An Environmental and Political History of Coca-Cola

A Review of Citizen Coke: An Environmental and Political History of the Coca-Cola Company, by Bartow Elmore

Historian Bartow Elmore’s Citizen Coke takes aim at the ubiquitous corporate giant’s historical depiction of itself.  This makes for a juicy target, for, as Coke historian Mark Pendergrast has observed, “There’s no question that Coca-Cola loves its own history…” (Mark Pendergrast, For God Country, and Coca-Cola: The Unauthorized History of the Great American Soft Drink and the Company That Makes It. New York: Collier Books, 1994, p. 9). As Elmore’s title suggests, Coke has long represented itself as a public service-minded company, a capitalist benefactor whose global expansion, and concomitant investment, has spurred economic development not only in the U.S. and Europe but throughout the developing world.  Elmore sets out to refute those claims—in systematic, though refreshingly unconventional fashion—through historical analysis of Coke’s business strategies (viewed over the long term), the environmental impact of those strategies, and the company’s evolving relationships with governments, be they federal, state, local, or foreign.

Posing the question of how Coca-Cola acquired the natural resources it needed to expand, Elmore’s approach to this inquiry is somewhat unusual for an historian in that he organizes his dissertation thematically, rather than chronologically.  The body of the dissertation is divided into six chapters, each focusing on a separate component of the production and distribution of Coca-Cola: Chapter 1, Water; 2, Sugar; 3, Coca; 4, Caffeine; 5, Packaging; and 6, High-Fructose Corn Syrup.

The prologue examines the myth that Coke is committed to public service.  Elmore observes that Coke has long represented itself as an independent and self-sustaining company driving capitalist development throughout the world through its own investment.  Yet while Coke justified its global expansion into communities around the world by presenting itself as a stimulator of local economies, the reality, Elmore argues, is that Coke’s spectacular and sustained growth has been driven largely by its own rather parasitical exploitation of publicly-funded infrastructure.  The dissertation can thus be seen as reversing the conventional commodity chain approach by examining Coke “as a consumer rather than as a producer” (p. 6).

In his introduction, Elmore challenges the emphasis that existing Coke historiography has placed upon advertising as the primary factor in explaining the company’s spectacular growth.  At the heart of Elmore’s work is the premise that, with their emphasis on cultural factors, Coke historians have heretofore overlooked the highly successful strategies that the company developed for exploiting both natural and public resources.  The author examines the ways in which Coke worked with government institutions to help them create the cheap commodity markets so essential to the company’s growth.  From a business-historical perspective, then, Elmore presents Coke’s history as a counter-example to scholarship that views vertical integration as the preeminent paradigm for modern corporate growth.  Elmore argues that Coke’s success resulted from the company’s adoption of the opposite approach:  “[W]hat made Coke great, its secret formula in many ways, was its slender organizational structure and its ability to forge partnerships with extra-firm institutions that helped the company to externalize much of the cost of extracting raw materials from provider communities around the world”  (pp. 9-10).

Chapter 1 of the dissertation investigates the historical development of Coke’s strategies for acquiring water, an essential ingredient in its products.  The chapter also identifies a strategic pattern of externalization of costs that serves as Elmore’s general explanatory paradigm throughout his work.  By the 1890s, Coke was selling large volumes of its syrup to soda fountains in the southern U.S., but if it wanted to significantly increase its profits, it had to find a way to reach customers far removed from its home region.  This, in turn, presented the problem of how to deliver large amounts of water to distant regions without incurring the high costs of shipping the heavy substance.  Elmore then examines the emergence of a bipartite solution to this problem that flowed from a general approach of decentralization.

Decentralization, for Coke, combined the outsourcing of bottling operations to independent local enterprisers with a strategy of tapping into local municipal water supplies to obtain cheap water.  In 1899, Coke began licensing rights to local bottlers around the country, a strategy designed to “secure expansive growth of the bottling enterprise while effectively managing the capital risks associated with national growth” (p. 33).  In so doing, Elmore argues, Coke shifted the risks of capital investment from the Coca-Cola company to independent local bottlers.  These bottlers, in turn, “depended on public water systems built, managed, and operated by municipal governments…”  (p. 35).  Coke was thus able to expand rapidly with minimal investment in either bottling plants or the extraction of water.  In other words, Elmore observes, Coke externalized both costs—it shifted the cost of bottling to independent operators, and the cost of water extraction to the state.

