WEBVTT 00:00:00.000 --> 00:00:02.379 Welcome back to the Deep Dive. This is the show 00:00:02.379 --> 00:00:05.040 where we try to give you the essential, surprising 00:00:05.040 --> 00:00:08.099 and sometimes pretty uncomfortable truths behind 00:00:08.099 --> 00:00:10.199 the world's biggest brands and ideas. Yet we 00:00:10.199 --> 00:00:13.199 take a huge stack of sources. We're talking articles, 00:00:13.560 --> 00:00:16.579 financial reports, historical documents, and 00:00:16.579 --> 00:00:20.480 we boil it all down for you. And today we are 00:00:20.480 --> 00:00:23.379 opening up a file. On a company that is, I mean, 00:00:23.399 --> 00:00:25.179 it's pretty much global capitalism in a can. 00:00:25.359 --> 00:00:27.699 The Coca -Cola Company. It was founded in Atlanta, 00:00:27.859 --> 00:00:32.000 Georgia, way, way back in 1892. And it has become 00:00:32.000 --> 00:00:35.799 this multinational machine that's really unlike 00:00:35.799 --> 00:00:37.700 anything else. And when you talk about the scale, 00:00:37.859 --> 00:00:40.340 the numbers almost don't make sense. Not at all. 00:00:40.439 --> 00:00:42.840 The company sells its products in over 200 countries. 00:00:43.219 --> 00:00:45.600 And if you look at their daily output, they account 00:00:45.600 --> 00:00:48.799 for something like 1 .3 billion beverage servings. 00:00:48.820 --> 00:00:52.159 Every single day. Every single day. That's why 00:00:52.159 --> 00:00:53.979 we have to do this deep dive. Our mission today 00:00:53.979 --> 00:00:57.100 is to look way beyond just the red logo. We really 00:00:57.100 --> 00:00:59.259 need to trace the company's history, which is, 00:00:59.280 --> 00:01:02.560 well, it's genuinely bizarre and complex. It 00:01:02.560 --> 00:01:05.019 starts as a drug, basically. It does. And we'll 00:01:05.019 --> 00:01:08.180 dissect its unique operational model, which is 00:01:08.180 --> 00:01:10.560 sort of the genius of the whole thing. We'll 00:01:10.560 --> 00:01:13.159 map out its huge portfolio. And then critically, 00:01:13.420 --> 00:01:16.140 we have to analyze the big criticisms. Right. 00:01:16.299 --> 00:01:20.040 Especially around environmental impact. and corporate 00:01:20.040 --> 00:01:22.659 influence on public health. That stuff really 00:01:22.659 --> 00:01:25.040 defines its reputation today. So let's just start 00:01:25.040 --> 00:01:28.060 with that central tension, this titan of industry. 00:01:28.200 --> 00:01:32.060 It began as a medicinal tonic, a cure. It's hilarious 00:01:32.060 --> 00:01:35.799 and a little unsettling. But what's maybe less 00:01:35.799 --> 00:01:37.980 unsettling, especially if you were an early investor, 00:01:38.159 --> 00:01:41.079 is the financial return. Oh, the investment stability 00:01:41.079 --> 00:01:44.280 is the stuff of legend. Our sources note that 00:01:44.280 --> 00:01:46.920 a single share of Coca -Cola stock, if you bought 00:01:46.920 --> 00:01:50.239 it back in 1919 for just $40. 40 bucks. And you 00:01:50.239 --> 00:01:52.980 just reinvested all the dividends, that one share 00:01:52.980 --> 00:01:56.459 would have been worth a staggering $9 .8 million 00:01:56.459 --> 00:02:00.980 by 2012. That's insane. It's a 10 .7 % annual 00:02:00.980 --> 00:02:03.939 return adjusted for inflation for almost a century. 00:02:04.200 --> 00:02:06.659 That is the very definition of a blue chip stock. 00:02:06.980 --> 00:02:08.300 Yeah. But here's the point, and we're going to 00:02:08.300 --> 00:02:09.870 keep coming back to this. throughout the dive. 00:02:10.009 --> 00:02:13.770 That immense, sustained financial power, that 00:02:13.770 --> 00:02:17.530 deep, steady river of cash is what funds every 00:02:17.530 --> 00:02:19.750 other part of this company. Including its ability 00:02:19.750 --> 00:02:22.789 to defend itself. Exactly. Defend itself against 00:02:22.789 --> 00:02:25.110 some really existential criticism. It's true. 00:02:25.210 --> 00:02:28.150 The company's wealth gives it this colossal influence, 00:02:28.490 --> 00:02:31.949 but that success is, you know, it's tied to equally 00:02:31.949 --> 00:02:34.289 massive responsibilities. And liabilities. And 00:02:34.289 --> 00:02:36.909 liabilities. I mean, just as a preview of the 00:02:36.909 --> 00:02:39.990 scale here, consider this. The Coca -Cola company 00:02:39.990 --> 00:02:43.289 produces over 3 million tons of plastic packaging 00:02:43.289 --> 00:02:47.090 every year. Which translates to 110 billion plastic 00:02:47.090 --> 00:02:49.810 bottles. 110 billion. They've been labeled the 00:02:49.810 --> 00:02:51.509 worst plastic polluter in the world. And for 00:02:51.509 --> 00:02:54.090 good reason. They're churning out 200 ,000 plastic 00:02:54.090 --> 00:02:55.969 bottles every single minute. So you have this 00:02:55.969 --> 00:02:58.490 company that's built on a kind of a dark origin 00:02:58.490 --> 00:03:00.930 story, producing world -changing wealth. Which 00:03:00.930 --> 00:03:03.870 then funds this machine that is now facing a 00:03:03.870 --> 00:03:07.139 global environmental reckoning. That contrast, 00:03:07.240 --> 00:03:09.960 that tension is what makes this deep dive so 00:03:09.960 --> 00:03:14.240 vital for you to understand. Okay, let's rewind. 00:03:14.400 --> 00:03:17.300 Let's go all the way back to 1886 and uncover 00:03:17.300 --> 00:03:20.419 this foundational story. It sounds less like 00:03:20.419 --> 00:03:24.280 a business startup and more like a period drama, 00:03:24.460 --> 00:03:26.939 really. Yeah, we're calling this part the tonic 00:03:26.939 --> 00:03:28.939 and the takeover. It begins with the inventor, 00:03:29.080 --> 00:03:31.439 right? A pharmacist named John Stith Pemberton 00:03:31.439 --> 00:03:34.069 from Columbus, Georgia. And to really get why 00:03:34.069 --> 00:03:36.430 he invented Coca -Cola, you have to understand 00:03:36.430 --> 00:03:38.750 the context of his life. It was pretty devastating. 00:03:38.990 --> 00:03:40.930 Pemberton was severely wounded in the American 00:03:40.930 --> 00:03:43.330 Civil War. And like so many men from that era. 00:03:43.680 --> 00:03:45.879 That injury led to a really severe addiction 00:03:45.879 --> 00:03:48.099 to morphine. So the whole genesis of Coca -Cola 00:03:48.099 --> 00:03:50.599 was explicitly medicinal. He developed it as 00:03:50.599 --> 00:03:53.500 a patent medicine, a health tonic that was specifically 00:03:53.500 --> 00:03:56.099 aimed at controlling his dependency on opioids. 