions for one reason or another, and South Africa’s policies were no exception to them.
One such occurrence took place in the summer of 1990, when Nelson Mandela, newly released from prison and on his first visit to the United States, demanded that hotels providing accommodations for his delegation not serve Coke. As one member of his entourage put it: ‘‘They [Coca-Cola] are not the kind of people to do business with. They are making money off of us. Apartheid is good business for Coke’’ (Pendergast, 2000).
Yet, by the mid 1990s, both Coca-Cola and PepsiCo were prepared to invest heavily in the South Africa market, not out of sentiment but for the most pragmatic of business reasons: profit. To do so would require both firms to do the seemingly impossible: to adapt the developed to the develop- ing world, the market to the politics, a harrowing proposition made tantalizingly attractive because of its market potential.
236 C. T. Moses and D. Vest
NEW AGE BEVERAGES
It was to be the mother of all concert tours, a 1994 tour-de-force dubbed the ‘‘Concert for a New South Africa,’’ headlined by none other than pop diva Whitney Houston. The proceeds would go to charity, the goodwill to PepsiCo, an advance payment on its high expectations of besting arch-rival Coca-Cola in South Africa. Houston, who had called South Africa her ‘‘spiritual home,’’ was one of a group of prominent African Americans— among them basketball star Shaquille O’Neal; publisher Earl Graves, and attorney Johnnie Cochran—who invested up to $20 million in New Age Beverages (NAB), a joint venture under which Pepsi would be bottled and sold in South Africa.
2
One of the major concert venues was Ellis Park, a 60,000-seat venue in downtown Johannesburg. The concert was to be filmed by Home Box Office (HBO) for international broadcast. And while the broadcast would feature prominent shots of Pepsi logos arrayed around the stadium, Coca-Cola was already in the house, the result of a long-standing promotional deal between it and the stadium that prevented the sale of rival products.
That arrangement typifies the challenges that NAB faced in returning to South Africa. PepsiCo, as a key investor in the deal, had a long and August history on which to draw. It was a highly profitable company with a sterling reputation as a corporate good citizen. In the United States, it was a pioneer in the hiring and promotion of women and minorities.
3 Coca-Cola was the market leader, however. Its reputation was also good. But it had a less- than-stellar record in hiring and promoting African American employees at home, something that could be an issue in a country about to end legal race discrimination.
NAB’s strategy was to try to wrest away Coca-Cola’s dominance using an aggressive, high-profile marketing campaign The battleground: informal stores in dozens of black townships across the country. The prize would be substantial: some estimate that the South African soft market was Coca- Cola’s 10th largest.
4
Coca-Cola and PepsiCo both left South Africa in the mid-1980s in response to widespread criticism of apartheid, but Coca-Cola was more cle- ver—some would say Machiavellian—in managing its disinvestment strategy: before leaving South Africa, the company sold its bottling and distribution interests to a black-owned firm, creating South Africa’s first black-owned soft drink bottler. It then moved its syrup manufacturing operations to nearby Swaziland and continued to serve the companies in South Africa that it created. By 1994, Coca-Cola and its bottling partners commanded 81% of the South African soft drink market, versus PepsiCo’s 4.7%.
PepsiCo’s plan for its return to South Africa was based on its experi- ences in dealing with its experience with diversity and inclusion in the
Coca-Cola and PepsiCo in South Africa 237
United States. NAB’s first chairman and chief executive, Khehla S. Mthembu, was a former political prisoner who spent 3 years in prison with Nelson Mandela. When it was announced, Mandela called NAB a ‘‘model for foreign investment in the new South Africa.’’ Mthembu hailed the ven- ture as reflective of South Africa’s future. ‘‘Coca-Cola is seen as part of the old South Africa,’’ he said, while PepsiCo would ‘‘involve black people in a process of empowerment, ranging from ownership and management to community support programs’’ (Collins, 1994).
Soon South African media began writing stories claiming that there was a whispering campaign among black South Africans urging people to dump Coke as a reminder of the ‘‘old South Africa’’ (Browne, 1994).
‘‘South Africans Urged to Switch to Pepsi for Political Reasons— Whispering Campaign Erupts as Black U.S. Investors Back Company’s Return’’—The Wall Street Journal (1994)5
Johannesburg, South Africa—‘‘Could politics flatten the sale of Coca-Cola in South Africa?’’ ‘‘Some think that with an unofficial wink and nudge from rival Pepsi Cola, it just might.’’6
Yet, within months, the business began to show signs of weakness as hundreds of protesters lined up outside one of the new company’s bottling plants demanding jobs already filled. The protesters blocked delivery trucks and clashed with police. One woman is alleged to have died in the melee; several others were injured. Company officials, worried that PepsiCo delivery trucks would be hijacked, anxiously developed a share option plan for drivers, something very new for black South Africans.
Ironically it was PepsiCo’s own high profile marketing campaign that may well have sparked the protests. The company’s reentry strategy centered on U.S. personalities like Whitney Houston. The aim was to foster an indirect appeal to notions of racial solidarity between black South African and African Americans. At the time, South Africa’s black unemployment rate was nearly 50%. News of the opening of a major international firm drew scores of anxious job seekers not in the least concerned about the racial identity of the firm’s owners or their prominence elsewhere. They charged that, instead of hiring the unemployed, PepsiCo was poaching experienced help from Coca-Cola. ‘‘To prove that they are a good company, they must prove that here in South Africa,’’ said one protestor. ‘‘As we are here, the company must employ us.’’
7
For their part, NAB’s heads were sympathetic, yet unmoved. ‘‘We’re supposed to be perhaps more empathetic . . . more humane, understanding,’’ one told a newspaper correspondent. ‘‘I think we are all these things. But we are also, first and foremost, a business.’’7 Company representatives met with representatives of the protestors at the factory gate and filled four jobs— paying $2.65 an hour—using a hastily organized lottery.
238 C. T. Moses and D. Vest
The main battle, as always for market share, also exacted a toll on the fledgling venture. NAB hired up to 1200 workers and spent heavily in an attempt to wrest a substantial share of market from Coca-Cola. But Coca-Cola’s bottlers were signed to exclusive contracts, an arrangement that PepsiCo found very expensive to overcome. In the end, the company, unable to find local bottlers, resorted to importing containers, bottles, and coolers from as far away as Mexico and Kenya. An expected endorsement from Mandela, who had publicly snubbed Coca-Cola on numerous occasions, never materialized.
By 1997, the venture’s final year, the company’s debt was $155 million. The African American investors, still enthusiastic, planned a refinancing round, but PepsiCo, the deep pockets in the deal, refused to provide guaran- tees to the new investors. Coca-Cola’s market presence during the apartheid years was proving insurmountable.
In 1997, PepsiCo, a majority investor in NAB, decided to end the venture. PepsiCo was unsuccessfully butting heads with Coca-Cola in South America, another front in the ongoing ‘‘Cola War’’ between the two behe- moths, and company heads decided that they could not take yet another costly loss. When operations ceased, the company listed debts in the hundreds of millions of dollars.
The move irked some in the African American investment group, who clearly saw the deal as having more of a social rather than an economic value. ‘‘This wasn’t to be a quick kill,’’ said actor Danny Glover, who lost an estimated $750,000 in the venture, in a Newsweek article, ‘‘I thought Pepsi was in it for the long run.’’8
But a PepsiCo spokesman maintained that the venture was just too risky.9
Coca-Cola’s decision to maintain close ties with its black bottlers during the apartheid era—when both companies were supposedly out of the country— gave it too much of a head start for PepsiCo to overcome. NAB was a noble experiment, but ‘‘the challenges proved to be too great.’’8 That view was echoed by Carl Ware, who was Coca-Cola’s Africa region president during that period and was the driving force behind the company’s return to South Africa after its 10-year absence. ‘‘They (NAB) were doing public relations, not business,’’ he said.10
PepsiCo’s exit in 1997 cost the company more than mere money. Recriminations between the various investor groups in NAB escalated. In 1999, PepsiCo sued the investment group that organized the venture, claim- ing that its principals had failed to address mounting financial and managerial problems in NAB. PepsiCo would eventually win a summary judgment in excess of $175 million, but not before it paid $9 million in company stock to some of the high-profile investors involved.
Coca-Cola President Roberto Goizueta, clearly gleeful over his prime competitor’s misfortunes, said that he would be less concerned about PepsiCo in the future. ‘‘As they have become less relevant, I don’t need to look at them very much anymore.’’10
Coca-Cola and PepsiCo in South Africa 239
COCA-COLA AND PEPSICO IN SOUTH AFRICA
Coca-Cola and PepsiCo had long experience in South Africa by the mid 1990s. And, as was the fashion of the early and middle part of the twentieth century, neither company initially appeared unduly concerned that their profits were built on a system of institutionalized racism and segregation. As was the case in later eras, public awareness campaigns in the United States eventually influenced PepsiCo, then Coca-Cola, to acknowledge and address the plight of their black African workers.
Robert Woodruff formed the Coca-Cola Export Company in 1930 and the company entered that market the same year. Over the next two decades, the company steadily moved upward and across the continent, particularly after World War II. Coca-Cola—along with PepsiCo and other multinational corporations (MNCs)—found great success in South Africa, primarily because of the political and economic realities of the country.
The system, which would come to be called apartheid decades later, created opportunities: Cheap and politically powerless labor like that found among South African nonwhite populations meant that all MNCs could legally pay their workers less than their American equivalent, leading to exaggerated rates of return compared to other markets. Thanks to this tremendous cost advantage and their already wide international appeal, Coca-Cola quickly dominated sales and market presence in South Africa.
Coca-Cola’s supremacy in the global soft drink industry did not develop by chance. Shrewd planning and massive advertising campaigns always proved successful for the company, and in South Africa the model was the same.
The company also ingratiated itself into the local, Afrikaner-dominated, society, working diligently to associate its product with South African communi- ties. In 1948—the year of both PepsiCo’s arrival and the arrival of Nationalist control and institutionalized apartheid—Coca-Cola acted as the major sponsor of the Cadet Band Competition in Johannesburg and provided the only bever- age for sale there. Although not the first time the company had sponsored an event in the country, the presence of PepsiCo prompted South African Coca-Cola correspondent J. H. Smit to remind executives in South Africa and in Atlanta that the ‘‘special events market’’ presented a unique opportunity for Coca-Cola to ‘‘become associated with all community activity . . . .’’11
Insider publications like Coca-Cola Overseas show local Coca-Cola bottlers holding ‘‘sampling tests’’ at local all-white schools in Cape Town and sponsoring—and winning—a whites-only float in the annual Jacaranda Festival in Pretoria. Coca-Cola’s largest and most noticeable sponsorship, though, occurred in December 1949 at the dedication of the Voortrekker Monument.12
Coca-Cola also had a strong presence in nonwhite South Africa, adver- tising in white, black, and colored sections of all major cities, and many smaller ones, as well. Although Coca-Cola did nothing to protest the
240 C. T. Moses and D. Vest
discriminatory and segregationist laws that had been and would later be passed by the Afrikaner government, the allegations of racism and threats of boycotts in its home country eventually spurred the company taking a more aggressive stance on social issues in South Africa.
PepsiCo’s foray into South Africa began in 1948, nearly two decades after Coca-Cola’s was there. Having trailed Coca-Cola in national sales throughout its existence, PepsiCo found itself in a familiar place in this ven- ture: having to battle uphill against its prime rival. Initially, because of the expense of opening modern factories in South Africa, PepsiCo used local bot- tlers to help distribute its soft drinks, reducing profits. In the late 1950s, com- pany C.E.O Alfred Steele expanded bottling operations into South Africa, taking his celebrity wife, actress Joan Crawford, along to publicize the com- pany’s presence and commitment to the region.