Coke’s historical dependence upon publicly-funded waterworks is deeply ironic, Elmore contends, in light of the company’s subsequent history of anti-communist-inflected denigration of public water projects.  The remainder of Chapter 1 explores Coke’s evolving relationship with the U.S. federal government, as well as foreign governments, as the company persistently tried, with increasing success, to insinuate itself into development aid programs for its own profit.  Beginning in the late 1960s, and after years of lobbying, Coke benefited from amendments to the Foreign Assistance Act which created bureaucracies such as USAID that “would channel government aid away from public institutions and into the pockets of private corporations operating abroad”  (p. 71).

Chapter 2, which explores the history of Coke’s acquisition of sugar, provides further support for Elmore’s overarching argument that Coke’s success flowed from its eschewing of the vertical integration model.  He begins by treating sugar as an addictive substance and noting that, by the 1910s, Coke had become the largest industrial consumer of sugar in the world.  As with water, the success of Coca-Cola depended upon continued access to a steady supply of cheap sweetener.  Elmore then revisits the topic of Coke’s historical relationship with the state, this time focusing on the question of the U.S. government’s shifting policy of interventions to affect global sugar production and prices.  Noting that Coke has long publicly advocated for limited government, Elmore offers a revisionist interpretation of the company’s policies.  He claims that scholars have tended to accept Coke’s claims uncritically, and thus to treat Coke “as the victim of discriminatory tariff policies rather than the beneficiary of an internationally integrated sugar production and distribution network created through state protections (pp. 86-7).

Elmore lays the groundwork for his argument through a detailed analysis of the role of the U.S. government in constructing a “vertically integrated international trade network managed by American sugar refineries” during the nineteenth century (p. 87).  He argues that American sugar refiners were willing to assume the risks of expansion in large measure because of the protections offered by U.S. tariff policies and overseas military interventions.  The resultant sustained low prices of sugar, Elmore contends, allowed Coke to avoid direct involvement in sugar production, thus insulating itself from the vicissitudes of the global sugar market.  Ultimately, Elmore argues that, by staying out of the sugar production industry, and remaining adaptable, Coke reaped the benefits of government intervention while avoiding the costs of changing conditions in the sugar markets.

In Chapter 3, Elmore investigates Coke’s relationship to coca, the most critical ingredient of the company’s vaunted “secret formula.”  The author presents the coca story as another facet of Coke’s complex, shifting, and ultimately beneficial historical relationship with government—in this case centering on regulation of access to a rare commodity.  Except for a brief abortive experiment with “New Coke” in the 1980s, Coca-Cola has, since 1903, required constant inputs of de-cocainized coca for its cola.  Elmore’s work on coca, which engages substantially with that of coca historian Paul Gootenberg, examines the business relationship that developed between Coke and the Maywood Chemical Company, a major producer of medical-grade cocaine  (Paul Gootenberg, “Secret Ingredients:  The Politics of Coca in US-Peruvian Relations, 1915-65,” Journal of Latin American Studies 36, no. 2 (May 2004): p. 246).  In the late nineteenth century, anti-drug sentiment reached the point that Coke felt its public image would be tarnished if it were to procure its coca leaves directly from the Andes.  Maywood, however, enjoyed legitimacy as a medical drug processor importing coca for medical purposes.  Coke’s demand for de-cocainized coca leaves thus afforded Maywood a buyer for what was otherwise a waste product, while Maywood provided Coke with a way to publicly distance itself from the acquisition of a product that had precipitously become quasi-illicit in the United States.

Elmore then elucidates the ways in which Coke exploited the U.S. government’s creation, for regulatory purposes of a monopoly of coca within the U.S. market.  Elmore concludes this chapter by arguing that much more valuable to Coke than the cultural allure of a “secret formula” were “state actions and private sector contracts” that ensured Coke’s monopoly over this commodity that became “rare” through the operation of U.S. juridical and regulatory policy (p. 169).