00:03:56.240 --> 00:03:58.039 Which sounds kind of crazy now, but it wasn't 00:03:58.039 --> 00:04:00.319 a totally crackpot idea at the time. No, it was 00:04:00.319 --> 00:04:03.340 rooted in this popular, though, you know, devastatingly 00:04:03.340 --> 00:04:05.860 wrong belief that cocaine could be used as a 00:04:05.860 --> 00:04:08.439 substitute or even a cure for opioid addiction. 00:04:08.800 --> 00:04:11.479 Hence the original formulation. It was a powerhouse 00:04:11.479 --> 00:04:14.909 of stimulants. A real powerhouse. It had cocaine 00:04:14.909 --> 00:04:17.550 from coca leaves and caffeine from cola nuts. 00:04:17.589 --> 00:04:20.290 And these two ingredients worked together synergistically. 00:04:20.550 --> 00:04:23.129 Which is why it was immediately promoted as this 00:04:23.129 --> 00:04:25.649 healthy tonic, something that would, you know, 00:04:25.649 --> 00:04:27.850 invigorate you and lift your spirits. And chemically 00:04:27.850 --> 00:04:30.670 speaking, it absolutely did. The name itself 00:04:30.670 --> 00:04:33.209 was pretty straightforward, but also genius. 00:04:33.959 --> 00:04:36.500 Right. Pemberton's bookkeeper, a man named Frank 00:04:36.500 --> 00:04:39.240 Mason Robinson, gets the credit for that. He 00:04:39.240 --> 00:04:41.959 chose the name Coca -Cola for the alliteration 00:04:41.959 --> 00:04:44.800 and the ingredients. And he also created that 00:04:44.800 --> 00:04:47.480 iconic script logo that we still see everywhere 00:04:47.480 --> 00:04:49.819 today. And Robinson was really the marketing 00:04:49.819 --> 00:04:52.779 mind here. They had very little cash. So he used 00:04:52.779 --> 00:04:55.120 advertising that just perfectly captured the 00:04:55.120 --> 00:04:58.000 product's effect. That famous tagline, Coca -Cola, 00:04:58.139 --> 00:05:03.519 delicious, refreshing, exhilarating. It wasn't 00:05:03.519 --> 00:05:05.459 advertised as a fun drink. It was advertised 00:05:05.459 --> 00:05:08.079 as a boost. Exactly. Now, unfortunately for Pemberton, 00:05:08.139 --> 00:05:09.939 he was ill. He was struggling with money and 00:05:09.939 --> 00:05:12.899 he started selling off parts of the formula and 00:05:12.899 --> 00:05:15.040 the brand rights to different people. But the 00:05:15.040 --> 00:05:17.139 person who really turned this patent medicine 00:05:17.139 --> 00:05:20.660 into a commercial empire was Asa Griggs Candler. 00:05:20.740 --> 00:05:23.120 Right. Candler saw the potential. He stepped 00:05:23.120 --> 00:05:26.439 in. And by 1889, he'd managed to buy the full 00:05:26.439 --> 00:05:29.060 formula and all the brand rights. For how much? 00:05:29.180 --> 00:05:31.819 A mere $2 ,300. Now, in today's money, that's 00:05:31.819 --> 00:05:34.160 more, obviously. Yeah, our sources say it's about 00:05:34.160 --> 00:05:38.180 $73 ,000 in 2024 dollars. But even with that 00:05:38.180 --> 00:05:40.259 adjustment, it's an absolute historical bargain 00:05:40.259 --> 00:05:42.160 for what would become one of the most valuable 00:05:42.160 --> 00:05:44.899 brands on the planet. So Candler incorporates 00:05:44.899 --> 00:05:48.709 the Coca -Cola Company in Atlanta in 1892. And 00:05:48.709 --> 00:05:51.170 he didn't just sell the drink. He sold the idea 00:05:51.170 --> 00:05:53.089 of the drink. He was an early marketing pioneer, 00:05:53.230 --> 00:05:55.310 one of the first businessmen to really go all 00:05:55.310 --> 00:05:57.470 in on merchandising, you know, calendars, clocks, 00:05:57.889 --> 00:06:00.290 signs, all sorts of decorative items. He was 00:06:00.290 --> 00:06:02.689 cementing the brand's visual identity everywhere 00:06:02.689 --> 00:06:05.189 people looked. And that strategy, that aggressive 00:06:05.189 --> 00:06:07.629 marketing. it paid off almost immediately yeah 00:06:07.629 --> 00:06:10.410 by 1895 coca -cola was being sold all across 00:06:10.410 --> 00:06:12.949 the u .s and this relentless expansion just kept 00:06:12.949 --> 00:06:15.290 going until 1948 when the company claimed an 00:06:15.290 --> 00:06:18.529 astonishing 60 of the entire american soft drink 00:06:18.529 --> 00:06:22.850 market 60 that's almost a monopoly but you know 00:06:22.850 --> 00:06:24.930 that figure also tells another story a story 00:06:24.930 --> 00:06:27.829 of vulnerability exactly because that 60 share 00:06:28.410 --> 00:06:31.250 It dropped sharply. By 1984, it was down to 21 00:06:31.250 --> 00:06:33.870 .8%. Which shows that even with brilliant branding, 00:06:33.990 --> 00:06:36.470 you're not immune to new competitors and changing 00:06:36.470 --> 00:06:40.050 tastes. That's what led to the infamous Cola 00:06:40.050 --> 00:06:42.939 Wars. But despite that market share fight. The 00:06:42.939 --> 00:06:45.459 company's financial foundation was just rock 00:06:45.459 --> 00:06:48.620 solid. It went public in 1919, underwritten by 00:06:48.620 --> 00:06:51.000 Ernest Woodruff's Trust Company of Georgia. We 00:06:51.000 --> 00:06:53.060 mentioned the IPO success earlier, but it's worth 00:06:53.060 --> 00:06:55.199 saying again just to set the scale. Right. The 00:06:55.199 --> 00:06:58.019 bank that underwrote that 1919 offering for only 00:06:58.019 --> 00:07:01.639 $100 ,000, huge sum then, but still, they later 00:07:01.639 --> 00:07:03.540 sold the remaining stake for over $2 billion 00:07:03.540 --> 00:07:07.490 in 2012. It's just an almost unparalleled story 00:07:07.490 --> 00:07:09.810 of corporate value creation in American history. 00:07:09.970 --> 00:07:12.610 And you see that value consistently in the stock 00:07:12.610 --> 00:07:15.370 behavior. The stock KO on the New York Stock 00:07:15.370 --> 00:07:18.089 Exchange is a staple of the Dow Jones and the 00:07:18.089 --> 00:07:20.410 S &P 500. And for investors, this is the key. 00:07:20.529 --> 00:07:22.470 Coca -Cola has paid a dividend every year since 00:07:22.470 --> 00:07:26.209 1920. And as of 2019, they had increased that 00:07:26.209 --> 00:07:29.829 dividend annually for 57 straight years. That's 00:07:29.829 --> 00:07:31.949 what institutional reliability looks like. That 00:07:31.949 --> 00:07:34.129 is exactly why they call it a blue chip. It's 00:07:34.129 --> 00:07:36.910 a company that generates cash so reliably that 00:07:36.910 --> 00:07:39.009 you can literally count on it for over half a 00:07:39.009 --> 00:07:42.589 century. So we've covered the chaotic and kind 00:07:42.589 --> 00:07:45.430 of dark origin story and we understand the financial 00:07:45.430 --> 00:07:48.050 success. But none of that really makes sense 00:07:48.050 --> 00:07:50.569 until you get the engine that runs it all. Right. 