By the following decade, PepsiCo’s place in South Africa, and the entire continent, appeared secure, albeit not as strong as Coca-Cola’s. However, in 1960 PepsiCo helped to sponsor a tour that sent Jazz great Louis Armstrong on a tour of neighboring Rhodesia. By the end of the 1960s, Coca-Cola had 37 bottling plants in South Africa, far eclipsing PepsiCo.
It was initially envisioned as the prototype for the modern emerging nation. South Africa in the early 1990s was busily preparing itself for a future after nearly five decades of apartheid. As the ruling National Party began loosening its grip, the world anxiously prepared to assist. Hundreds of com- panies from around the world sent assessment teams to evaluate business opportunities. A prima facie case was easy to make: unlike many African countries, South Africa boasted a modern infrastructure, a stable currency, and a relatively well-educated workforce, all—ironically—products of the apartheid system. U.S. companies clearly saw the opportunity to demonstrate their commitment to diversity and inclusion. McDonald’s Corporation, for example, set up a franchise training program for black South Africans and quickly solidified plans to build hundreds of stores. The company also sent an African American to head up its operations there. J. P. Morgan established a program to train black financial executives.
South Africa had long been a multiracial cauldron of dueling cultures and interests. Apartheid, Dutch for ‘‘apartness,’’ describes a deep and broad system of racial classification and ranking, with whites at the top and black and those of mixed race or ‘‘colored’’ and Asians at the bottom.
13 It was codified into law through a series of measures that began in 1948 with the election of the National Party, a Boer-dominated political party. Passage of repressive laws continued, among them the Population Registration Act in 1950, which restricted blacks—then 70% of the population—to 13% of the land; the Abolition of Passes and Coordination of Documents Act, which required all blacks to carry identification booklets, called ‘‘passes’’; and in 1953, the Preservation of Separate Amenities Act, which established ‘‘separate
Coca-Cola and PepsiCo in South Africa 241
but not necessarily equal’’ parks, beaches, post offices, and other public places for whites and nonwhites.
South Africa was blessed with immense natural resources. Bordered by the South Atlantic and Indian Oceans, the country’s geographic location at the southern tip of Africa was ideal for small- and large-scale farming.14 In 1867, diamonds were discovered. In 1886, gold was discovered and, just 10 years later, South Africa was producing up to 23% of the world’s output. The economic opportunities heightened the need for cheap labor to do the dirty work in extracting the minerals from the land, and blacks were given the lowest-paying and most-dangerous jobs.
While few parts of the world are now immune to the presence and influence of either Coca-Cola or PepsiCo, this is a relatively new phenom- enon. Evidence from both American and South African primary sources indi- cates that the decisions to confront the South African government’s racial policies may have been born out of a sense of social and economic justice, but company profits proved the deciding factor in how both corporations carried out their own internal courses of action. In the end, we will see that even the seemingly bold confrontations made by Coca-Cola and PepsiCo proved less definitive than either business portrayed them.
For both Coca-Cola and PepsiCo, entrance into the South Africa repre- sented the extension of an already healthy domestic soft drink market into foreign territories. Coca-Cola’s 18-year South African head start on its chief domestic rival allowed the Atlanta-based company to extend its international dominance to sub-Saharan Africa.
From its outset, many political organizations opposed apartheid, promi- nent among them the African National Congress (ANC), which was formed in 1912. Opposition to apartheid was largely peaceful until the 1960s, when a large group of blacks in the town of Sharpeville refused to carry their passes. The government declared a state of emergency and responded with fines, imprisonment, and whippings. In all, 69 people were murdered and 187 wounded. The ANC and a second prominent political organization, the Pan-African Congress (PAC), were banned.
Relations between the United States and South Africa during apart- heid were, like both Coca-Cola’s and PepsiCo’s, cozy into the 1980s,
15
when activists and politicians began to agitate against the country’s racist policies.
In 1986, the U.S. Congress passed the Comprehensive Anti-Apartheid Act (CAAA), which committed the United States to ‘‘use economic, political, diplomatic and other means to remove the the apartheid system and to assist the victims of apartheid to overcome the handicaps imposed on them by apartheid.’’
16 PepsiCo and Coca-Cola, anticipating the move, soon announced that they were ending operations in South Africa.17
Yet, even as it planned its departure, Coca-Cola was setting the stage for a return, one day. ‘‘Our intention is not solely disinvest,’’ said Coca-Cola
242 C. T. Moses and D. Vest
President Donald R. Keough. ‘‘We will disinvest in a way which creates signifi- cant multiracial participation in the South African soft drink industry.’’18
SOUTH AFRICA’S INFORMAL SECTOR: FIRST WORLD MEETS THIRD WORLD
South Africa had a well-developed informal sector by the mid-1990s, a bypro- duct of the harsh economic exclusions of apartheid. The apartheid era ethnic townships and other areas were served by legions of taxis, bars, restaurants, groceries, and other necessities catering to the nation’s black majority. Oper- ating out of backyards, side doors, and neighborhood kiosks, the tuck and spaza19 shops became a vital lifeline for black South Africans in the waning years of apartheid. This economy was systematized in that it featured orga- nized distribution networks and various types of cooperative agreements. Informal businesses also provided employment and a means to develop economically for black businesses in South Africa.20
FIGURE 1 Coca-Cola’s South African bottling system in 1998. [Source: Woodward and Teel, 1999.]
Coca-Cola and PepsiCo in South Africa 243
Theinformal sector was keytoCoca-Cola’s strategy inSouth Africa.Figure1 provides a visual representation of Coca-Cola’s bottling and distribution system in South Africa. Informal and formal traders are a key part of the company’s model. As a key firm in South Africa’s beverage cluster, Coca-Cola’s system is highly representational (e.g., whether competitors like it or not, what Coca-Cola does certainly figures strongly into their own strategy).21
A 1998 study of 815 informal retail outlets in that county found that Coca-Cola employed approximately 16,500 workers directly, and that another 178,205 jobs were indirectly supported by the company’s production system. Of the latter estimate, about 42% of the jobs (74,794) created were in the informal sector (Woodward & Teel, 1999, p. 7).
Statistical analyses confirm what most casual observers might easily note: Informal businesses are a critically important part of South Africa’s economy. Most are sole proprietorships, started to either increase personal or family income or to stave off unemployment.22 According to studies commissioned by Coca-Cola, their economic activities in South Africa also provided consider- able upward mobility for aspirant black-owned businesses. ‘‘Soft drink pro- ducts appear to play a pivotal role in helping thousands of entrepreneurs transform into viable business concerns’’ (Woodward & Teel, 1999).
BLACK EMPOWERMENT
Black empowerment is a South African euphemism for programs and pro- cesses to support that nation’s emerging black majority. Literally dozens of syndicates, or ‘‘empowerment groups,’’ sprung up in the 1990s, typically led by former African National Congress operatives. The nation’s economic and financial apparatus, cognizant of this new group of actors, devised new financial instruments and schemes to support this burgeoning class. The groups have taken interests in virtually all of the country’s industrial sec- tors and have been roundly criticized as elitist and corrupt.
Ironically, the terms Affirmative Action and ‘‘Black Economic Empower- ment,’’ each defined differently, have both been used to characterize nascent economic aspiration in South Africa. Affirmative Action, as in the United States, was used to characterize corporate initiatives aimed at increasing the numbers of Africans and other previously disadvantaged groups in corporate South Africa, while Black Economic Empowerment refers to a broader set of initiatives aimed at increasing ownership of productive assets and access to economic opportunities.
PEPSICO
PepsiCo’s history in South Africa dates back to 1948.9 In April 1990, the com- pany shut down its bottling operations there, citing both stagnant sales and bottling problems.23
244 C. T. Moses and D. Vest
While still following discriminatory hiring practices common in most businesses of the era, PepsiCo could boast a slightly better track record for minority involvement. The first person to ever taste the product that would eventually become Pepsi Cola was James Henry King, Caleb Bradham’s assistant in 1898. PepsiCo could also point to its extensive inclusion of Afri- can Americans in advertisements, including the first such ad to be marketed directly toward African Americans.
24 Most importantly, though, in 1962 Pep- siCo became the first major American corporation to hire an African Ameri- can as a company executive, naming Harvey C. Russell the vice-president of corporate planning.
In 1973, although PepsiCo gave their black employees in South Africa above-average pay and allowed them to be promoted within the lower ranks of the company, they still paid white workers better wages (Louis & Yazijian, 1980). However, PepsiCo soon took steps to address this wage disparity. First, that same year it became just the second U.S. company—Polaroid being the first—to sign on to a plan to spend over $50,000 annually for an edu- cational trust fund for its black workers. Administered by the Institute of Race Relations, the plan, known as ASSET (the American-South African Study and Educational Trust), represented one of the earliest voluntary attempts by MNCs with business in South Africa to circumvent the modest but growing criticism of their profiting from a politically oppressive political and econ- omic system. PepsiCo coupled this with significant wage increases for black workers in its South African plants, despite the fact that the profits from these plants could be called ‘‘unexceptional,’’ at best.
In 1984, PepsiCo became one of the first American companies to begin divesting its holdings in South Africa. While it heard the numerous com- plaints from American and international civil rights groups, officially it cited ‘‘business reasons’’ for its choice to divest from South Africa. James M. Griffith, director of public affairs for PepsiCo, noted that the company’s divestment plans illustrated the corporations refranchising plan for overseas plants and was ‘‘apart from the apartheid issue.’’
25 Here, PepsiCo truly proved a trailblazer in South Africa. First, following its divestment announce- ment, nearly 200 other U.S. companies divested by the time Congress took official economic action against South Africa. Additionally, PepsiCo sold its equipment to local black entrepreneurs.
COCA-COLA
Coca-Cola was clearly a global juggernaut before and during the apartheid era. Immensely profitable, the company competed then, as now, with PepsiCo in many countries. South Africa was a special opportunity for Coca-Cola, because of its unique history and market opportunity. But profits alone were not the reason for Coca-Cola’s efforts: Like many firms, it was clearly more enthusiastic
Coca-Cola and PepsiCo in South Africa 245
about the opportunity to demonstrate that it could make money in South Africa, and less so about championing the emergence of a new country.26
Such a strategy was immediately apparent in Coca-Cola’s actions in South Africa. For all of its success as a global brand leader, the company has had a spotty record in its dealings with hiring and promotion of non- whites in the United States and in South Africa.
While Coca-Cola claimed to employ a ‘‘majority of nonwhites,’’ a pol- icy that should have circumvented any criticism of their South African practices, their labor practices continued to reflect social constructs favored by the Afrikaner government. In addition to underpaying their black labor, Coca-Cola faced criticism regarding allegations that one of their South African bottlers secured a contract with the government to use black prison labor in its plants during the 1970s, paying workers even less than their free counterparts.
27
Coca-Cola’s strategy in South Africa was two-fold: first, build overall brand awareness, then couple that with a deep and broad market penetration linked to people’s passions, even into the townships and rural areas. Instead of appeals to race sentiment, Coca-Cola appealed to South Africans’ love for sport and sense of tradition. Throughout the late 1990s, the South African advertising agency of Sonnenberg Murphy Leo Burnett (SMLB) helped promote the drink to the townships and villages through emotively linking Coke with Africa’s great obsession: soccer. It also introduced a locally famous commercial, shot in Morocco, that likens drinking one’s first Coke to one’s first kiss. Other campaigns linked Coke to the African concept of seriti (community respect) by airing commercials that show an African boy becoming a man of stature in his township by selling Coke.