Chapter 4 of the dissertation, which addresses caffeine, focuses upon Coke’s profitable exploitation of another industrial waste-product, in this case the production of decaffeinated coffee and tea.  Elmore’s narrative on caffeine also has a substantial cultural element, as he explores the changing politics of caffeine—and Coke’s participation therein—throughout the twentieth century.  As background, Elmore notes that the expansion of global trade networks in the late nineteenth and early twentieth centuries, led to the production of a new class of waste products—namely, “low-grade commodities [that]… often ended up in the dustbins of trading exchanges” (p. 170).  As Elmore explains: “Unfit for direct distribution to customers, these products nonetheless contained valuable minerals and chemicals that, if processed and extracted, could be salvaged for use in other consumer products” (pp. 170-71).  Caffeine became a paradigmatic example of this phenomenon, as Merck and other pharmaceutical companies purchased “tea sweepings” (broken or damaged tea leaves) at low cost from the international tea exchanges of Europe for use in the extraction of caffeine.  This competitive pharmaceutical industry, in turn, provided Coca-Cola with a cheap and abundant source of caffeine for its soda.

Yet Coke still faced the problem of convincing the health-conscious consumers of the Progressive Era that caffeine was good for the human body.  Elmore thus goes on to investigate the political, public-relations, and, at times, judicial battles that Coke waged in order to elevate the status of Coke’s “chief narcotic” (to use Elmore’s term).

Much of the chapter is devoted to Coke’s interventions in the political arena, as the company lobbied and negotiated with the FDA over questions of labeling and over the relative health benefits and detriments of caffeine consumption.  Elmore points out Coke’s adeptness in exploiting the cultural struggle and political ambiguity over the status of caffeine:  “Doubt was the company’s biggest ally, not simply because it forestalled FDA interventions in the market, but because it sustained the growth of the decaffeinated industry whose primary waste helped supply an expanding caffeine commodity market” (p. 207-08).

Chapter 5 explores the history of the political battles Coca-Cola waged to ensure its ability to continue to externalize the costs of the ubiquitous waste produced by its packaging.  The author begins by noting that, in the early twentieth century, most local bottlers used returnable glass containers, which, because they carried a deposit, were returned and reused numerous times.  However, in the 1920s the brewing business instigated a shift to one-way container distribution which was soon adopted by the soft drink industry.  The move to non-returnable containers—steel cans in place of glass bottles- allowed distributers to reach consumers in distant locations, and enabled Coke to bypass local independent bottling companies, greatly increasing Coke’s profits.  This move, however, also had substantial and visible environmental costs, as public spaces became increasingly littered with discarded soft drink cans.  Elmore’s research reveals that, by the 1970s, independent bottlers, whose profits depended upon a returnable system, were criticizing the government for allowing soft drink mega-companies like Coke to pass the costs of non-returnable packaging distribution—i.e., collection and disposal of waste packaging— onto the government.  Thus, Elmore argues, the “one-way container allowed Coke and the major beverage giants to achieve record profits by shifting key costs of distribution onto municipalities” (p. 219).

This state of affairs produced a consumer backlash, which, in the 1950s and 60s, threatened Coke’s profits.  A few states passed laws outlawing one-way containers, or requiring deposits, a trend which Coke took as a sign that it needed to address the public image problem presented by its packaging waste.  Thus, in the mid-1950s, the major U.S. canning and beverage industries created Keep America Beautiful (KAB), a national anti-litter organization whose primary purpose was to “deflect accusations that producers were to blame for the country’s growing litter problem” (p. 221).  KAB embarked on an extensive national advertising campaign which urged consumers to do their part to keep the environment clean.

Ultimately, in the 1970s, Coke and other soft drink giants settled upon recycling as the long-term solution to the problem of how to externalize the costs of packaging waste.  Elmore chronicles the political history in which Coke, in partnership with other soft drink giants, successfully lobbied the federal government to embrace recycling as a cure-all for the nation’s litter problems.  So it was, argues Elmore that, the recycling movement, ironically, was born largely of the efforts of producers to avoid shouldering the costs of cleaning up their own waste.  “By the end of the 1990s, publicly funded recycling programs had become the accepted method for cleaning up industry container waste… Taxpayers were taking on the vast majority of the cost of collecting, processing, and returning corporate byproducts back to producers, and industry remained exempt from disposal fees…” (p. 238).