00:07:50.629 --> 00:07:54.110 So let's shift focus to the structural genius 00:07:54.110 --> 00:07:56.730 of their business, the syrup enfranchising model. 00:07:56.930 --> 00:07:58.949 This is the critical insight for you, the listener. 00:07:59.129 --> 00:08:01.529 Most people think Coke sells bottles of soda. 00:08:01.670 --> 00:08:03.410 But that's not really their business, is it? 00:08:03.639 --> 00:08:05.860 Structurally, they're in the business of selling 00:08:05.860 --> 00:08:09.319 concentrate and brand protection. Precisely. 00:08:09.319 --> 00:08:11.720 The core business model is brilliantly simple. 00:08:11.939 --> 00:08:14.600 The Coca -Cola company, the mothership, they 00:08:14.600 --> 00:08:17.560 largely produce only the syrup concentrate. Or 00:08:17.560 --> 00:08:20.439 they source the bases for other drinks, tea leaves, 00:08:20.600 --> 00:08:22.540 coffee beans, that sort of thing. They intentionally 00:08:22.540 --> 00:08:25.439 avoid most of the expensive, heavy operational 00:08:25.439 --> 00:08:28.319 work. They sell that concentrate to a global 00:08:28.319 --> 00:08:31.439 network of franchise bottlers. And this system 00:08:31.439 --> 00:08:35.200 goes way back to 1889. And these bottlers, they 00:08:35.200 --> 00:08:37.480 hold exclusive contracts for certain geographic 00:08:37.480 --> 00:08:39.690 areas. And they're the ones who do all the heavy 00:08:39.690 --> 00:08:42.730 lifting. Yeah. The franchise bottlers take on 00:08:42.730 --> 00:08:45.210 all the capital intensive risk. They're the ones 00:08:45.210 --> 00:08:47.450 mixing the concentrate with filtered water and 00:08:47.450 --> 00:08:50.149 sweeteners, packaging the final product. And 00:08:50.149 --> 00:08:52.389 then handling the entire infrastructure of selling 00:08:52.389 --> 00:08:55.039 it. distributing it, and getting it into every 00:08:55.039 --> 00:08:57.299 single store, restaurant, and vending machine 00:08:57.299 --> 00:09:00.039 on earth. So what's the profound result of this 00:09:00.039 --> 00:09:02.639 setup? It lets the Coca -Cola company focus only 00:09:02.639 --> 00:09:05.100 on the highest margin activities. Managing the 00:09:05.100 --> 00:09:07.779 brand identity, executing that massive global 00:09:07.779 --> 00:09:11.059 ad spend we talked about, and protecting the 00:09:11.059 --> 00:09:13.259 secret formula. They get to shed all the low 00:09:13.259 --> 00:09:15.299 -margin, capital -intensive work of owning the 00:09:15.299 --> 00:09:17.440 factories and the trucks and all that. It's an 00:09:17.440 --> 00:09:19.700 incredibly elegant, highly profitable model. 00:09:20.200 --> 00:09:22.580 But since the 80s, they haven't been entirely 00:09:22.580 --> 00:09:25.919 hands -off. No, they've actively encouraged and 00:09:25.919 --> 00:09:28.200 even participated in the consolidation of these 00:09:28.200 --> 00:09:31.379 bottlers. They often keep a minority share in 00:09:31.379 --> 00:09:33.860 these huge regional entities, which they call 00:09:33.860 --> 00:09:35.779 anchor bottlers. And that gives them a seat at 00:09:35.779 --> 00:09:38.000 the table, right? They don't have the full financial 00:09:38.000 --> 00:09:41.039 liability, but they can still influence strategy 00:09:41.039 --> 00:09:44.519 and maintain quality control through their contracts. 00:09:44.840 --> 00:09:48.039 They even formalized this in 2006. They created 00:09:48.039 --> 00:09:50.320 something called the Bottling Investments Group, 00:09:50.500 --> 00:09:54.080 or BIG. And the role of BIG is pretty crucial. 00:09:54.240 --> 00:09:57.279 Very. It temporarily takes over bottling operations, 00:09:57.740 --> 00:10:00.320 uses the company's leadership to invest in them 00:10:00.320 --> 00:10:02.000 and improve them, and then they often just sell 00:10:02.000 --> 00:10:04.740 them off again, a process they call re -franchising. 00:10:05.019 --> 00:10:06.879 So it's like an internal corporate surgery team. 00:10:07.039 --> 00:10:09.740 They go in, fix the broken parts, streamline 00:10:09.740 --> 00:10:12.139 everything, and then spin the improved asset 00:10:12.139 --> 00:10:14.399 back out, keeping a small stake but getting rid 00:10:14.399 --> 00:10:16.840 of the operational cost. And it accelerates efficiency 00:10:16.840 --> 00:10:19.259 across the globe. You can see the result in these 00:10:19.259 --> 00:10:22.000 huge multinational bottling partners that exist 00:10:22.000 --> 00:10:24.360 today. Like Coca -Cola, Euro Pacific Partners. 00:10:24.399 --> 00:10:27.139 They operate across 29 countries in Europe and 00:10:27.139 --> 00:10:30.279 Oceania. And Coke still holds a nearly 20 % stake 00:10:30.279 --> 00:10:32.779 in them. Or Coca -Cola Femso, which serves a 00:10:32.779 --> 00:10:34.620 huge part of Latin America. The mothership has 00:10:34.620 --> 00:10:37.940 a 27 .8 % stake there. And then there's Coca 00:10:37.940 --> 00:10:40.399 -Cola HBC, based in Switzerland, which covers 00:10:40.399 --> 00:10:42.659 28 countries from Nigeria to Eastern Europe. 00:10:42.960 --> 00:10:46.500 Coke holds a 23 .2 % stake in that one. So this 00:10:46.500 --> 00:10:49.440 whole complex web of ownership, it ensures control. 00:10:49.659 --> 00:10:52.340 They don't own all the physical assets, but they 00:10:52.340 --> 00:10:55.340 direct the flow and they benefit massively from 00:10:55.340 --> 00:10:57.399 selling the syrup. Which brings us back to the 00:10:57.399 --> 00:10:59.679 power we mentioned in the intro. Let's look at 00:10:59.679 --> 00:11:02.909 the financial snapshot from 2024. This model, 00:11:02.990 --> 00:11:05.529 this concentrate model, generated annual revenue 00:11:05.529 --> 00:11:09.429 of over $47 billion. And that led to a net income, 00:11:09.629 --> 00:11:13.610 pure profit, of $10 .63 billion. Think about 00:11:13.610 --> 00:11:15.970 that. Over $10 billion in profit from selling 00:11:15.970 --> 00:11:18.490 essentially a flavored water base. And it's all 00:11:18.490 --> 00:11:21.509 backed by $100 billion in total assets. And the 00:11:21.509 --> 00:11:23.250 operational overhead for the main company is 00:11:23.250 --> 00:11:25.309 pretty lean considering the scale. They only 00:11:25.309 --> 00:11:28.490 employ about 59 ,700 people globally. And where 00:11:28.490 --> 00:11:31.029 that money comes from in 2024 is also revealing. 