Company Background
The American corporation, The Coca-Cola Company, which was established in 1892 presently engages in the production and sale of concentrates and syrup for Coca-Cola, a carbonated beverage. Coca-Cola represents a cultural institution within the United States and is a symbol of American tastes worldwide. Typically, the company produces and sells more than 2,800 products including other soft drinks as well as citrus beverages in more than 200 countries worldwide ("The Coca-Cola Company | History, Products, & Facts," 2018). It is the largest manufacturer and distributor of beverages globally with its headquarters in Atlanta, Georgia.
Originally, the design and manufacture of the Coca-Cola drink commenced with an Atlanta pharmacist, John S. Pemberton, who worked on it at Pemberton Chemical Company. In the year 1886, while workers were constructing the Statue of Liberty in the New York Harbor some seven hundred miles away, the unveiling of the great American emblem that is Coca-Cola was underway. Much like numerous history makers before him, curiosity drove John Pemberton to the discovery of a uniquely tasting syrup with a distinctive fragrant and dark caramel color. Pemberton’s bookkeeper, Frank Robinson, selected the name for the drink and noted it in his famous flowing script, which became the Coca-Cola trademark to this date.
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As history indicates, Pemberton initially publicized his drink as medicine for common ailment basing it on the extracts of the kola nut, which is rich in caffeine. While this was the case, it was removed from the overall formula of Coca-Cola in 1903 and sold as syrup to local fountains of soda. Subsequently, with extensive marketing, the drink became a phenomenon among the American population. In 1891, another pharmacist from Atlanta, Asa Griggs Candler, secured the entire ownership of the company for a total of close to $2,300 and soon became the first Coca-Cola president, consequently, bringing about real vision and strategy for the emerging brand ("The Coca-Cola Company | History, Products, & Facts", 2018). Under the leadership of Candler, the company’s sales rose steadily from 9,000 gallons of premium syrup to an estimated 370,000 by 1900 ("The Coca-Cola Company | History, Products, & Facts," 2018). In particular, it was at this time that syrup-making production centers emerged particularly in Philadelphia, Dallas, and Los Angeles. Soon, the product achieved national sales in America and Canada. In 1899, the company devised its distribution system by allowing the first independent bottling company to buy the syrup and produce, bottle, and distribute the drink in a landmark agreement that has since been the benchmark and foundation of its unique distribution. Up to now, within the soft-drink industry, this distribution system is still in use extensively. Upon incorporation in 1892, the capitalization of the company was at $100,000. By 1919, for $25 million, a group of investors headed by an Atlanta executive, Ernest Woodruff, bought the company ("The Coca-Cola Company | History, Products, & Facts," 2018). With his stewardship and that of his son, Robert Winship Woodruff, the company endured three decades of unprecedented success.
Over time, Coca-Cola diversified in its packaging and product acquisition, further championing new entrants to its product portfolio such as Fanta, a drink initially produced in Germany. Onwards, the company produced various assortments of drinks including the lemon-lime drink Sprite and the diet cola in 1961 and 1963 respectively. Further, in 1960, the company purchased the Minute Maid Corporation and ventured into the citrus juice market. By 1985, the company announced its decision to alter the original flavor of Coca-Cola. This attempt to reformulate Coca-Cola did not augur well with consumers who highlighted its resemblance to the taste of its 87-year old rival Pepsi Cola (Schindler, 1992). Nonetheless, by the 1990s, the company ventured into novel markets such as East Germany, India as well as Asia, further creating new products such as the Qoo children’s fruit drink, Dasani bottled water, and Powerade sports drink.
Crisis Details
Notably, the Coca-Cola Company has endured numerous crises. In the recent past, Coca-Cola faced a cacophony of allegations relating to illegal soil and water contamination as well as human rights violations. In 2001, the International Labor Rights Fund (ILRF) and the United Steelworkers of America filed lawsuits against various beverage companies including Coca-Cola, Panamerican Beverages, Inc., and Bebidas y Alimentos. In part, the lawsuits claimed Coca-Cola engaged in “death squads” designed to intimidate, kidnap, torture, and to some extent murder union officials within Latin America ("The Coca-Cola Company | History, Products, & Facts," 2018). Garnering much attention, this controversy led to a ban in the sale of Coca-Cola products within several American university campuses. Nonetheless, the lawsuit never went to trial and was eventually discharged, acquitting Coca-Cola of all allegations.
One of the biggest controversies Coca-Cola has had to deal with in its existence is the fact that involved the inclusion of the drug cocaine in their drinks prior to the twentieth century. A background study on Dr. John Stith Pemberton reveals that his initial Coca-Cola formula contained cocaine and caffeine in fair amounts. According to The Atlantic, Pemberton learned the formula from Angelo Mariani, a Parisian chemist who combined wine with coca to create a unique drug known as cocaethylene, a powerful euphoric chemical formula that induces invigoration to the sexual organs (Hamblin, 2013). After learning of Mariani’s success, Pemberton applied similar techniques to create his own French Wine Coca that was marketed as Panacea. Notwithstanding, the prohibition era in his hometown Georgia meant that he could not use alcohol in combination with cocaine, which made him turn to sugar syrup and, thus was born the legend of Coca-Cola: the temperance alternative.
