The Coke Machine - Michael Blanding [51]
Even so, the Coca-Cola Company appealed to “choice” in 2001 when it staged a strategic retreat with a new school beverage policy. Coke would continue to allow its products in schools but prohibit exclusive school contracts or up-front payments to school districts. “We just don’t think that schools are an appropriate venue for marketing,” said Coca-Cola America president Jeffrey Dunn during a luncheon announcement in Washington. Coke received a rush of positive publicity, but there was only one problem—nobody bothered to tell the bottlers. Whether by design or benevolent neglect, Coca-Cola Enterprises was caught flat-footed by the announcement. A spokesperson for CCE promised that the bottlers would comply if schools stopped putting out requests for proposals. That promise lasted for all of a week—until Portland, Oregon, put out a request and Coca-Cola Enterprises ponied up a bid.
When the Los Angeles plan passed in August 2002, CCE president John Alm appealed to his chief lobbyist and public relations head John Downs, asking, “What is the plan?” Truth is, the bottler didn’t have one. It would take ten months to declare that it was keeping exclusive contracts, even as the bottler encouraged salespeople to offer schools more choices and eliminated big up-front payments. While Alm was announcing the policy, he also produced a private video for friendly politicians calling obesity “a war that’s been declared on our company.” At the same time, CCE proactively became a chief sponsor of the National Parent Teacher Association in June 2003 with an undisclosed contribution; Downs was placed on its board.
In partnering with teachers and parents, Big Soda emphasized the importance of the money they provided to schools. “They are a win for the students and the schools and the taxpayer,” said the NSDA’s McBride. “I think everybody benefits as a result of these business partnerships.” It was a meme that was picked up by the media. A review by the Berkley Media Studies Group of news articles in 2001 and 2002 found 103 references to obesity threatening children’s health but 115 references to soda sales providing money for schools.
Later analyses, however, showed they weren’t quite the panacea they seemed. A review by Oregon nonprofit Community Health Partnership found contracts yielded on average only $12 to $24 per student annually—and most of that money came from commissions on purchases themselves. Another analysis by CSPI found that soda commissions averaged only 33 percent—meaning that schools made back only a third of each dollar students spent. The most detailed sections of the contracts, CSPI found, were those delineating just where and how the Coke logo was to be displayed—with stiff penalties to schools for noncompliance.
When Coca-Cola Enterprises finally announced its own new policy at the end of 2003, it did little to change any of the existing pouring-rights contracts. According to Downs, the company would prohibit sales of soda to elementary school kids during school hours—an empty gesture, as most elementary schools didn’t sell soft drinks anyway. In addition, it would encourage bottlers to voluntarily control vending machine operating hours in middle schools and high schools. As a response to the criticism against advertising to kids, it announced, it would also end the practice of distributing book covers with the Coke logo (even while the vending machine signs and scoreboards stayed).
As soft drink executives hunkered down at an industry conference in New York City at the end of 2003, the mood was grim. Coke’s sales growth for the year was a disappointing 2 percent overall, and sales volume of Coca-Cola Classic actually declined 3 percent. Then there were other problems: A young accountant recently laid off by Coke, Matthew Whitley, had lashed out with allegations that Coke had committed fraud in consumer tests