00:11:31.169 --> 00:11:33.029 North America is still the biggest piece of the 00:11:33.029 --> 00:11:36.990 pie at 38 .7 % of sales. But it's genuinely global. 00:11:37.509 --> 00:11:40.029 Europe, the Middle East and Africa are at 16 00:11:40.029 --> 00:11:44.149 .8%, Latin America at 13 .4 % and Asia Pacific 00:11:44.149 --> 00:11:48.100 at 11 .5%. And if you look at who owns this massive 00:11:48.100 --> 00:11:51.000 financial engine, it's all about long term institutional 00:11:51.000 --> 00:11:55.059 trust. As of March 2025, the top owner is Berkshire 00:11:55.059 --> 00:11:58.080 Hathaway with 9 .3%. Followed by the Vanguard 00:11:58.080 --> 00:12:02.059 Group at 8 .4 % and BlackRock at 5 .6%. So that 00:12:02.059 --> 00:12:03.879 means the long term direction of this company 00:12:03.879 --> 00:12:06.379 is heavily influenced by three of the most powerful 00:12:06.379 --> 00:12:08.740 investment entities in the world. And when you 00:12:08.740 --> 00:12:11.759 combine that guaranteed high margin revenue with 00:12:11.759 --> 00:12:13.879 that kind of entrenched ownership, you get a 00:12:13.879 --> 00:12:16.779 corporate entity with incredible. And we'll see 00:12:16.779 --> 00:12:20.899 how they use that leverage later on. OK, let's 00:12:20.899 --> 00:12:23.759 shift gears now to the sheer breadth of the business. 00:12:23.919 --> 00:12:27.379 Part three, from cola to global portfolio. Because 00:12:27.379 --> 00:12:29.299 even with that financial engine humming, if all 00:12:29.299 --> 00:12:31.080 you sell is sugary soda, you're eventually going 00:12:31.080 --> 00:12:33.379 to stall out. Right. Consumer tastes change and 00:12:33.379 --> 00:12:35.500 Coca -Cola had to diversify and they did it aggressively. 00:12:35.679 --> 00:12:37.940 As of 2020, they had something like 500 brands 00:12:37.940 --> 00:12:40.779 in over 200 countries. But then, you know, responding 00:12:40.779 --> 00:12:42.779 to the pandemic and the need for efficiency. 00:12:43.470 --> 00:12:46.169 They strategically announced huge cuts. They 00:12:46.169 --> 00:12:48.090 got rid of more than half of those brands. But 00:12:48.090 --> 00:12:50.429 the need for that diversification was so clear. 00:12:50.629 --> 00:12:54.289 By 2017, sales of the main Coca -Cola brand were 00:12:54.289 --> 00:12:57.049 actually down 11%. People were actively moving 00:12:57.049 --> 00:12:59.370 away from sugary soft drinks, especially in developed 00:12:59.370 --> 00:13:02.169 countries. It forced the company to pivot into 00:13:02.169 --> 00:13:04.210 healthier categories, specialty drinks, things 00:13:04.210 --> 00:13:06.230 like that. So to show how adaptable they are, 00:13:06.350 --> 00:13:08.330 let's look at some of their other big soft drink 00:13:08.330 --> 00:13:10.850 brands. Some of them have these origin stories 00:13:10.850 --> 00:13:14.230 that are just, well... pure historical accidents. 00:13:14.450 --> 00:13:17.509 The classic example is Fanta. It was introduced 00:13:17.509 --> 00:13:21.070 around 1941. And Fanta is basically a World War 00:13:21.070 --> 00:13:24.769 II story. It is. A trade embargo against Germany 00:13:24.769 --> 00:13:27.330 made it impossible for the German office to get 00:13:27.330 --> 00:13:30.509 the cola syrup concentrate. So Max Keith, the 00:13:30.509 --> 00:13:32.250 head of the German operation, basically said, 00:13:32.330 --> 00:13:34.950 we have to create a new product using only what 00:13:34.950 --> 00:13:37.129 we have available here. And they created Fanta. 00:13:37.289 --> 00:13:40.100 It was pure necessity. But it was a huge hit 00:13:40.100 --> 00:13:42.840 in wartime Germany. After the war, when the main 00:13:42.840 --> 00:13:45.340 Coca -Cola company came back, they realized they 00:13:45.340 --> 00:13:47.740 had a global winner on their hands and they just 00:13:47.740 --> 00:13:50.240 adopted the brand worldwide. Great lesson in 00:13:50.240 --> 00:13:52.500 corporate resilience. And then you have Sprite, 00:13:52.500 --> 00:13:55.759 which came out in 1961. That was their lemon 00:13:55.759 --> 00:13:58.740 -lime answer to the popularity of 7 -Up. It quickly 00:13:58.740 --> 00:14:01.879 became another global giant. And for a bit of 00:14:01.879 --> 00:14:04.539 misology, we should talk about Tab. Ah, Tab. 00:14:05.240 --> 00:14:08.580 Introduced in 1963, it was Coke's very first 00:14:08.580 --> 00:14:11.399 attempt at a diet soft drink. It used saccharin. 00:14:11.440 --> 00:14:13.620 And even though it was completely eclipsed by 00:14:13.620 --> 00:14:16.379 Diet Coke and Coke Zero, they kept selling it 00:14:16.379 --> 00:14:19.460 until late 2020. which shows a fascinating kind 00:14:19.460 --> 00:14:21.779 of loyalty to some of their old brands, even 00:14:21.779 --> 00:14:23.460 when they weren't selling much. The company's 00:14:23.460 --> 00:14:25.659 global reach also forces them into these really 00:14:25.659 --> 00:14:28.799 specific regional battles. Coca -Cola is the 00:14:28.799 --> 00:14:31.039 best -selling soft drink in most of the world, 00:14:31.120 --> 00:14:33.220 but not everywhere. Right, like in Peru. The 00:14:33.220 --> 00:14:35.860 native Inca -Cola, which is this bright yellow, 00:14:36.000 --> 00:14:38.700 very sweet soda, was actually more popular. So 00:14:38.700 --> 00:14:40.860 what did Coke do? They executed a strategic move. 00:14:41.019 --> 00:14:43.710 They bought 50 % of the brand's stakes. So they 00:14:43.710 --> 00:14:46.070 basically gained control over its marketing and 00:14:46.070 --> 00:14:48.809 production outside of Peru and secured their 00:14:48.809 --> 00:14:51.190 access to that market without having to beat 00:14:51.190 --> 00:14:53.470 the local favorite. You see a similar thing in 00:14:53.470 --> 00:14:56.309 Japan, where consumers are way more interested 00:14:56.309 --> 00:14:59.769 in canned tea and coffee. The Coca -Cola company's 00:14:59.769 --> 00:15:03.029 number one brand in Japan is not a soda. It's 00:15:03.029 --> 00:15:06.009 Georgia coffee. Exactly. It shows they are absolutely 00:15:06.009 --> 00:15:08.629 willing to change their portfolio to fit local 00:15:08.629 --> 00:15:12.610 tastes. And this need to adapt led to a major... 