DIVESTMENT, DISINVESTMENT AND SANCTIONS IN AN ERA OF INTERNATIONAL CODES
The South African apartheid system was ended—in part—because of the strong and continuous pressure brought on the global economic system by activists who organized and deployed the threat of sanctions in terms under- standable to even the most hardened businessperson.
The impact of divestment and disinvestment on the South African economy was substantial.
28 Between 1984 and 1989, approximately 200 U.S. and more than 60 British firms withdrew from South Africa. This response was a reaction to massive protests within South Africa in the wake of the introduction in 1983 of a new South African constitution that established a set of segregated client states. These ‘‘Bantustans’’ were widely discredited as artifices of apartheid, and the ensuing widespread unrest forced the South African government to declare a state of unrest a year later. Student protests in the United States surged during this period,
246 C. T. Moses and D. Vest
resulting in up to 155 universities divesting at least some of their South African holdings by 1988 (Knight, 1990). By 1989, 26 U.S. states, 22 coun- ties, and over 90 U.S. cities had taken economic action against doing business in South Africa.29
The United States was not alone in its economic campaign against South Africa. Net capital movement out of South Africa, a reflection of global sentiment on apartheid, was R$9.2 billion by 1985 and R$6.1 billion in 1986, R$3.1 billion in 1987, and R$5.5 billion in 1988. These outflows caused a dramatic decrease in the value of the South African Rand, making imports more expensive. Inflation also increased. Yet it would be wrong to say that the economic impact of divestment and disinvestment campaigns was entirely successful. Between 1985 and 1987, the value of U.S. direct invest- ment in South Africa actually increased. Yet the long-term trend was clearly adverse to investment there.
30
THE SULLIVAN PRINCIPLES
Another highly effective campaign dated back to 1997, when the Rev. Leon Sullivan, a pastor in Philadelphia, PA, developed the ‘‘Sullivan Principles,’’ a code of conduct for U.S. businesses in South Africa (Figure 2). The principles placed conditions on businesses doing business in South Africa, among them equal pay for equal work, nondiscrimination in work conditions, and the implementation of job training and other initiatives designed to promote
FIGURE 2 Map of South Africa. [Source: Google Maps.]
Coca-Cola and PepsiCo in South Africa 247
racial inclusion. Sullivan had devised the principles while serving on the General Motors (GM) board of directors. At the time, GM was the largest employer of blacks in South Africa. Sullivan was a particularly effective champion of the principles, and by the end of apartheid, over 125 companies had formally adopted the principles.
PAST AS PROLOGUE
By 2006, PepsiCo was back in South African market, this time by acquiring businesses in the recreational foods sector. As was the case in 1996, the company announced its presence with a glittering marketing onslaught, this time with footballer David Beckham at the center. In 1995, PepsiCo’s other arm, Frito-Lay, also reentered South Africa, buying half of Simba, a local manufacturer of potato chips, for $55 million.
Despite the new strategy, PepsiCo still faced a formidable foe in Coca- Cola. The latter’s longstanding alliance with South African Breweries’ subsidiary, Amalgamated Beverage Industries, itself a global player in the beverage industry, continues to give it a significant advantage. Coca-Cola’s success in Africa, wrote Ron Irwin, ‘‘has been due to its savvy advertising as well as its ubiquitous involvement in local community life. City dwellers in South Africa cannot fail to notice the Coke signs installed in every shop and roadside stand, but Coca-Cola has taken the initiative to reach poorer South Africans in rural areas as well. To this end, it has initiated sports spon- sorships, sports development, entrepreneurial development, scholarships and education projects. It has also relentlessly found ways to get its products trucked into even the most remote corners of Africa, and has cultivated a reputation for corporate honesty and openness that has the respect of African businesspeople from Cape Town to Madagascar.’’
31
Yet all has not been rosy for Coca-Cola. In April 1999, the company was sued for racial discrimination by a group of its current and past African Amer- ican employees. Coca-Cola would later settle the suit for $192 million, at that time the largest settlement ever in a corporate racial discrimination case. In the settlement agreement, the company denied the allegations against it but agreed to make sweeping changes to its personnel policies and procedures, including the formation of a ‘‘task force’’ selected by plaintiffs and manage- ment to monitor compliance with the agreement. The task force issued its final report in 2006, finding that the company had ‘‘made significant progress.’’
32
NOTES
1. Cited by Anonymous. (June 16, 1997). PepsiCo’s bottling operation in South Africa closes: promi-
nent black Americans among investors. Jet Magazine, 92:4, pp. 46–47.
2. The U.S. investor group, called Egoli Beverages, L.P., was composed of the Savant Group,
a black-owned investment firm; Pryor, McClendon, Counts & Co.; two Motown Records executives;
248 C. T. Moses and D. Vest
Hampton University, a historically black college and Percy Sutton, chairman of Inner City Broadcasting.
Other investors included actor=activist Danny Glover, two prominent African American pastors, and Hale
House, a nationally known, nonprofit children’s services organization. PepsiCo had about 25% of the
shares. Black South Africans were given a minority stake in NAB. Source: Spivey, J. K. (2009). Coke vs.
Pepsi: the Cola Wars in South Africa during the anti-apartheid era. Unpublished masters’ thesis, Georgia
State University.
3. Harvey Russell joined PepsiCo in 1950 as a field rep and in the 1960s became a company vice
president.
4. According to Just Drinks, South Africa’s soft drink market was 2.2 billion liters (or 13 billion South
African Rand) in 2005, of which Coca-Cola controlled about 96%. The company and its bottling partners
employed an estimated 10,000 people. Source: http://www.just-drinks.com/article.aspx?id=74232. Citing
Beverage Digest, an industry publication, The Wall Street Journal noted that some 310 million 8-ounce
cases of soft drinks were sold annually in South Africa, making it the 15th largest soft drink market in
the world.
5. Wells, K. (October 4, 1994). The Wall Street Journal.
6. Wells, K. (October 4, 1994). The Wall Street Journal.
7. Keller, B. (December 9, 1994). Johannesburg journal; corporate foe of apartheid finds reward
elusive. The New York Times.
8. Newsweek. (June 23, 1997). 25, p. 58.
9. PepsiCo, Incorporated, founded in 1898 in New Bern, NC, is a Fortune 500, American multina-
tional corporation headquartered in Purchase, NY, with interests in manufacturing and marketing a wide
variety of carbonated and noncarbonated beverages, as well as salty, sweet, and grain-based snacks and
other foods. Their main product, Pepsi Cola, sells an estimated 100 billion cans a year. Besides the
Pepsi-Cola brands, the company owns the brands Quaker Oats, Gatorade, Frito-Lay, SoBe, Naked,
Tropicana, Copella, Mountain Dew, Mirinda, and 7-Up. Indra Krishnamurthy Nooyi has been the chief
executive of PepsiCo since 2006. In December 2005, PepsiCo surpassed Coca-Cola Company in market
value for the first time in 112 years since both companies began to compete.
10. Interview with Carl Ware, former Coca-Cola Africa President, April 12, 2010, Atlanta, GA, USA.
11. Prendergast (2000, p. 417).
12. A shrine to the Boer victory in the Battle of the Blood River in 1838 over the Zulu army, the
monument’s completion, for Afrikaner nationalists, represented not only the magnificence of Afrikaner
culture and society but their political domination.
13. In 1652, Dutch settlers established a colony in the Cape of Good Hope (near the southern tip of
South Africa), bringing with them slaves from Asia. The settlers, called ‘‘Boers,’’ seized land from the
indigenous groups who had lived there for thousands of years. In 1883, the British colonized the area
and abolished slavery. The Boers moved northward into the interior. In 1910, after a series of wars, the
British colonies and Boer Republics formed the Union of South Africa, with political power to be shared
between the two groups.
14. According to Statistics South Africa’s mid-2006 estimates, the country’s population was 47.4
million. Africans are in the majority at 37.7 million, making up 79.5% of the total population. The white
population is estimated at 4.4 million (9.2%), the colored population at 4.2 million (8.9%), and the
Indian=Asian population at 1.2 million (2.5%). The county has 11 official languages, with English and
Afrikaans among them. Source: http://www.statssa.gov.za/publications/p0302/p03022006.pdf
15. The official U.S. policy during this period was called ‘‘constructive engagement’’ championed
by then President Ronald Reagan as an alternative to boycotts and sanctions. American firms were encour-
aged to subvert the apartheid system by paying their South African workers better than local firms.
16. U.S. Congress, The Comprehensive Anti-Apartheid Act of 1986, 99th Cong. 2nd. Session. 1986.
H.R. 4868.
17. Pepsi left South Africa in 1985; Coca-Cola, in 1986.
18. Green, C. (1986, September 17). Coke Getting out of South Africa. The Atlanta Journal, p. A1.
19. Tuck and spaza shops are small canteens or home-based convenience shops.
20. One of Coca-Cola’s top distributers was Kunene Bros., Ltd., a black-owned firm that got its start as
a distributor of milk, bread, and other perishables to tuck and spaza shops in various townships around
Johannesburg.
21. A cluster is a group of interconnected companies and associated institutions in a particular econ-
omic field, linked by mutual interests and complementarities. Characteristic of clusters are synergies that
tie core firms, such as common access to key input suppliers, financing sources, technologies and other
Coca-Cola and PepsiCo in South Africa 249
inputs and outputs (Moore, 2005). http://moore.sc.edu/UserFiles/moore/Documents/Division%20of%20
Research/sareport2.pdf (March 2005)
22. According to a survey done by the Moore School of Business (University of South Carolina),
nearly 80% of respondents said that they started their business either to increase income or because they
were unemployed (2005). http://moore.sc.edu/UserFiles/moore/Documents/Division%20of%20Research/
sareport2.pdf (March 2005).
23. Pepsi had not been able to rise above a 1.7% share of market, compared to Coca-Cola’s 70%
(Spivey, 2009).
24. The advertisement was one of the earliest to eschew racist, stereotyped depictions of African
Americans. Appearing in 1948 it showed a middle class black family enjoying Pepsi and included a young
Ron Brown, the future secretary of commerce under President Bill Clinton.
25. Staff Writer. (May 15, 1985). Ferraro says Pepsico will sell plant in South Africa. The Los Angeles
Times, p. 4.
26. Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines. The
Coca-Cola Company claims that the beverage is sold in more than 200 countries. It is produced by The
Coca-Cola Company in Atlanta, GA, and is often referred to simply as Coke (a registered trademark of
The Coca-Cola Company in the United States since March 27, 1944) or (in European and American coun-
tries) as cola or pop. Originally intended as a patent medicine when it was invented in the late nineteenth
century by John Pemberton, Coca-Cola was bought out by businessman Asa Griggs Candler, whose mar-
keting tactics led Coca-Cola to its dominance of the world soft drink market throughout the twentieth cen-
tury. The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout the
world. The bottlers, who hold territorially exclusive contracts with the company, produce finished product
in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers
then sell, distribute, and merchandise Coke to retail stores and vending machines. Such bottlers include
Coca-Cola Enterprises, which is the largest single Coca-Cola bottler in North America and Western Europe.
The Coca-Cola Company also sells concentrate for soda fountains to major restaurants and food service
distributors.
27. Although this claim was dismissed as a misstatement—the company claims the convicts were
hired as part of their rehabilitation process—the allegation ran counter to both the spirit of the Sullivan
Principles and the decreasing tolerance of the Carter administration toward the Nationalist Party in South
Africa. See M. P. Curzan and M. L. Pelesh (February 1980). Revitalizing corporate democracy: control of
investment managers’ voting on social responsibility proxy issues. Harvard Law Review, 93(4), 670–700.