While the use of cocaine at the beginning of Coca-Cola production endured and was welcomed for several years, various stakeholders saw it as a menace especially with its subsequent bottling that rendered Coca-Cola accessible to anyone with a nickel to spare. This bottling meant access of Coca-Cola to not only the rich suburb population of the white south but also black populations as well as those of the middle and low class. Therefore, from the fountains to the bottled brand, Coca-Cola encouraged and spread the use of the drug cocaine among the Americans. While the outlawing of cocaine did not materialize until 1914, ethically, Coca-Cola was stepping out of their ethical bounds as business leaders and social influencers with their product.
Ethical Issues
As the crisis unfolded, numerous reports of crime, predominantly among white neighborhoods, emerged. Stakeholders, often-rich white consumers of the south, noted with much trepidation the increased use and proliferation of cocaine among African-Americans. This occurrence in itself was an ethical dilemma in Coca-Cola as they promoted the use of cocaine on a national scale, ultimately making the drug to be known globally thus creating a “new history of drugs” as depicted in Victor M. Uribe-Uran’s “Andean Cocaine: The Making of a Global Drug” (Gootenberg, 1954). Promoting this culture of drug use by Coca-Cola brought numerous legal repercussions. Ironically, the same hypersexuality touted as a selling attribute by Mariani in the nineteenth century became a crux in a prejudiced indictment by the U.S. State Department. As noted in 1910 by Dr. Hamilton Wright, the use of cocaine brought about social unrest and much resistance to the enforcement of the law, often incentivizing ugly crimes such as rape and violence. Up to now, traces of coca can be found in Coca-Cola without the ecgonine alkaloid (Hamblin, 2013).
Influencing Factors
Primarily, the major influencing factor of the ethical issue emerged from the media owing to the negative repercussions the product was having on the community at large. On the outset, it was evident that traces of cocaine as well as large amounts of caffeine were used in the process of producing the syrup and were widely accepted within rich segregated white communities. Nonetheless, when it became apparent after the bottling of Coca-Cola that the drug component in the product was harming the community, the ethical factor of using cocaine in the production process emerged. While company culture adhered to their formula, Candler had to accept the wishes of their prime stakeholders to sustain the company for future business (Boudreau, Jesuthasan & Boudreau, 2011). As such, the implementation of evidence-based change transpired, which enabled Coca-Cola to have a sustainable advantage in the form of using alternatives such as more sugar and caffeine.
Recommendation
To begin with, the Coca-Cola Company could have done in-depth research concerning the side effects of prolonged use of high sugar, cocaine, and caffeine mixtures. Dope, as defined by Tuttleton and Louise (1963), refers to any preparation, drug, or mixture, predominantly one designed into concentrates. Being by design a chemical compound, its research and study of its effects on the human physiological and behavioral aspect should have been prioritized before mass production. Therefore, to alleviate ethical complications in the future, the need for research and development departments in companies is eminently significant as it streamlines stakeholder expectations and guarantees sustainability.
Business Impact
As stated above, companies should focus on understanding their products first before selling it to customers. In addition, disclosure in regards to marketing is of absolute essence. For quite a long time, Americans have always consumed various carbonated drinks to the point that it has become a heritage (Allen, 2005). Therefore, to ascertain the continuity of this tradition, marketing should be done in line with the contents of the product in question. It is an apparent shame that until today, Coca-Cola still uses coca as an ingredient of their product. Although the psychoactive element ecgonine alkaloid is typically removed through an extraction process, the importation of 175 metric tons of coca for Coca-Cola in 2003 by Stefan, a chemical processing facility for Coca-Cola based in New Jersey, still raises question marks (Hamblin, 2013). Such quantities are enough to make $200 million worth of cocaine, which raises further ethical concerns.
References
Allen, F. (2005). Soft Drink. American Heritage , 56 (5), 74–75.
Boudreau, J., Jesuthasan, R., & Boudreau, J. (2011). Transformative HR: How great companies use evidence-based change for sustainable advantage .
Gootenberg, P. (1954). Andean cocaine: The making of a global drug .
Hamblin, J. (2013). Why we took cocaine out of soda. Retrieved from https://www.theatlantic.com/health/archive/2013/01/why-we-took-cocaine-out-of-soda/272694/
Schindler, R. (1992). The real lesson of new Coke: The value of focus groups for predicting the effects of social influence. Marketing Research , 4 (4), 22-27.
The Coca-Cola Company | History, Products, & Facts. (2018). Retrieved from https://www.britannica.com/topic/The-Coca-Cola-Company
Tuttleton, J., & Ackerman, L. (1963). Coca-Cola and Dope: An etymology. American Speech , 2 (153), \.