00:15:12.679 --> 00:15:15.340 strategic expansion into so -called healthy beverages 00:15:15.340 --> 00:15:18.340 starting in the 90s. Right. They launched Powerade 00:15:18.340 --> 00:15:20.399 to compete with Gatorade, Minute Maid juices 00:15:20.399 --> 00:15:23.120 to go, and their bottled water brand Dasani. 00:15:23.279 --> 00:15:25.500 And this strategy relied heavily on acquisitions. 00:15:25.519 --> 00:15:27.320 They'd already bought Minute Maid way back in 00:15:27.320 --> 00:15:30.419 1960. But more recently, we saw them buy Barks 00:15:30.419 --> 00:15:34.820 in 95. Odwalla in 2001, though they later discontinued 00:15:34.820 --> 00:15:37.360 at Fuse Beverage in 2007. And then the huge one, 00:15:37.440 --> 00:15:40.820 the $4 .1 billion purchase of Glaceau, the company 00:15:40.820 --> 00:15:43.519 that makes vitamin water, in 2007. That vitamin 00:15:43.519 --> 00:15:45.980 water deal really signaled how serious they were 00:15:45.980 --> 00:15:48.240 about competing in that functional beverage space. 00:15:48.519 --> 00:15:51.700 They also bought specialty brands like Zico Coconut 00:15:51.700 --> 00:15:55.360 Water in 2013 and took full control of Honest 00:15:55.360 --> 00:15:58.370 Tea in 2011. They also just kept... trying to 00:15:58.370 --> 00:16:01.490 find that perfect low -calorie formula. Remember 00:16:01.490 --> 00:16:05.730 C2 Cola in 2004? Vaguely. It used a blend of 00:16:05.730 --> 00:16:08.210 corn syrup and artificial sweeteners. It was 00:16:08.210 --> 00:16:10.309 trying to taste more like classic Coke, but with 00:16:10.309 --> 00:16:13.009 fewer carbs. It didn't really work. It was eventually 00:16:13.009 --> 00:16:15.950 replaced by Coca -Cola Life in 2013. It just 00:16:15.950 --> 00:16:18.549 highlights this constant, expensive R &D battle 00:16:18.549 --> 00:16:21.090 to adapt the main product to health trends. And 00:16:21.090 --> 00:16:23.450 beyond the beverage aisle, Coke has this bizarre, 00:16:23.629 --> 00:16:27.269 brief, but very profitable history of non -beverage. 00:16:27.399 --> 00:16:29.639 acquisitions. The most famous one is their ownership 00:16:29.639 --> 00:16:32.200 of Columbia Pictures. A soft drink company owning 00:16:32.200 --> 00:16:34.360 a Hollywood studio. It sounds like a joke. It 00:16:34.360 --> 00:16:38.039 does. They bought it in 1982 for $692 million, 00:16:38.320 --> 00:16:40.940 partly because the studio was just not worth 00:16:40.940 --> 00:16:43.139 much at the time, making it an attractive buy. 00:16:43.340 --> 00:16:45.019 And during their ownership, the studio released 00:16:45.019 --> 00:16:47.600 massive hits like Ghostbusters, Stripes, and 00:16:47.600 --> 00:16:50.220 The Karate Kid. But after the infamous commercial 00:16:50.220 --> 00:16:52.960 and critical flop of the movie Ishtar in 1987, 00:16:53.419 --> 00:16:56.769 the company decided to get out. They sold the 00:16:56.769 --> 00:16:59.490 studio to Sony for an incredible three billion 00:16:59.490 --> 00:17:03.549 dollars in 1989. That's almost a fourfold return 00:17:03.549 --> 00:17:06.450 on an asset totally unrelated to their main business. 00:17:06.589 --> 00:17:09.349 It was a brilliant financial hedge. More recently, 00:17:09.450 --> 00:17:11.329 they've made some calculated moves back into 00:17:11.329 --> 00:17:13.950 high margin beverage adjacent markets. In 2019, 00:17:14.150 --> 00:17:16.410 they bought Costa Coffee for three point nine 00:17:16.410 --> 00:17:20.390 billion pounds. This gives them a huge international 00:17:20.390 --> 00:17:23.029 platform in the hot coffee sector, letting them 00:17:23.029 --> 00:17:25.490 compete directly with Starbucks and expand. their 00:17:25.490 --> 00:17:27.890 non -soda revenue. We also have to look at their 00:17:27.890 --> 00:17:29.789 strategy in the energy drink sector. This is 00:17:29.789 --> 00:17:33.430 interesting. In 2014, Coke bought a 16 .7 % stake 00:17:33.430 --> 00:17:37.630 in Monster Beverage for $2 .15 billion. And this 00:17:37.630 --> 00:17:39.829 wasn't just a simple investment. It was a strategic 00:17:39.829 --> 00:17:41.930 portfolio trade. But let's slow down on this 00:17:41.930 --> 00:17:43.769 because it's a great example of corporate chess. 00:17:43.970 --> 00:17:45.750 Think of it like swapping trading cards between 00:17:45.750 --> 00:17:48.569 two powerful players. Coca -Cola gave ownership 00:17:48.569 --> 00:17:51.089 of its smaller energy brands, specifically Full 00:17:51.089 --> 00:17:54.450 Throttle and Burn, over to Monster. And in return, 00:17:54.730 --> 00:17:57.529 Monster gave several of its non -energy brands, 00:17:57.630 --> 00:17:59.930 like Hansen's Natural Sodas and Peace Ice Tea, 00:18:00.109 --> 00:18:03.269 to Coke's portfolio. So it allowed Monster to 00:18:03.269 --> 00:18:05.509 focus purely on the high -growth energy market, 00:18:05.670 --> 00:18:08.190 and it allowed Coke to absorb these successful, 00:18:08.369 --> 00:18:11.369 established natural and tea brands without having 00:18:11.369 --> 00:18:15.069 to compete. A mutually beneficial deal. And finally, 00:18:15.170 --> 00:18:18.930 a clear sign of just pure market pragmatism. 00:18:19.289 --> 00:18:22.670 Alcohol. In 2021, the company debuted a range 00:18:22.670 --> 00:18:25.170 of alcoholic hard seltzers under its Mexican 00:18:25.170 --> 00:18:27.789 sparkling water brand Topo Chico, launching them 00:18:27.789 --> 00:18:30.529 in the UK and the US. It just showed that no 00:18:30.529 --> 00:18:32.849 category is really off limits if the market demand 00:18:32.849 --> 00:18:34.920 and the profit margins are there. We should also 00:18:34.920 --> 00:18:37.119 mention the major strategic deal that didn't 00:18:37.119 --> 00:18:39.839 happen. Oh, right. China. In 2009, China's Ministry 00:18:39.839 --> 00:18:42.960 of Commerce flat out blocked Coke's $2 .4 billion 00:18:42.960 --> 00:18:45.400 bid for Huaiyuan Juice Group. The official reason 00:18:45.400 --> 00:18:47.220 was that the deal would create a virtual monopoly 00:18:47.220 --> 00:18:49.279 in the Chinese juice market and it would hurt 00:18:49.279 --> 00:18:51.859 smaller local companies. But our sources also 00:18:51.859 --> 00:18:55.299 cite nationalism