28. Disinvestment occurred when a company sold its ownership in a South African subsidiary (50% or
more owned) or an affiliate (less than 50% owned). Individuals disinvested by selling their shares in South
African companies. Divestment was the selling of securities (stocks and bonds) in a company that doing
business in South Africa. Other, nonequity, ties included licensing, distribution, franchising, and manage-
ment agreements between U.S. and South African companies. (Knight, 1990). Knight, Richard. (2010).
Sanction, Disinvestment, and U.S. Corporations in South Africa. In R. R. Edgar (Ed.), Sanctioning Apart-
heid. Trenton, NJ: Africa World Press.
29. These activities included divestment by public pension funds in stocks and strictures on contract-
ing with firms doing business in South Africa (Knight, 1990, p. 2).
30. Direct investment is a measure of the value of the foreign subsidiaries and associates of U.S. com-
panies. Between 1982 and 1988, U.S. direct investment in South Africa fell from $2.3 billion to $1.3 billion
(Knight, 2010).
31. http://www.brandchannel.com/features_effect.asp?fa_id=40
32. http://www.business-humanrights.org/categories/Lawlawsuits. Accessed April 10, 2010
REFERENCES
Browne, Z. (October 8, 1994). Investment group funds start-up capital venture. The New York Amsterdam News.
Collins, G. (June 7, 1994). Pepsi and South Africa to get together again. The New York Times.
250 C. T. Moses and D. Vest
Division of Research, Moore School of Business, University of South Carolina (March, 2005). The Economic Impact of the Coca-Cola System on South Africa. Columbia, SC: Author. Retrieved from http://moore.sc.edu/UserFiles/moore/ Documents/Division%20of%20Research/sareport2.pdf
Keller, B. (December 9, 1994). Johannesburg journal; corporate foe of apartheid finds reward elusive. The New York Times.
Louis, J. C., & Yazijian, H. (1980). The cola wars. New York: Everest House. Pendergrast, M. (2000). For God, country and Coca-Cola: the definitive history of the
great American soft drink and the company that makes it. New York Basic Books. Scherer, A. (2007). Toward a political conception of corporate responsibility:
Business and society seen from a Habermasian perspective. Academy of Management Review, 32(4), 1096–1120.
Spivey, J. K. (2009). Coke vs. Pepsi: The cola wars in South Africa during the anti-apartheid era. (Unpublished masters thesis). Georgia State University, Atlanta, GA.
Wells, K. (October 4, 1994). South Africans urged to switch to Pepsi for political reasons—whispering campaign erupts as black U.S. investors back company’s return. Wall Street Journal–Eastern Edition, p. B16.
Woodward, D. P., & Teel, S. J. (July=September 1999). Doing business in South Africa. Business & Economic Review.
Coca-Cola and PepsiCo in South Africa 251
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Community—Coca-Cola Interface: Political-Anthropological Concerns on Corporate Social Responsibility Author(s): K. Ravi Raman Source: Social Analysis: The International Journal of Social and Cultural Practice, Vol. 51, No. 3 (WINTER 2007), pp. 103-120 Published by: Berghahn Books Stable URL: http://www.jstor.org/stable/23181982 . Accessed: 14/12/2014 18:40
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Community-Coca-Cola Interface Political-Anthropological Concerns on Corporate Social Responsibility
K. Ravi Raman
Abstract: By critiquing corporate social responsibility (CSR) as dis
course and practice, it is argued in this article that CSR conceals its
own invention and intentions. CSR is found to be problematic as it
is yet another legitimating discursive domain that serves only the
colonization process of corporate, oligarchic power structures. The
present article attempts to traverse the complex maze that currently
constitutes the theory and practice of CSR through a juxtaposition of
the expressed acceptance of CSR by one of the world's biggest oligar
chic-corporate structures, the US-based Coca-Cola Company, and the
lived experience of village communities that have borne the ill-effects
of its operations in India.
Keywords: Coca-Cola, corporate capital, corporate social responsibility,
globalization, groundwater, pesticides
In an inevitable culmination of capitalist transition that parallels the Haberma
sian postulate, transnational corporations have come to colonize our lifeworld
and occupy a central position in the governance of the nation-state.1 In fact,
the evolution of corporate-led capitalism is now at a stage wherein the nation state itself is being increasingly corporatized, turned into an "instrumentality of oligarchic empires and corporations" (Kapferer 2005; see also Hardt and
Negri 2000, 2004; Kapferer 2002; Sharma and Gupta 2006; Trouillot 2001), and
ultimately left with minimal residual powers of regulation. There are instances, however, as Enron and other scandals indicate in the US and elsewhere (see
Armour and McCahery 2006; Gledhill 2004), in which the state is engaged in efforts to regulate these transnationals, often after significant social protest has been launched. Yet the new power of corporate capitalism, born of ideological
t Social Analysis, Volume 51, Issue 3, Winter 2007, 103-120
doi: 10.3167/sa.2007.510305
® Berghahn Journals
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104 | K. Ravi Raman
shifts that include 'sustainable development', 'transparency', 'participation', 'social capital', etc., forms part of the current legitimacy of new state orders, rais
ing indeed the necessity to engage with the question of yet another legitimating
discursive domain—corporate social responsibility (CSR) and accountability.
While the literature on CSR as a concept and a method of practice has come
to occupy a prominent place in the everyday discourse on capitalist globaliza tion (see Blowfield and Frynas 2005; Campbell 2006; Garvey and Newell 2004; Jones 1996; Margolis and Walsh 2003; Orlitzky, Schmidt, and Rynes 2003), political anthropological inquiry, with its subject matter of power relations and
reconfiguration of authority, offers valuable insights into the hidden facets of CSR as discourse and practice, all of which the corporate power block increas
ingly portrays as the new face of corporate culture. The present article attempts
to traverse the complex maze that currently constitutes the theory and practice
of CSR by juxtaposing the expressed acceptance of CSR by one of the world's
largest oligarchic-corporate structures, the US-based Coca-Cola Company, and the experience of local communities that have borne the ill-effects of its opera tions. The study, however, is limited to an examination of the content and nature of the claims made by the corporate capital—often articulated through its own CSR documents and periodical reviews or environmental reports, fre
quently in response to the lived experiences of the host communities—and the
extent to which the CSR discourse distances itself from the objective reality at the grass-roots level. Following a brief account of the genealogical context in
which the oligarchic corporations, including Coca-Cola, took a paradoxical turn
toward CSR, the article proceeds to ground-level realities, such as the impact
and consequences of the operations of Coca-Cola in the Indian villages, to prove
how the claims of CSR amount to nothing more than corporate rhetoric.
CSR as Discourse and Practice
The early 1970s witnessed momentous changes in the world economic sce
nario. It was an era in which the demise of the 'golden age of capitalism'2
neatly coincided with the generation and diffusion of CSR as a systematic body
of discourse/knowledge. Faced with a profit squeeze in the first half of the
1970s, corporate capital showed remarkable resilience by fashioning suitable buffers to neutralize its losses and thereby re-establish its supremacy. Apart from venturing into the realm of neo-liberal flexible accumulation, it wound its
way to the rather new terrain of CSR. In other words, corporate capital began to introduce discursive and non-discursive strategies, the latter in the material
domains, in the form of sweeping neo-liberal reforms and a massive dislocation of labor. Downsizing, cutting wages, reformulating conditions of labor, search
ing for high-tech innovations, plundering natural resources—all of these char acterized the "accumulation by dispossession" that Harvey (2003) attributes to
contemporary imperialism (see also Arrighi 2005; Fine 2006). As welfare states were gradually dismantled, their power was reduced to a bare minimum, leav
ing the regulation of entire economies in the hands of corporate capital.
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Community-Coca-Cola Interface | 105
Unethical practices in business were debated, particularly, the human rights
violations in the seemingly innocent promotional measures adopted by Nestle
in developing countries for infant formula that contributed to malnutrition and
even the death of infants. The human rights violations of companies operat
ing in the South African apartheid regimes were exposed (Smith 1981). The US-based farm chemical multinational Monsanto (see Glover 2007; Herring 2007) and fashion brands such as GAP and Nike have come under scrutiny, as have the large number of corporate-community conflicts in the mining and
oil-extraction belts (Moffat and Linden 1995; Okonta and Douglas 2001; also
see Idemudia and Ite 2006; Utting 2002). The discourse of corporate social
responsibility, which implies a voluntary engagement with ethics and social and environmental sustainability, in addition to making a profit, was largely constructed by the multinationals themselves, partly in an effort to fend off
political-ideological attacks and partly to work around the 'crisis of legitima tion' that forms a part of the larger derailment of ethics in the public sphere (see Habermas 1975, 1989). This is not to deny the role played by civil society in Europe, North America, and Asia in the construction of CSR (see Bendell
2004), but rather to highlight the fact that these interventions were the out come of the very restructuring of global accumulation.
While the corporate world is increasingly seen to be articulating its regard for
social responsibility, critics (Jones 1996; also see Bakan 2004; Christian Aid 2004; De George 1996; Frynas 2005; Mah 2004; Roberts 2003; Utting 2002) continue to see this as more a myth than a reality, since corporate capital is, in the final
analysis, interested in accumulation alone. Ironically, this point of view was also the starting point of critiques of CSR from those most committed to absolute
market freedom as a social good, including Milton Friedman (1970), who argued that corporate managers should be legally restrained from deviating from their
proper role of maximizing shareholder value. Various positions—that CSR is 'bad capitalism school', that weak CSR is 'bad development', that capitalism can
make 'hardly any CSR', and that CSR is nothing more than 'good capitalism' and
therefore not worth thinking about in its own right—are being discussed and
debated (Blowfield and Frynas 2005). Being portrayed as an apparently fresh facet of corporate culture, particularly with regard to business ethics, social and
environmental sustainability, and human rights, the debate on CSR, however,
does not lend itself to any sort of consensus.
Foucault (1980) spurns the concept of language as discourse, holding instead that it is what the former represents that truly constitutes discourse (see also Escobar 1995; Ferguson 1990, 2005; Gledhill 1994; Grillo and Stirrat 1997). The Foucaultian notion of discourse—CSR in this context—identifies appropri ate and legitimate ways of practicing ideas (as well as speaking and thinking them) that are permissive of a certain manner of thought and thereby exclusive of all other alternatives. The discourse that produces knowledge is therefore
inseparable from power—that is, no power relation could exist without the correlative construction of a field of knowledge. The corporate capitalists have
generated just such a knowledge/discourse of corporate social responsibility to the extent of qualifying themselves as citizens (corporate) in their effort to live
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106 | K. Ravi Raman
down the crises of legitimation/confidence. Hegemonic ideas are discursively introduced/reinforced/adopted/brought up in order to articulate a consensual
legitimacy, for example, the commonsense notion (Gramsci 1971; see also Levy
and Egan 2003; Levy and Newell 2002; Mah 2004; Ravi Raman 2006; Sharp
2006) that the corporate sector could regulate itself or that voluntary regulation would be the best option. This hegemonic discourse is being used as a strategy by proponents of neo-liberal, corporate-led globalization—a process of "mysti fication" that works to "co-opt and/or diffuse potential countervailing forces"
(Jones 1996; 33)—but in a way that conceals the nature of interventions and the mechanism of its own invention (see Foucault 1974, 1980).