Elmore frames the final chapter of his dissertation, on high fructose corn syrup, as an investigation into Coke’s efforts to limit its liability from waste products deposited in what he terms “the end-point of the commodity chain”—namely, the human body.  The chapter begins with the back-story of the U.S. government corn subsidy program begun in the 1930s that ultimately gave rise to high fructose corn syrup.  The initial subsidy program caused corn farmers to limit their production.  In 1972, however, the government affected a subtle, though radical, change of course:  it began paying farmers directly for the corn they produced, thereby giving them an incentive to produce large amounts of corn and to sell it at low prices.  However, in order for this new program to be sustainable, the government needed commercial buyers for this glut of corn.  High-fructose corn syrup (HFCS), Elmore argues, “offered a solution to this dilemma” (p. 245).  At this point, Coke enters the HFCS story.  Looking to capitalize on cheap HFCS prices, Coca-Cola began incorporating HFCS into its formula in 1974, and by 1985 HFCS has completely replaced sugar in all of Coke’s beverages in the U.S.

Elmore argues that Coke’s switch to HFCS represented the beginning of a corporate strategy designed to direct ever-increasing amounts of low-cost, high-calorie sweetener into the bodies of consumers:

By shifting to HFCS, Coca-Cola and other US confectioners channeled millions of pounds of cheap American corn byproducts into human bodies.  Rather than decrease prices for their product to
reflect multi-million dollar savings in production costs… Coke looked to sell greater quantities
of their beverages to their consumers at marginally higher prices.  (p. 247)

The result, Elmore contends, was a dramatic increase in soft drink consumption, and attendant consumer obesity, from the mid-1980s through the end of the 1990s.  This, in turn, meant that “consumers functioned as the new repositories of agricultural surpluses,” a phenomenon that Elmore describes as “corporeal pollution” (pp. 247-48).  Elmore concludes this chapter by expanding upon the theoretical implications of his foray “into the human body to understand how macroeconomic policies disrupt microscopic systems”  (p. 261).

In his conclusion, Elmore draws specific policy lessons from his research, the most central of which being his claim that Coke’s history undermines the claims of proponents of limited government who argue that private industry should take over services that are now provided by the state:  “The story of Coke’s ascendancy… suggests that many of America’s big business firms are ill-suited for the tasks that would be demanded of them as executors of public service projects”  (p. 266).

Elmore’s dissertation has the potential to have significant impact on scholarly understanding of the nature of political and economic relationships between big corporations and government.  One of the strengths of Elmore’s dissertation lies in its close, comparative examination of the various facets of Coke’s strategic relationship with governments.  Elmore’s work represents a significant duel contribution here—first, it provides a new account of – and explanation for – Coke’s spectacular growth; and second, it enhances our conceptual understandings of the relationship between corporate growth and government policy.

Elmore’s work also makes considerable progress toward integrating business history with environmental history, extending, to a degree, methodologies developed by such historians as John Soluri ( John Soluri, Banana Cultures: Agriculture, Consumption, and Environmental Change in Honduras and the United States. Austin: Univ. of Texas Press, 2005.)
The author largely succeeds in his objective of offering a “model for a new interpretation of the rise of the modern corporation that focuses on the environmental demands that structured big business development in the twentieth century” (p. 9, fn 3).  Moreover, Elmore’s work is provocative in its extension of these considerations to the environment of the human body.

Andrew Erhrinpreis
Department of History
Stony Brook University
andrew.ehrinpreis@stonybrook.edu

Primary Sources
American Beverage Association Information Library, Washington, DC.
Emory University, Manuscript, Archives, and Rare Book Library, Atlanta, Georgia.
Virginia Historical Society.
Records of the Central Coca-Cola Bottling Company
American Druggist and Pharmaceutical Record
Freedom of Information Act (FOIA) Responses
Overseas Private Investment Corporation.

Dissertation Information
University of Virginia.  2012.  285 pp. Primary Advisor:  Ed Ayers.

Image: Protest at Plachimada plant, 2006.  Courtesy Sho Kasuga.