as a heavy factor. It highlights 00:18:55.299 --> 00:18:57.779 the sensitivity around foreign companies controlling 00:18:57.779 --> 00:19:00.519 key local consumer brands in a massive market 00:19:00.519 --> 00:19:03.779 like China. OK, so let's pivot now to part four. 00:19:04.190 --> 00:19:07.009 advertising sponsorship and influence if the 00:19:07.009 --> 00:19:09.049 syrup and franchise model is the engine that 00:19:09.049 --> 00:19:11.670 generates the cash then this part is how that 00:19:11.670 --> 00:19:13.730 cash gets spent to maintain global dominance 00:19:13.730 --> 00:19:16.569 and shape cultural trends coca -cola advertising 00:19:16.569 --> 00:19:19.410 is rightly described as among the most prolific 00:19:19.410 --> 00:19:22.569 in marketing history it has a huge cultural footprint 00:19:22.569 --> 00:19:25.410 and it costs billions to maintain We're talking 00:19:25.410 --> 00:19:27.849 about an annual global spend of around $4 billion. 00:19:28.250 --> 00:19:32.609 It was $4 .24 billion in 2019 alone. And they 00:19:32.609 --> 00:19:35.170 use every possible method to reach you. That 00:19:35.170 --> 00:19:37.609 budget is spread across direct marketing, massive 00:19:37.609 --> 00:19:40.369 social media campaigns. They report 86 million 00:19:40.369 --> 00:19:43.269 global fan engagements and especially mobile 00:19:43.269 --> 00:19:45.670 advertising. Every delivery truck is a mobile 00:19:45.670 --> 00:19:47.789 billboard. Every red cooler, every vending machine, 00:19:47.990 --> 00:19:50.410 it just reinforces the brand right at the point 00:19:50.410 --> 00:19:52.859 of sale. That massive marketing budget also pays 00:19:52.859 --> 00:19:54.859 for protecting its secrets. Which brings us to 00:19:54.859 --> 00:19:57.440 a really remarkable story from 2006. Right, the 00:19:57.440 --> 00:19:59.339 trade secrets and security incident. This was 00:19:59.339 --> 00:20:02.759 a major corporate espionage attempt. A Coca -Cola 00:20:02.759 --> 00:20:05.619 employee and two other people were arrested for 00:20:05.619 --> 00:20:08.759 trying to sell proprietary trade secrets to their 00:20:08.759 --> 00:20:13.799 arch rival, PepsiCo, for $1 .5 million. And this 00:20:13.799 --> 00:20:15.880 was for a new beverage in development, not the 00:20:15.880 --> 00:20:18.519 original famous formula. Right. But here's the 00:20:18.519 --> 00:20:20.339 interesting part. PepsiCo actually showed some 00:20:20.339 --> 00:20:22.960 unexpected corporate ethics here. When the conspirators 00:20:22.960 --> 00:20:25.180 came to them, PepsiCo immediately called the 00:20:25.180 --> 00:20:27.500 FBI. It was PepsiCo that helped expose the whole 00:20:27.500 --> 00:20:31.089 thing, which is... a rare moment of corporate 00:20:31.089 --> 00:20:34.269 cooperation against criminal activity. So beyond 00:20:34.269 --> 00:20:38.009 defense, their most powerful tool is their use 00:20:38.009 --> 00:20:41.640 of global sponsorships. Sports. entertainment 00:20:41.640 --> 00:20:43.880 they make sure the brand is always associated 00:20:43.880 --> 00:20:46.960 with positive mass market events their sports 00:20:46.960 --> 00:20:49.660 portfolio is just immense they have title sponsorships 00:20:49.660 --> 00:20:52.140 in nascar they're a key partner for the ncaa 00:20:52.140 --> 00:20:54.900 the olympic games and the fifa world cup at the 00:20:54.900 --> 00:20:56.740 world cup they've even partnered with panini 00:20:56.740 --> 00:20:59.000 for the virtual sticker album for every tournament 00:20:59.000 --> 00:21:01.789 since 2006. They're deeply involved in golf, 00:21:01.930 --> 00:21:04.589 sponsoring the PGA Tour's season -ending Tour 00:21:04.589 --> 00:21:07.410 Championship. They sponsor the McLaren Formula 00:21:07.410 --> 00:21:10.029 One team. They've even gotten into esports with 00:21:10.029 --> 00:21:12.250 a NASCAR. And they recently shifted their allegiance 00:21:12.250 --> 00:21:15.009 in Major League Baseball. In 2017, they signed 00:21:15.009 --> 00:21:17.390 a multi -year deal to become the official soft 00:21:17.390 --> 00:21:20.170 drink, kicking Pepsi out. And today, you'll find 00:21:20.170 --> 00:21:23.190 Coke products in 19 MLB ballparks. They just 00:21:23.190 --> 00:21:25.410 added the Chicago Cubs and Milwaukee Brewers 00:21:25.410 --> 00:21:28.250 in 2023. Their presence in theme parks is almost 00:21:28.250 --> 00:21:30.890 a monopoly. They sponsor and exclusively supply 00:21:30.890 --> 00:21:33.890 beverages to six of the nine largest global theme 00:21:33.890 --> 00:21:36.769 park operators. That includes Disney Experiences, 00:21:37.029 --> 00:21:39.670 Universal, Six Flags, and Cedar Fair. The only 00:21:39.670 --> 00:21:42.009 really big high -profile exception to that is 00:21:42.009 --> 00:21:44.190 the Shanghai Disney Resort, which serves Pepsi, 00:21:44.329 --> 00:21:46.690 a fascinating little anomaly in their global 00:21:46.690 --> 00:21:49.009 network. Their history in television also ties 00:21:49.009 --> 00:21:51.849 into these huge cultural moments. They sponsored 00:21:51.849 --> 00:21:54.490 Walt Disney's very first TV show back in 1950. 00:21:54.809 --> 00:21:56.849 They sponsored the holiday classic A Charlie 00:21:56.849 --> 00:22:00.359 Brown Christmas in 1960. And they were the main 00:22:00.359 --> 00:22:03.079 sponsor for the TV behemoth American Idol from 00:22:03.079 --> 00:22:06.900 2002 to 2014. Another key cultural property they 00:22:06.900 --> 00:22:09.779 developed is the Coke Studio franchise. It started 00:22:09.779 --> 00:22:12.839 in Brazil and has adapted into these massive 00:22:12.839 --> 00:22:15.619 regional cultural successes all over the world. 00:22:15.720 --> 00:22:18.079 Right, like Coke Studio Pakistan, Coke Studio 00:22:18.079 --> 00:22:21.259 India, and Coke Studio Africa. And finally, we 00:22:21.259 --> 00:22:23.519 have to look at their civic and political involvement. 