Coca-Cola and CSR
Global soft drink giants, particularly, Coca-Cola and PepsiCo, have come under attack in Colombia, Guatemala, Zimbabwe, and the Philippines, as well as in their country of origin, the United States. In these countries, it was the dis crimination against black employees, the poor working conditions of migrant workers,3 and the assassinations of trade union leaders and union-affiliated workers that provoked protests. In India, however, it was the thoughtless eco
logical degradation that laid the land to waste and the poisonous content of the soft drinks themselves that were condemned by villagers and activists alike.
Counterpoised against these articulations of protest is the discourse of corpo
rate social responsibility that is generated by the corporate world in alliance
with international organizations such as the United Nations. The corporate
capital pledges allegiance to the UN Global Compact, which seeks to promote "responsible corporate citizenship so that business can be part of the solution
to the challenges of globalization" and to work toward a "more sustainable and
inclusive global economy."4
Although late in pledging its support for the UN Global Compact, in a report
titled Corporate Responsibility Review, the first of its kind, Coca-Cola (2006) claims that it is "listening to governments, NGOs and other external stakehold ers, including our critics." It appears committed to the view that corporate
responsibility should be "incorporated into every aspect of doing business. It
should be part of a company's culture." In its "Manifesto for Growth," Coca-Cola
lays out a vision for what it calls sustainable growth with five priority areas:
profit, people, portfolio, partners, and planet.5 The company claims that this vision is premised on the understanding that ensuring a sustainable future for its business equates to ensuring a sustainable future for the entire planet. In its
report titled Our Environmental Values (Environmental Report 2002) (Coca-Cola 2003), the company recognizes three principal challenges that demand attention: water quality and quantity, energy and climate change, and solid waste man
agement. Its guidelines on CSR bespeak an adherence to its tenets. In Corporate
Responsibility: Citizenship Review for the Coca-Cola System in Great Britain, its first citizenship report, Coca-Cola (2005) declared its aim of "being a global citi zen that makes a difference" in the marketplace, workplace, environment, and
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Community-Coca-Cola Interface \ 107
community. It has also pledged to take part in a global water initiative to ensure
the sustainable use of water resources in their business,6 as well as a stakeholder
forum to engage with environmental issues related to water resources. As part
of its CSR, the company has also undertaken a large number of education and
health programs, the majority of which have been developed and implemented with the aid of government agencies. In an unequivocal assertion, Coca-Cola
states: "[W]e live and work in more than 200 countries and have deep roots in communities around the world. We are connected to the lives and livelihoods of
those communities. And we are intensively committed to the economic success
and continued growth of these communities. "7
New Sources of Misery
After a 16-year exile, Coca-Cola made its re-entry into India in 1991 when the rule that no foreign corporation could have a majority holding in an Indian
company was rescinded. The company quickly spread its network of bottling operations far and wide across the vast expanse of the country. Two major fac
tors attracted Coca-Cola to India: its expanding middle class, which ensured a
market, and a virtually free supply of its single most important input—namely,
water. Its operations, both direct and franchisee-owned, with a total investment
of more than US $1 billion, have made the company one of the leading for
eign direct investors in India. However, the company's return also marked the
beginning of fresh tales of devastation and ruin that swept across the Indian
countryside, which was already struggling to come to grips with the effects of neo-liberal restructuring.
In Kala Dera village in Rajasthan, where Coca-Cola started a factory in 1999,
groundwater resources were quickly depleted, leaving nearly four dozen villages deprived of their sources of irrigation. Mehdiganj is a village located 20 kilome ters from the city of Varanasi, in the north Indian state of Uttar Pradesh. Within
a year of the commissioning of a Coca-Cola factory, water levels in the villages
began to fall alarmingly, rapidly leading to a water crisis within the community. Plachimada in the district of Palakkad in Kerala in south India was yet another
prime location chosen by the multinational company, lying as it did in close
proximity with a network of irrigation canals and storage resources richly fed by the many rivers of the region. The factory was commissioned in 2000, and the
effects of its operations became evident soon after. Although the average rainfall
in this area is low in comparison with other regions in the state, the conditions for groundwater recharge are better, owing to the gently undulating nature of the
terrain and due to the surface water reservoirs and dam irrigation canals. These fertile lands are home to an agricultural populace who cultivate a liv
ing relationship with the land. This region is also home to the most marginalized communities in the country, the dalits and the adivasis. In a typical case of what
has come to be known as 'environmental racism', the most environmentally
hazardous projects are invariably assigned to regions inhabited by these under
privileged communities (see Cole and Foster 2000; Guha 1989; Martinez-Alier
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108 I K. Ravi Raman
2002; Newell 2005; Pellow and Park 2002). Whether viewed from a macro-per
spective or explored through micro-level ethnographic evidence, what emerges
is the raw truth of the appropriation of public spaces and domains that were
the possessions of the local communities and their representative governments
by corporate capital and new oligarchic-state formations (Kapferer 2005), san
guine in their fixed belief in the powerlessness of the underprivileged.
Corporate Culture sans Environmental Ethics?
A common cry welled up from among the village communities across the
length and breadth of India in protest against Coca-Cola's over-mining of
groundwater from common sources, which was creating severe water short
ages in villages around almost all of the factories. The most vehement reprisals occurred in Kala Dera in Rajastan, Mehdiganj in Uttar Pradesh, and Plachi mada in Kerala, with many of the factory sites increasingly becoming places of brewing protests. The protests also decried the pollution of whatever little
water remained, making it unfit for domestic consumption and irrigation. In
addition, the extraordinary practice of distributing toxic wastes to the farmers
as fertilizers was denounced. With no way to dispose of these factory wastes,
the company dumped them indiscriminately in nearby areas, causing soil and
groundwater pollution in the immediate vicinity of the bottling plant. This was
compounded by the discharge of wastewater from the plants, which contrib uted pollution to the drinking water.
Roughly two years after the manufacturing of cola products commenced in
Plachimada, the effects of the massive groundwater mining and the disposal of treated effluents became manifest. The surrounding adivasi and dalit families
were faced with acute scarcity of water, and the little that remained was unfit
for drinking or cooking. Even worse, the consumption of this polluted water
had resulted in widespread sickness and ill health, with the villagers becoming
highly prone to a variety of skin and stomach disorders. In the words of the vil
lagers, "Our own health departments told us not to use the water as it contains
hazardous wastes ... then how can we use it ... Will they use it?" The harassed
villagers, deprived of their very livelihood and resources, unable to tend their cattle and milch animals, and attacked now by new and unknown diseases,
finally gave vent to their frustration. Their protests attracted the support of human rights activists and other socially concerned groups, who together initi ated the Anti-Coca-Cola Campaign, which took up the task of informing the
factory authorities of the ill-effects of their operations and requesting them to halt production. The various protest campaigns that had sprung up in different
parts of the country, demanding that Coca-Cola leave their villages, now began to mesh together and grow into a massive post-development social movement
(Ravi Raman 2007), through which the scattered communities developed a
solidarity of 'everyday' forms of resistance (see Scott 1985).8 The manner in which Coca-Cola responded to the villagers' demands and
the extent to which this response agreed with the principles of CSR are matters
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Community-Coca-Cola Interface | 109
that merit closer inspection. It was through its report titled Our Environmental
Values (Coca-Cola 2003) that the company sought to counter each of the allega
tions leveled against it: the depletion of the aquifer in Kerala by an unreason
able withdrawal of groundwater, the presence of heavy metals far in excess
of prescribed limits in the biosolids generated at the local bottling plants, and unsafe levels of pesticide residues in the carbonated soft drinks it produced.
In its report, the company asserts: "We take these concerns seriously and we
continually work to ensure that our products and practices are world class and
safe." In fact, the characterization of the hazardous factory wastes as biosolids is in itself an illustration of the power politics played by hegemonic forces. The
report continues: "We believe that these issues are challenges that arise through
working in merging economies. In our opinion, the balance of evidence includ
ing testing and analysis by independent laboratories and the Indian government shows that the allegations against Coca-Cola have not been substantiated."
Janus-Faced Corporate Culture
While acknowledging the objections raised against its environmental man
agement policies and practices in India, Coca-Cola is firm in its stand that its
"quality standards not only meet, but often exceed, applicable laws." In its
Corporate Responsibility Review, Coca-Cola (2006) states that it had reduced water use ratios in India by 24 percent between 2000 and 2004. It highlights its role in the commissioning of massive rainwater harvesting systems in various
plant locations, particularly in India, within communities, and on school and farm premises. Moreover, the company also draws attention to its involvement
with social projects such as HIV/AIDS, launched by global organizations that
include UNICEF, Population Services International, and the Global Business
Coalition on HIV/AIDS. It also points out its contribution to the co-founding
of the Global Water Challenge, a multi-stakeholder coalition to leverage collec
tive strength in addressing water and sanitation issues, and its role in initiating Global Community-Watershed Partnerships with USAID to support a wide
variety of water-related programs.
This image of corporate philanthropy is dear to globalizing corporations, which often assume responsibility not only for their home bases but also for
overseas business sites. Corporate sponsorship of sporting events is another
high-profile investment designed to bring in profits that far outweigh the invest ments. Coca-Cola sponsored the 2006 FIFA World Cup as well as the Olympic
Games in Torino in 2006, and with its new pact, it would continue to support
the forthcoming Olympic Movements. But perhaps the most difficult of all its interventions is that of pushing its products on school and college campuses, where it deliberately positions its vending machines at key points to lure the
gullible youth. In fact, the Coca-Cola logo has now become part of the global psyche, being stamped on a range of objects and activities, including sports and countless other events, organizations, and services (see Sklair 2001). The Coca-Cola marketing system is an example of how the culture of consumerism
is rendered essential to individuals' perceptions of culture and self-worth.
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110 | K. Ravi Raman
In defense of its operations in the village of Plachimada, the Coca-Cola
Company quotes an "independent study" by the Centre for Water Resources
Development and Management (CWRDM], commissioned by the High Court of
Kerala, which states that "under normal rainfall conditions the planned ground water withdrawal of 5 lakh liters per day by Coca-Cola factory will not adversely affect the availability of groundwater in the Chittur Block. However, groundwa ter withdrawal by the Coca-Cola factory has to be strictly controlled in those
years in which the rainfall is much less than the mean value." The company has
cashed in on this observation by the High Court, claiming that the court is itself of the view that the primary cause of the water shortage in the region of Kerala was the low rainfall in the preceding years, and therefore the company retains
the right to withdraw water from the local aquifer for use by its bottling plant. This interpretation of the High Court ruling, which presupposes legal sanction for the continuation of factory operations, is one that begs investigation.
The local panchayat in Plachimada was emphatic in its rebuttal of the High Court ruling, asserting, first of all, that the CWRDM had overestimated the
groundwater availability in the area and, secondly, that it had underreported the
daily consumption of water by the giant multinational. When water is harvested
from such deep aquifers, it results in a decline of water fed by annual rainfall received. This is another aspect that the multinational had tried to conceal. It is not difficult to see that even the reported daily extraction of water—which in itself is considered an underestimation—leads to heavy water stress in the
vicinity of the factories, making the lives of the local populace miserable. The reduction in the water levels is always first reflected in the dug wells, and it is the water in these dug wells that is exclusively used for drinking and cooking purposes by the local indigenous people. These are facts that Coca-Cola had been
well aware of long before it established a set-up for business, and it has displayed an almost criminal negligence in persisting with its commercial plans.
In justifying its use of water from the local aquifer for its Kerala bottling plant,
the company, first of all, masks the earlier verdict of the High Court. Although it was at the level of the single bench, this High Court decision had in fact
maintained that the groundwater belonged to the people and that the govern ment had no right to allow a private party to extract it in such huge quantities,
the water being "a property held by [the government] in trust." The judiciary was of the opinion that the groundwater underneath was a national resource
belonging to the entire society and that each landowner could draw a "reason
able" amount of groundwater necessary for his or her domestic and agricultural
requirements. Subsequent to operations and the legal warfare that followed the
panchayat action in Plachimada, the company could still have saved its image, had it not challenged the state legislature and the local government.