00:22:24.029 --> 00:22:26.309 This is where the company's influence leaves 00:22:26.309 --> 00:22:28.789 the world of entertainment and enters social 00:22:28.789 --> 00:22:31.089 history and power dynamics. And the most iconic 00:22:31.089 --> 00:22:33.630 example of this involves the civil rights era. 00:22:33.829 --> 00:22:37.130 In 1964, Atlanta was still a segregated city. 00:22:37.250 --> 00:22:39.869 When Martin Luther King Jr. won the Nobel Peace 00:22:39.869 --> 00:22:42.710 Prize, the local business leaders refused to 00:22:42.710 --> 00:22:45.109 support an interracial celebratory dinner for 00:22:45.109 --> 00:22:47.269 him. And this is where corporate leverage came 00:22:47.269 --> 00:22:50.019 into play. Jay Paul Austin, who was the chairman 00:22:50.019 --> 00:22:52.660 and CEO of Coca -Cola at the time, called a meeting 00:22:52.660 --> 00:22:55.160 with the business elite and the mayor. And the 00:22:55.160 --> 00:22:57.420 message he delivered, as it's been chronicled 00:22:57.420 --> 00:23:00.240 by Andrew Young, was basically an ultimatum. 00:23:00.359 --> 00:23:03.039 He said something powerful. It is embarrassing 00:23:03.039 --> 00:23:05.700 for Coca -Cola to be located in a city that refuses 00:23:05.700 --> 00:23:08.839 to honor its Nobel Prize winner. We're an international 00:23:08.839 --> 00:23:11.539 business. The Coca -Cola company does not need 00:23:11.539 --> 00:23:13.940 Atlanta. You all need to decide whether Atlanta 00:23:13.940 --> 00:23:16.299 needs the Coca -Cola company. And the outcome. 00:23:16.809 --> 00:23:19.170 Within two hours, every single ticket to that 00:23:19.170 --> 00:23:21.089 dinner was sold. It's an incredible anecdote. 00:23:21.410 --> 00:23:25.170 It just reveals the immense power a global cash 00:23:25.170 --> 00:23:28.289 rich corporation can have over the social policy 00:23:28.289 --> 00:23:30.710 of its hometown. But that influence isn't always 00:23:30.710 --> 00:23:33.549 directed towards social progress. In 2012, Coca 00:23:33.549 --> 00:23:38.269 -Cola contributed $1 ,700 ,500 to a campaign 00:23:38.269 --> 00:23:41.349 opposing Proposition 37 in California. And that 00:23:41.349 --> 00:23:43.170 proposition would have mandated the labeling 00:23:43.170 --> 00:23:45.670 of foods containing GMOs, genetically modified 00:23:45.670 --> 00:23:48.150 ingredients. They have also engaged in positive 00:23:48.150 --> 00:23:50.630 global campaigns. They were listed as a partner 00:23:50.630 --> 00:23:53.750 in 2012 of the RED campaign, which works to prevent 00:23:53.750 --> 00:23:56.170 the transmission of HIV from mother to child. 00:23:56.369 --> 00:23:58.089 In the current American political climate, they 00:23:58.089 --> 00:23:59.910 maintain their tradition of broad engagement. 00:24:00.049 --> 00:24:03.210 In 2024, Coca -Cola sponsored the presidential 00:24:03.210 --> 00:24:05.930 campaign of Donald J. Trump and even gifted him 00:24:05.930 --> 00:24:08.450 a custom Coke bottle for his inauguration. So 00:24:08.450 --> 00:24:10.589 this willingness to engage politically on all 00:24:10.589 --> 00:24:13.190 sides just underscores their commitment to securing 00:24:13.190 --> 00:24:15.650 a favorable business environment no matter who 00:24:15.650 --> 00:24:18.630 is in charge. That remarkable ability to generate 00:24:18.630 --> 00:24:21.569 cash and exert political influence brings us 00:24:21.569 --> 00:24:24.509 to the inevitable friction point in this deep 00:24:24.509 --> 00:24:27.339 dive. Let's pivot now to the immense scrutiny 00:24:27.339 --> 00:24:29.980 that follows a company this size. Part five, 00:24:30.259 --> 00:24:32.819 the weight of the world criticism and corporate 00:24:32.819 --> 00:24:35.519 responsibility. When you're making tens of billions 00:24:35.519 --> 00:24:38.039 in revenue from selling syrup, you have the resources 00:24:38.039 --> 00:24:40.579 to defend yourself against any threat. And the 00:24:40.579 --> 00:24:42.200 biggest threat over the past couple of decades 00:24:42.200 --> 00:24:44.920 has been the growing scientific consensus on 00:24:44.920 --> 00:24:46.980 the harmful health effects of sugary drinks. 00:24:47.220 --> 00:24:50.119 And Coca -Cola's response was sophisticated. 00:24:50.819 --> 00:24:53.539 They used a strategy that critics call front 00:24:53.539 --> 00:24:56.390 groups. Basically, funding what seemed to be 00:24:56.390 --> 00:24:58.930 independent organizations to deflect public attention 00:24:58.930 --> 00:25:01.049 away from the link between their products and 00:25:01.049 --> 00:25:04.150 diseases like type 2 diabetes. One early example 00:25:04.150 --> 00:25:06.549 was the Beverage Institute for Health and Wellness. 00:25:06.769 --> 00:25:08.890 What made this problematic was that it was led 00:25:08.890 --> 00:25:11.369 by a woman who was simultaneously the Coca -Cola 00:25:11.369 --> 00:25:13.930 Company's chief science and health officer. So 00:25:13.930 --> 00:25:16.009 this institute sponsored continuing education 00:25:16.009 --> 00:25:19.450 for dieticians and nurses. And critics argue 00:25:19.450 --> 00:25:22.329 this created a huge conflict of interest, potentially 00:25:22.329 --> 00:25:25.029 influencing their public health stances on sugary 00:25:25.029 --> 00:25:27.589 drinks. But the most egregious example was the 00:25:27.589 --> 00:25:31.769 Global Energy Balance Network, or GEBN. This 00:25:31.769 --> 00:25:34.529 group was explicitly funded by Koch to shift 00:25:34.529 --> 00:25:36.990 the public narrative away from diet and toward 00:25:36.990 --> 00:25:39.230 lack of exercise as the main cause of obesity. 00:25:39.630 --> 00:25:42.150 But investigative reports eventually exposed 00:25:42.150 --> 00:25:45.190 them. They found that GBN was designing studies 00:25:45.190 --> 00:25:47.589 to arrive at conclusions that were predetermined 00:25:47.589 --> 00:25:49.609 by the company, and they were cherry -picking 00:25:49.609 --> 00:25:52.710 data to support Koch's PR agenda. After it was 00:25:52.710 --> 00:25:55.349 exposed in August 2015, the GBN was shut down 00:25:55.349 --> 00:25:58.109 very quickly. But the pattern continued. Three 00:25:58.109 --> 00:26:00.339 years later... Coke was found to be funding an 00:26:00.339 --> 00:26:02.779 initiative in China called Happy 10 Minutes. 00:26:02.799 --> 00:26:04.779 And this was through the International Life Sciences 00:26:04.779 --> 00:26:07.859 Institute, or ILSI, a group that had previously 00:26:07.859 --> 00:26:10.359 promoted the tobacco industry's agenda back in 00:26:10.359 --> 00:26:12.900 the 80s and 90s. The goal of Happy 10 Minutes 00:26:12.900 --> 00:26:15.200 was pretty clear. Promote physical activity to 00:26:15.200 --> 00:26:17.480 the Chinese population while completely avoiding 00:26:17.480 --> 00:26:19.579 any discussion of the link between sugary drinks 00:26:19.579 --> 00:26:22.309 and diet -related diseases. It's a classic tactic. 