In doing so, Coca-Cola was in fact challenging not only the local require ments of the communities, but also their demands as expressed through their local-level institutions and the very legal structure that the state and the people held in such high esteem. This was hardly appropriate for a corporate structure
committed to the path of corporate social responsibility. Since the CWRDM's
independent study was itself flawed on many counts, any juridical decision
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Community-Coca-Cola Interface | 111
that drew upon it to permit resumption of operations by the factory, as did
that of the High Court of Kerala in 2005, was bound to be equally flawed on
many grounds (Ravi Raman 2005). Further, when an agricultural community
struggles for water in an area due to the continuous extraction of water by a
corporate giant, one fails to understand both the rejection of the lower court's observation that priority should be given to the agriculture sector as well as Coca-Cola's anti-people stand—even as it asserts its commitment to CSR.
It is important to note that the Joint Parliamentary Committee (JPC) of India
had expressed concern over the use of groundwater by soft drink and bottled water
manufacturing companies. It had pointed out that since groundwater is being
depleted at alarming rates in various parts of India, its commercial use should
first be restricted and then duly charged. In effect, the JPC upheld the view of the Kerala High Court's judgment that groundwater was the property of the people, and that a free use of the same could be permitted only for domestic or agricultural
purposes. Further, the JPC also highlighted that as per the National Water Policy, priority must be given to provision of drinking water, followed by water for irriga tion, with surplus water alone being allocated for commercial use.
Rechristening 'Waste'?
Campbell (2006) argues that corporations can be considered acting in socially
responsible ways if they do two things. First, they must not knowingly do any
thing that could harm their stakeholders. Secondly, if they do harm the stake holders, they must seek to rectify the ill-effects, whosoever it is that brings the situation to their attention. This definition, which sets a minimum behavioral standard with respect to the relationship of the corporation to its stakeholders,
could be considered as a critical perspective on CSR. Had Coca-Cola even a
minimum regard for the cultural commonsense and everyday experience of one
of the most important stakeholders of CSR as it claimed in its discourse, it would
have closed down operations at the first hint of environmental disruption. New
perspectives in political anthropology view organizational behavior in relation
to communities and other stakeholders as crucial, particularly with regard to
trajectories of knowledge/discourse. Hegemonic structures evolve their own
discursive strategies to deploy power in varying disguises (see Gledhill 1994), as illustrated by the articulation of Coca-Cola on the management of its biosolids.
Coca-Cola's (2003) report, Our Environmental Values, has its own clarifica tions that counter the allegation that the biosolids generated at the bottling plants contained heavy metals above prescribed limits. It maintains that the company
requires that the generation, composition, and management of biosolids be mon
itored by managers at Coca-Cola bottling plants, and that they be routinely tested to determine appropriate disposal options and to meet internal and local require ments. It is quite interesting to note the company's handling of its solid wastes and the way in which it articulates its discourse by treating solid wastes as bio solids. A large number of studies have repeatedly confirmed that ever since the
factory began functioning, the water in nearby wells has been polluted and unfit for human consumption. Because the effluents contained hydrochloric acid and
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112 | K. Ravi Raman
alkaline compounds, it was viewed that the effects of this on the wells and on the
people who used this water would be deleterious, with some of the pollutants
even crossing tolerance limits. With scant regard for the neighboring locality, the
multinational had been disposing of its effluents in the guise of 'irrigation' of its
premises. The effluents, however, accumulated as dissolved solids in the soil and
polluted the wells. This was an incriminating piece of evidence that Coca-Cola had deliberately concealed, thereby violating the policy of transparency that a
socially responsible corporate capital should have adopted. Coca-Cola's stand that wastewater was being adequately treated in its effluent treatment plant and
that it could not pollute nearby wells since it was being recycled for use in gar
dening and other domestic purposes thus remained exposed. More importantly, the use of the term 'biosolid' instead of 'hazardous solid
waste' is itself part of the legal obscurantist and social legitimization strategy of the multinational. Many studies, such as the one conducted by David Santillo at the University of Exeter, which Coca-Cola has attempted to suppress, reveal that analyzed solid wastes showed relatively high levels of toxic metals, such
as cadmium and lead, and are hence hazardous wastes. This report, which was aired on BBC radio in its Face the Facts program, further confirmed that sludge
material is useless as a fertilizer and that it contains substances that cause
mental retardation and anemia, particularly in children. The BBC also reported
that the water in the nearby Vijayanagar colony in Plachimada contained lead
in excess of World Health Organization (WHO) norms.9
Following complaints about Coca-Cola bottling plants in Kerala and West
Bengal, the Central Pollution Control Board conducted a survey of 16 soft drink
bottling plants across the country in which the effluent sludge of 8 of Coca Cola's bottling plants was found to have unacceptably high levels of hazardous
wastes, and not simply biosolids, which has serious legal and social implica
tions. The study, which included samples from Mehdiganj as well as Plachi
mada, found that the poisonous sludge was not being disposed of in a scientific
manner at any of the Coca-Cola factory sites in India (Sethi 2006). In fact, the
multinational, in an almost criminal error of omission, had completely con
cealed the fact that the sludge it had been distributing as fertilizer contained
toxic chemicals harmful to humans and the environment.
The Coca-Cola factories in India abide by neither the Water (Prevention and Control of Pollution) Act of 1974 nor the Environment (Protection) Act of 1986, which was passed in the aftermath of the Bhopal industrial disaster in 1984,
yet another incident of heinous corporate irresponsibility in India. While Coca Cola continues to adopt an ambivalent position with regard to the hazardous nature of its waste, the Supreme Court of India had to direct the State Pollution
Control Boards in October 2003 to issue closure directions.
'Missing' Environmental Impact Assessment
Whether its CSR is "liberal" or "community-centered" (see Newell 2005), it is
ethically obligatory and often scientifically necessary for a socially responsible corporate company to conduct an environmental impact assessment (EIA). The
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Community-Coca-Cola Interface | 113
clear remit of such an EIA would be to identify the scientific benefits for the
company, as well as the people; to study the environmental and health safety
issues; to assess the application of technologies; and to predict and evaluate
the relevant effect of the proposal, with feasible measures being suggested as
a remedy to any anticipated consequences. The International Association for
Impact Assessment has laid down certain principles of EIA that are considered
relatively viable for any sort of venture. It is also imperative that once an EIA
is conducted, it should be subjected to public scrutiny, particularly by those
institutions—the state, the local civic organizations, and, most importantly, the
people in the affected areas—so that they could raise pertinent objections, if
any. The primary idea is to make clear the possible impact of the project and to
adopt a cautious and staged approach toward its implementation.
Coca-Cola claims that it did conduct an EIA prior to the commencement
of construction. But it was in all probability aimed at an assessment of the
suitability of the region for setting up operations and to ensure an adequate source of water for the company's bottling plants. Had there been an EIA
with due emphasis on agro-climatic conditions in the host villages, it would have taken note of the fact that most of the regions have been character
ized as areas with low incidence of rainfall and that any extraction of deep
groundwater/aquifer for industrial purposes would threaten the basic water
security of the region and thereby the very livelihood of the people therein.
That the drawing of water from the deep aquifers would deplete the neigh
boring wells of water—the source of drinking water for the local people—was
something Coca-Cola did not reveal either to the public or to the local pan chayats, which have the authority to grant or reject the company's license. A socially responsible corporate capital should have identified who exactly the ethically relevant stakeholders were and whether it had the moral right
to continue with its activities. Clearly, Coca-Cola's discourse on EIA was use ful to no one but the company itself, its primary responsibility being to its own shareholders in place of the stakeholders on whose behalf the original
concept of CSR was conceived.
Behind the Brand Image
Having stated that pesticides are widely used in agriculture in India and that they could contaminate water sources and agricultural products, Coca-Cola's (2003) environmental report points out that the company constantly monitors its ingre dients and products for quality control and works to strengthen its processes and
procedures to ensure that involuntary contamination by pesticide residues is kept
well below safety limits. The water used to make its products in India passes
through a multi-barrier water treatment system, which includes an activated
granular carbon filtration and purification process designed to ensure that every drop is safe for use in the beverages. However, none of these claims made by the
company stands scrutiny. Studies conducted in 2003 and 2006 by the Delhi-based
Centre for Science and Environment (CSE)—a leading public interest research and advocacy group in India—on the soft drinks produced by multinationals
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114 | K. Ravi Raman
revealed that 12 brands of soft drink manufactured by PepsiCo and Coca-Cola contained toxic pesticide residues at levels far exceeding the maximum limit set
down by the European Economic Commission and the WHO for pesticides in
water used as 'food'. Each sample had enough poison to cause, in the long run,
neurological problems, impaired fertility, and even cancer. The presence of toxic
pesticides in the soft drinks as revealed by the CSE was also confirmed by the
Indian Joint Parliamentary Committee. The CSE's report indicates that Coca-Cola
and PepsiCo duly comply with the highest quality standards in the United States, whereas in India, the products of these very same companies contain far more
pesticides than are allowed by EEC norms,10 a clear case of violation of business
ethics and hence CSR in any form.
It is important to note that Coca-Cola failed to withdraw its product from the
Indian market, whereas it quickly removed its bottled water in the UK when it was allegedly found to be harmful to public health. The reporting and release of scientific facts by the CSE and the Anti-Cola Campaign have helped certain
states to withdraw, partially or fully, Coca-Cola and PepsiCo products. The gov
ernment of Kerala was driven to take stronger regulatory measures, including a
complete ban of Coca-Cola and Pepsi in the state, in response to the cumulative
pressures mounted by the CSE and Plachimada's Cola-Cola-Pepsi Quit India
Campaign. However, rather than respecting the views of the democratically
elected government, Coca-Cola chose to challenge the people's verdict through
the employment of legalities. When Coca-Cola was directed by the High Court of Rajasthan to disclose
the complete and full composition and contents of their products, including the
presence, if any, of the pesticides and chemicals therein, the company refused
to do so. It retorted that it was not bound by law to make such a disclosure, and that if the water it uses does contain pesticides, the company could hardly
be held responsible for it—obviously reflecting its "culture-ideology of consum erism" (see Sklair 2001). Coca-Cola submitted to the High Court that divulging information with regard to the presence or absence of DDT from its beverages
was not relevant to the debate. It even went so far as to question the material
relevance of such information imparted to the consumers, denying that the
consumers had any right to an informed choice before selecting, buying, and
consuming the products. The company took this stand even though the High
Court had ruled that the consumers have a fundamental right to the full dis
closure of the composition and contents of the beverages and that the right to
acquire information is a constitutional right. In October 2004, the High Court
directed the Coca-Cola Company, PepsiCo, and all other manufacturers of
carbonated beverages and soft drinks to display the composition and contents
of products including the presence, if any, of pesticides and chemicals on the
bottles.11 But the soft drink giants refused to comply with the Rajasthan High
Court verdict, which, as far as Coca-Cola is concerned, is but a perpetuation of
its trade war in the US courts (see Clairmonte and Cavanagh 1988). Despite a
professed commitment to democracy and transparency, CSR as a lived experi ence leaves much to be desired. The "public sphere" (see Habermas 1989) thus
remains shrouded in a veil of corporate deceit and duplicity.
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Community-Coca-Cola Interface | 115
Concluding Remarks
Today corporate conglomerations continue to come under attack for three broad
reasons: they violate human rights, they undermine state power, and they appro
priate livelihood resources. Particularly hard hit in this process are their own
employees, the local communities, and the larger civil society. The magnitude of such concerns is increasingly drawing attention in the Third World, in which
corporate-led globalization indulges in a violation of international guidelines, including those of the UN and the Organisation for Economic Co-operation and Development (OECD). In light of the Environment (Protection) Act of 1986
passed by the Government of India following the Bhopal industrial disaster in 1984 and the decisions of the UN Conference 011 the Human Environment held
in Stockholm in 1972, one could safely argue that corporate crime in Indian
villages is the outcome of the violation of many an international guideline. The Coca-Cola Company also fails to operate in agreement with the two major goals
of the United Nations—the goal of sustainable development, which emerged
as part of the UN Conferences on Environment and Development (at Stock
holm in 1972 and Rio de Janeiro in 1992), and the Millennium Development Goals, which include a halving of world poverty. Further, the UN Human Rights Commission, which is now considering the Draft Declaration on the Rights of
Indigenous Peoples, is working toward ensuring the full participation of local
indigenous communities in the granting of licenses, the management of profits generated by multinational operations, and the laying down of procedures for
determining damage caused and compensation payable to indigenous commu
nities as a result of the exploitation of resources.12
It is pertinent to suggest that the Inter-American Commission on Human
Rights, which has made significant contributions toward investigating human
rights violations in Latin American countries, should also consider the man
ner in which its 'own' multinational violates human rights in Asian countries
such as India. The activities of Coca-Cola in various villages in India is frankly violative of Articles 3, 13, and 14 of International Labour Organization (ILO) Convention No. 107, which was ratified by India. These articles relate to the
protection of the properties of indigenous people and their customary rights
over resources. In addition, the company's actions also violate Part VI of the
UN Draft Universal Declaration of the Rights of Indigenous Peoples. ILO 169
(later replaced by 107) includes the obligation binding on states—and, for that
matter, all agencies—to consult with indigenous peoples even when natural resources such as water remain under state ownership. Coca-Cola's opera
tions in India also violate the OECD Guidelines for Multinational Enterprises, which were first adopted in 1976 as part of the Declaration on International
Investment and Multinational Enterprises. Although the OECD guidelines are
basically meant for member countries, multinational enterprises are expected
to adhere to the guidelines in non-member countries as well. The devastation of village life due to the operation of the cola factories in
India cannot be seen in isolation. It is a continuation of what has been hap pening in other Third World countries, such as Guatemala, Nicaragua, and
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116 | K. Ravi Raman
Columbia. In all of these places, the Coca-Cola Company is accused of alleged intimidation of trade unionists, families, and activists, either to stop the spread of trade union activities or to block the formation of unions. Since 1990, many employees of Coca-Cola bottlers in Colombia have been killed by hired para militaries. The role of Coca-Cola in these murders has been questioned in US courts on behalf of members of the Colombian National Union of Food Indus
try Workers (Sindicato Nacional de Trabajadores de la Industria de Alimentos,
SINALTRAINAL). Yet another injustice lies in the fact that the soft drink giants who guzzle the precious water resources of these regions are made to pay only
a nominal price for its use. Like the other soft drink companies, Coca-Cola
pays nothing when compared to the final product, which yields massive prof its along the global commodity chain, the most vital link of which lies in the rural villages that are exploited for their cheap land and labor and their water
resources, which are appropriated free of cost. Water over-extraction, pollution,
and pesticides in drinks are contentious issues that have a crucial impact on
people's health and on community/environmental sustainability, demanding in turn the mediation of global institutions such as the FAO (Food and Agricul ture Organization of the UN) and the WHO. Community and public concerns
hinge upon ethical and cultural issues that should be prioritized and settled. As Lawrence Mitchell (2001) warns, "corporate irresponsibility" has come to
stay. It is a disease that afflicts American corporate circles and is fast spreading to create a pandemic of sorts.
It would take a particularly opaque view of the history of capitalism in its
varying forms and manifestations to foster a faith in the altruistic nature of
corporate oligarchs and their hegemonic discourses such as CSR. Neither the economic rationality of corporate organizations nor their associated power rela
tions, based as they are on the corporate logic of ceaseless accumulation, have
the moral strength to support the citadel of any enhanced form of CSR. By their
own admission, the implementation of CSR would be essential in order to hold
on to their share of the market as revealed by a recent survey conducted by
the US-based multinational PricewaterhouseCoopers in collaboration with the World Economic Forum. The apparent acts of CSR—those that are celebrated
both within corporate circles and in academia—are but recent philanthropic
versions of corporate interest, and the strategic discourse on CSR conceals its
own invention and intervention, as Foucault would remind us. This is particu larly true with respect to the discourse that emanates from the most prominent symbols of neo-liberal imperialism.
Acknowledgments
The author is grateful to Bruce Kapferer, Barbara Harriss-White, John Gledhill, C. K.
Brahmaputhran, Catia Gregoratti, and Sabeena Panicker for discussing some of the
issues highlighted in this article.
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Community-Coca-Cola Interface | 117
K. Ravi Raman is on a Hallsworth Research Fellowship in the Department of Social
Anthropology, University of Manchester. Having worked on a wide range of themes,
he now concentrates on civil society-state/corporate relations, post-development
social movements, subaltern cosmopolitanism, resource conflicts, and the politics
of neo-liberal reforms in India. He has a large number of contributions in journals,
including Economic and Political Weekly and Social Analysis, and book chapters in
edited volumes from Oxford University Press and Routledge. He is currently final
izing the manuscript of a book on globalization and livelihood struggles from a
historical and political-economic perspective.
Notes
1. By 'colonization', Habermas ([1981] 1987) refers to the increasing permeation of our
lifeworld by the state, the market, the bureaucratic apparatus, and so on, in keeping with
the logic of the advanced capitalist system. Extending this process to the current context
of neo-liberalism, we find that corporate power, with its pervasive control that extends
even to the nation-state, virtually takes over facets of our everyday life. See Jones (1996),
Crossley (2003), and Edwards (2007). 2. The contested yet often employed term 'golden age'—see Marglin and Schor (1990)—
refers to the conditions of capital accumulation from the late 1940s to the late 1970s.
Broadly referred to as the 'Keynesian quarter century', this was a time during which high
investment, high growth, low inflation, and low unemployment existed within the capi talist world system, primarily in the United States, Western Europe, and Japan. However,
these conditions could not be sustained, owing to capitalism's own contradictions and
the impact of imperialist interventions, as in the case of Vietnam.
3. For an overall survey of human rights violation and unethical practices, particularly those
in Guatemala, Mexico, and other countries, including the United States, see Hutt (2001), Frundt (1987), and Pendergrast (2000). See also http://www.campaignforlaborrights
.org; http://www.killercoke.org; http://www.indiaresource.org; http://www.ciepac.org;
http://www.waronwant.org. 4. For information about the UN Global Compact, see http://www.unglobalcompact.org/. 5. The manifesto can be accessed at the following site: http://www.thecoca-colacompany.
com/ourcompany/manifesto_for_growth.html. 6. A news release states that the company's "pledge to replace the water it uses has three
core components: reduce, recycle and replenish" (http://www.thecoca-colacompany
.com/presscenter/nr_20070605_tccc_and_wwf_partnership.html). 7. Coca-Cola's statement of corporate responsibility, quoted in part here, can be found at the
following site: http://www.thecoca-colacompany.com/citizenship/our_communities.html. 8. For a critique of Scott (1985), see T. Mitchell (1990), Brass (1999), and Ferguson (200S). 9. "Coca-Cola's 'Toxic' India Fertilizer," BBC News, 25 July 2003; "India to Test Coca-Cola
Sludge," BBC News, 7 August 2003.
10. See "Why Still Unsafe?" Down to Earth, 15 August 2006 (http://www.downtoearth.org.in/
full6.asp?foldername = 20060815&filename = news&sec_id = 9&sid = 78).
11. Civil Rights Petition No. 3105/2003, in the High Court of Judicature for Rajasthan, Jaipur Bench Jaipur.
12. To quote Article 26 of the United Nations Draft Declaration on the Rights of Indigenous
Peoples: "Indigenous peoples have the right to own, develop, control and use the lands
and territories, including the total environment of the lands, air, waters, coastal seas,
sea-ice, flora and fauna and other resources which they have traditionally owned or
otherwise occupied or used."
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118 K. Ravi Raman
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- Article Contents
- p. [103]
- p. 104
- p. 105
- p. 106
- p. 107
- p. 108
- p. 109
- p. 110
- p. 111
- p. 112
- p. 113
- p. 114
- p. 115
- p. 116
- p. 117
- p. 118
- p. 119
- p. 120
- Issue Table of Contents
- Social Analysis: The International Journal of Social and Cultural Practice, Vol. 51, No. 3 (WINTER 2007), pp. i-vi, 1-164
- Front Matter
- Editorial [pp. v-vi]
- Timing in Karate and the Body in Its Own Right [pp. 1-22]
- Textual Categories and Gender Images in a Women's Wailing Performance [pp. 23-54]
- Town-State Formations on the Edge of the Kalahari: Social-Cultural Dynamics of Centralization in Northern Tswana Kingdoms [pp. 55-77]
- The Traveling Model That Would Not Travel: Oil, Empire, and Patrimonialism in Contemporary Chad [pp. 78-102]
- Community—Coca-Cola Interface: Political-Anthropological Concerns on Corporate Social Responsibility [pp. 103-120]
- On Interdisciplinarity and Models of Knowledge Production [pp. 121-147]
- Management Speak: Indigenous Knowledge and Bureaucratic Engagement [pp. 148-164]
- Back Matter
__MACOSX/Organisation theory/._Raman (2007) Community Coca Cola Interface.pdf
Organisation theory/Regassa and Corradino (2011) Determining the Value of the Coca Cola Company.pdf
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Journal of the International Academy for Case Studies, Volume 17, Number 7, 2011
DETERMINING THE VALUE OF THE COCA COLA COMPANY – A CASE ANALYSIS
Hailu Regassa, Colorado State University - Pueblo
Laurie Corradino, Colorado State University – Pueblo
CASE DESCRIPTION
The primary subject matter of this case concerns finance related topics and uses actual financial data to assess the rationale for why and when various models can be used to determine the stock price performance of the Coca Cola Company. Secondary issues examined include a determination of the value of the company using the discounted cash flow model. The case enables students to apply their knowledge of the principles of finance and accounting to a real world example. It is specifically designed to enhance, among other things, students’ understanding of the selection of appropriate financial techniques and to apply those methods to a specific company, in this case the Coca Cola Company.
The case has difficulty levels of three, four, and five. The content is appropriate for the both an undergraduate principles of finance course taken primarily by students at the junior or senior level (levels three and four) as well as for first-year graduate students (level five). The case is designed to be completed primarily outside of class as group work with limited discussion in an in-class setting. Outside preparation time is expected to be three to four hours for students who have adequate background in the topics included. In-class discussion may range from thirty minutes to one hour.
CASE SYNOPSIS
Nicki James, a CFO of a wealth fund management advisory group, had been successful in solving the financial woes of her clients for a number of years. During that time, she had also dabbled in some investing of her own and was always looking for new opportunities. Therefore it was no surprise that ideas randomly came to her as one did on that fall day in 2009 as she was sipping from her can of Classic Coca Cola. Coke, as many referred to the product, had been a part of her life ever since her early childhood. Thus the well-established nature of the company along with the new prospects in sight for the organization inspired her to instruct her assistant and recent MBA graduate, Sarah Mills, to perform some financial analysis on her behalf. Could Coca Cola stock be the financial goldmine that both Nicki and her clients had always sought? With a little research and a few calculations, Nicki and Sarah were determined to find out!
BODY OF CASE
On a fall day in 2009, Nicki James, the chief financial officer (CFO) of a wealth fund management advisory group, was sitting outside enjoying a cool breeze while sipping from her
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can of classic Coca Cola. As she was sipping, she thought about how Coke, as a beverage, has evolved over the years. She could remember how, as a young girl, her mother would persuade her and her siblings to be well behaved and to be kind to each other and would even offer them a can of Coke as an incentive for their good manners. As she grew older, new versions of the classic soft drink including Diet Coke, Caffeine Free Coke, Cherry Coke, Coke Zero, and many others emerged. As incredible as the variations of the coke flavors were, the Coca Cola Company even began to diversify and began to produce PowerAde, vitamin water, energy drinks, and juices.
With all of the other newly introduced beverages, the company somehow managed and even thrived throughout all of the transitions and remained the undisputed leader in the industry notwithstanding the competitive challenges it faced by the entrance of Pepsi, Dr. Pepper/Snapple, and others into the market. In fact, being the financial guru Nicki was, she recalled reading in a business article recently that the company had once again and for the ninth consecutive year claimed the title of the top world brand outshining a number of equally well- reputable and successful companies like Toyota, Disney, IBM, Microsoft, Google, and Intel. The Coca Cola Company, with a listed brand value of $68.7 billion, had gained an amazing three percent in this measure in less than a year (Trubey, 2009).
Like most financial professionals, Nicki not only utilized her expertise exclusively for her clients but also delved into investing for her own account in hopes of striking it rich so she could retire early and lead a comfortable life. Many already knew that the key to her successful career lied in her ability to select companies with steadily improving and predictable financial performances. However, she had never investigated Coca Cola as an alternative investment option in any detail. The memory of what her mother used to say and the encouraging headline news about Coke’s brand caught her attention by surprise and she decided to explore whether the stock price performance of the company justified the risk.
One other item that also stuck in her mind, though, was an announcement that had been released a few months prior regarding a possible national (U.S.) tax on the sugary beverages of the industry. The tax, if imposed, as she recalled, would be collected as an additional revenue source for the nation’s healthcare system (Adamy, 2009). The ramifications of such a measure on the demand for the company’s products could be worth examining as well. With such news and prospects as her motivators, Nicki began gathering additional information and data needed to properly analyze The Coca Cola Company and explore whether or not the company’s stock should possibly be one of the investments included in her portfolio.
Among the latest news that Nicki uncovered, was an announcement by the company of its plans to double its revenue by 2020. According to company officials, such phenomenal growth could be achieved, among other ways, through the penetration of new and untapped markets like China, India, Mexico, and South Africa (Geller, 2009). Nicki was quite intrigued by these potential market outlets and the company’s growth prospects. On a trip she took a few years back, she had the privilege of visiting a Coca Cola World museum and had the opportunity to taste Coke blends that were actually native to many of the countries represented. She had assumed that the brand that she was familiar with was just as popular in those nations as it was in the United States but was unaware of the exact expansionary opportunities available.
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Moreover, on the company’s list of modifications, were plans to revise its marketing approach and to specifically target new segments including multicultural teenagers and women while also offering new product sizes including a 7.5-fluid ounce mini can boasting a mere 90 calories (“Coca Cola to offer,” 2009). Additional packaging changes proposed included a front- label energy (or calorie) display to further appeal to health-conscious consumers and juice packages displaying prominent fruit images emphasizing the healthy contents of the products (“Coke putting energy,” 2009; Frederix, 2009). Even more awe-inspiring was news of a Coca Cola vending machine that would allow consumers to quench their thirst by blending flavors to create their own personalized carbonated beverages (Collier, 2009). Nicki was captivated by all of these growth prospects and they reinforced her desire to carry out an exploratory investigation.
While sifting through industry news, Nicki also learned of PepsiCo’s plans to buy some of its bottlers in an attempt to better control the supply chain and to partner with Anheuser Busch in an effort to cut costs (Birchall, 2009). Despite such competitive threats, from the preliminary news Nicki had gathered, she thought that the company’s financial background appeared to be solid and its prospects bright.
Now, it is time to determine if the number crunching offers a similar positive outlook. Specifically, Nicki is keenly interested in knowing how much the company is worth and whether the company’s stock price is under- or overvalued given its current price of $56.54 as of December 31, 2009.
Nicki has delegated Sarah Mills, her immediate assistant, who after having just graduated from a reputable business school with an MBA degree joined her wealth fund advisory group, to sift through and compile the necessary data, and to then make a recommendation. Sarah immediately got involved and put all of the necessary accounting and financial information together in order to make a recommendation.
In order to complete her analysis, Sarah made the following assumptions: * The company carries various outstanding loans with different maturities (Table 5). These loans are assumed to be rolled over or refinanced at the existing rates upon maturity. * Growth estimates (Table 8) in earnings and dividends over the past five years from various sources range from a low of 7.9 percent to a high of 8.5 percent. Sarah used the lowest estimate of 7.9 percent to be reasonable and to err on the side of caution. * Sarah took the overall average of the daily returns of the S&P 500 over a 60-year period, January 1, 1950 through December 31, 2009, for which data was available on Yahoo.finance.com, to determine the annualized compound growth rate as a proxy for the market return. * She used the 20-year Treasury bond rate (Table 6) as the risk free rate and the current beta of 0.62 (Table 7) as a measure of the firm’s market risk. * The company has outstanding short-term loans of $6.32 billion with a weighted average interest rate of 0.2%. On the grounds that the claim on operating income for such loans would be immaterial, Sarah decided to exclude them from the determination of the weighted average cost of long-term debt.
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Additional financial data used include Tables 1 and 2 which provide the income statement and balance sheet, respectively, for the past five years. Table 3 provides the free cash flows generated over the past five years while Table 4 outlines the company’s dividend and earnings history. Table 5 outlines the outstanding bond issues as of December 31, 2009, while Table 6 provides U.S. Treasury rates for a variety of maturities. Finally, Tables 7 and 8 itemize various company and industry data.
Table 1: The Coca Cola Company Consolidated Comparative Income Statements For the Years Ended December 31 (In Millions of Dollars)
2004 2005 2006 2007 2008 2009 Revenue 21,962 23,104 24,088 28,857 31,944 30,990 COGS 7,638 8,195 8,164 10,406 11,374 11,088 Gross Profit 14,324 14,909 15,924 18,451 20,570 19,902 Selling, General, and Administrative 8,626 8,739 9,431 10,945 11,774 11,358 Other 0 85 185 254 350 313 Operating Income (EBIT) $5,698 $6,085 $6,308 $7,252 $8,446 $8,231 Net Interest Income and Other 524 605 270 621 (1,007) 715 Income before Income Taxes 6,222 6,690 6,578 7,873 7,439 8,946 Income Taxes 1,375 1,818 1,498 1,892 1,632 2,040 Minority Interest 82 Net Income $4,847 $4,872 $5,080 $5,981 $5,807 $6,824 Diluted EPS $2.00 $2.04 $2.16 $2.57 $2.49 $2.93 Average Shares Outstanding (diluted) 2,429 2,393 2,350 2,331 2,336 2,329 Source: Morningstar.com
Table 2: The Coca Cola Company Comparative Balance Sheets
As of December 31: (In Millions of Dollars) 2004 2005 2006 2007 2008 2009
Cash and cash equivalents $6,707 $4,701 $2,440 $4,093 $4,701 $7,021 Short-term investments 61 66 150 215 278 2,192 Accounts receivable 2,171 2,281 2,587 3,317 3,090 3,758 Inventory 1,420 1,424 1,641 2,220 2,187 2,354 Other current assets 1,735 1,778 1,623 2,260 1,920 2,226
Total current assets 12,094 10,250 8,441 12,105 12,176 17,551 Property, plant, and equipment (net) 6,091 5,786 6,903 8,493 8,326 9,561 Intangibles 3,836 3,821 5,135 12,219 12,505 12,828 Other long-term assets 9,306 9,570 9,484 10,452 7,512 8,731
Total long-term assets 19,233 19,177 21,522 31,164 28,343 31,120 Total Assets $31,327 $29,427 $29,963 $43,269 $40,519 $48,671
Accounts payable $4,283 $4,493 $929 $1,380 $1,370 $0 Short-term debt 6,021 4,546 3,268 6,052 6,531 6,800 Taxes payable 0 0 0 0 252 264 Accrued liabilities 667 797 4,693 5,793 4,835 0 Other short-term liabilities 0 0 0 0 0 6,657
Total current liabilities 10,971 9,836 8,890 13,225 12,988 13,721 Long-Term Liabilities Long-term debt 1,157 1,154 1,314 3,277 2,781 5,059 Other long-term liabilities 3,264 2,082 2,839 5,023 4,278 5,092
Total long-term liabilities 4,421 3,236 4,153 8,300 7,059 10,151 Total Liabilities $15,392 $13,072 $13,043 $21,525 $20,047 $23,872
Total Equity $15,935 $16,355 $16,920 $21,744 $20,472 $24,799 Total Liabilities and Equity $31,327 $29,427 $29,963 $43,269 $40,519 $48,671 Source: Morningstar.com
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Table 3: Historic and Current Free Cash Flows
2005 2006 2007 2008 2009 Free Cash Flow (FCF) $5,524 $4,550 $5,502 $5,603 $6,193 (In millions of dollars) Source: Morningstar.com
Table 4: Historic Annual Dividends and Diluted Earnings per Share Annual Dividend Diluted EPS
2004 $1.00 $2.00 2005 $1.12 $2.04 2006 $1.24 $2.16 2007 $1.36 $2.57 2008 $1.52 $2.49 2009 $1.64 $2.93
Source: Yahoo Finance and Morningstar.com
Table 5: Bonds Outstanding (Late 2009 / Early 2010 – Prices and BV roughly as shown below) Maturity Date Book Value Price Coupon Coca Cola, 5.35% 11/15/2017 $1,748,000,000 109.8 5.35% Coca Cola, 4.875% 3/15/2019 1,339,000,000 103.8 4.88% Coca Cola, 3.625% 3/15/2014 897,000,000 104 3.63% Coca Cola, 5.75% 3/15/2011 500,000,000 104.5 5.75% Coca Cola, 7.375% 7/29/2093 116,000,000 116.9 7.38% Coca Cola, 5.30% 2018 510,000,000 92.32 (Inferred from financials) 5.30% Source: Morningstar.com & Coca Cola Company Financials
Table 6: YTM on U.S. Treasuries (12/31/09) 1-month 0.04% 3-month 0.06% 6-month 0.20% 1-year 0.47% 2-year 1.14% 3-year 1.70% 5-year 2.69% 7-year 3.39%
10-year 3.85% 20-year 4.58% 30-year 4.63%
Source: U.S. Treasury.gov
Table 7: Various Other Financial Data Shares outstanding (non-diluted) (12/31/09) 2,310,000,000 Beta (12/31/09) 0.62 P/E – Beverage Industry $17.23 S&P 500 overall average daily return (1950 - 2009) 0.03% Source: Yahoo.finance.com Industry Growth Rate 5.07% Source (Cooper, 2009)
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Table 8: Company Growth Rates
5-Year Estimated Growth – Morningstar 7.90% 5-Year Long-Term Growth Rate of Earnings - Reuters 8.50% Historical Compound Growth Rate (based on 5 years of EPS) 7.94% Historical Average Growth Rate (based on 5 years of EPS) 8.28%
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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.