00:26:22.509 --> 00:26:24.869 You focus on one side of the energy balance equation 00:26:24.869 --> 00:26:27.650 to protect your core product. OK, let's shift 00:26:27.650 --> 00:26:30.410 now to environmental impact and let's start with 00:26:30.410 --> 00:26:33.750 plastic and waste. This is maybe the most visible 00:26:33.750 --> 00:26:36.049 and pressing crisis facing the company today. 00:26:36.210 --> 00:26:38.650 The production numbers again are just overwhelming. 00:26:39.029 --> 00:26:41.930 Coca -Cola produces over three million tons of 00:26:41.930 --> 00:26:45.170 plastic packaging every single year. Which translates 00:26:45.170 --> 00:26:49.390 to 110 billion. single use plastic bottles. And 00:26:49.390 --> 00:26:52.150 the sheer volume is why the company has repeatedly 00:26:52.150 --> 00:26:54.569 been labeled the worst plastic polluter in the 00:26:54.569 --> 00:26:57.009 world. Forbes magazine called it the world's 00:26:57.009 --> 00:26:59.430 most polluting brand, noting their output of 00:26:59.430 --> 00:27:02.150 200 ,000 plastic bottles per minute. And our 00:27:02.150 --> 00:27:04.690 sources cite real world consequences, like in 00:27:04.690 --> 00:27:06.670 Samoa, where residents reported this massive 00:27:06.670 --> 00:27:09.490 spike in plastic pollution right after Coca -Cola 00:27:09.490 --> 00:27:12.190 switched from using reusable glass bottles to 00:27:12.190 --> 00:27:14.779 single use plastic. And compounding the problem 00:27:14.779 --> 00:27:17.619 is the company's own stance. In 2019, their global 00:27:17.619 --> 00:27:19.980 chief executive stated very plainly that Coca 00:27:19.980 --> 00:27:23.099 -Cola had no plans to reduce its use of plastic 00:27:23.099 --> 00:27:25.779 bottles because they claim consumers overwhelmingly 00:27:25.779 --> 00:27:29.240 prefer lightweight, resealable plastic. They 00:27:29.240 --> 00:27:32.819 also actively oppose mandatory bottle bill legislation 00:27:32.819 --> 00:27:35.519 that's designed to encourage recycling. And despite 00:27:35.519 --> 00:27:37.960 their public pledges, their sustainability goals 00:27:37.960 --> 00:27:41.720 are not going well. No. In 2018. Coke pledged 00:27:41.720 --> 00:27:44.160 to recycle the equivalent of 100 % of its packaging 00:27:44.160 --> 00:27:47.660 by 2030. But by December 2024, the company announced 00:27:47.660 --> 00:27:49.259 they were going to fail to meet that initial 00:27:49.259 --> 00:27:51.579 goal. And the composition of your packaging really 00:27:51.579 --> 00:27:56.180 shows the problem. In 2023, almost half 47 .7 00:27:56.180 --> 00:28:00.640 % was plastic, only 26 % aluminum and 10 .4 % 00:28:00.640 --> 00:28:03.400 glass. And crucially, the sources note that only 00:28:03.400 --> 00:28:06.359 1 .2 % of their packaging was reusable. And their 00:28:06.359 --> 00:28:08.240 use of virgin plastics has actually increased 00:28:08.240 --> 00:28:11.319 by about 6 % since 2019. The long -term environmental 00:28:11.319 --> 00:28:14.339 damage is projected to be huge. A 2025 study 00:28:14.339 --> 00:28:16.920 estimated that Coke, along with PepsiCo and Nestle, 00:28:17.079 --> 00:28:20.000 collectively contributed between 14 and 21 million 00:28:20.000 --> 00:28:22.700 tons of plastic waste into aquatic environments 00:28:22.700 --> 00:28:25.460 between 2000 and 2023. And it goes beyond plastic. 00:28:25.559 --> 00:28:27.819 We have to address their water usage and depletion. 00:28:27.920 --> 00:28:29.980 Right. Because of the decentralized bottling 00:28:29.980 --> 00:28:33.200 model, the mothership focuses on syrup. But the 00:28:33.200 --> 00:28:36.099 franchise bottlers are accused of depleting vital 00:28:36.099 --> 00:28:39.660 local water sources all over the world. Our sources 00:28:39.660 --> 00:28:42.759 highlight a really stark case in Caledera, Rajasthan 00:28:42.759 --> 00:28:45.980 in India. Local government data showed that water 00:28:45.980 --> 00:28:47.940 levels were stable there until the Coca -Cola 00:28:47.940 --> 00:28:50.740 plant opened in 2000. And in the five years after 00:28:50.740 --> 00:28:53.819 that, water levels dropped by almost 10 meters. 00:28:54.099 --> 00:28:56.759 It devastated local harvests and dried up local 00:28:56.759 --> 00:28:59.240 wells. It's a direct connection between industrial 00:28:59.240 --> 00:29:02.019 utes and local environmental impact. We also 00:29:02.019 --> 00:29:04.220 have to touch on the energy use, which is linked 00:29:04.220 --> 00:29:06.940 to their choice of sweetener. Right. While they 00:29:06.940 --> 00:29:09.339 use cane sugar in some parts of the world, their 00:29:09.339 --> 00:29:11.619 reliance on high fructose corn syrup in North 00:29:11.619 --> 00:29:13.900 America and other places is documented as being 00:29:13.900 --> 00:29:16.680 less sustainable. Why is that? Because the manufacturing 00:29:16.680 --> 00:29:19.460 process for corn syrup is very carbon intensive. 00:29:19.779 --> 00:29:22.400 It requires a lot of fossil fuels for the conversion 00:29:22.400 --> 00:29:25.400 process, but also for the heavy machinery, the 00:29:25.400 --> 00:29:27.799 irrigation and the fertilization you need to 00:29:27.799 --> 00:29:30.559 grow that much corn. It's a systemic energy burden 00:29:30.559 --> 00:29:33.630 built right into the recipe. And finally, we 00:29:33.630 --> 00:29:35.730 have to turn to the company's long and troubled 00:29:35.730 --> 00:29:38.250 history with racial discrimination allegations. 00:29:38.990 --> 00:29:41.809 In November of 2000, Coca -Cola agreed to pay 00:29:41.809 --> 00:29:47.130 a massive $192 .5 million to settle a class action 00:29:47.130 --> 00:29:49.589 lawsuit that alleged racial discrimination. And 00:29:49.589 --> 00:29:51.990 that settlement also mandated fundamental changes 00:29:51.990 --> 00:29:54.289 to their management, promotion, and how they 00:29:54.289 --> 00:29:56.750 treated minority employees in the U .S. But even 00:29:56.750 --> 00:29:59.750 after that nearly $200 million settlement, the 00:29:59.750 --> 00:30:02.730 problems didn't just go away. Protesters at their 00:30:02.730 --> 00:30:05.450 2003 annual meeting claimed that Black people 00:30:05.450 --> 00:30:08.210 were still underrepresented in management, paid 00:30:08.329 --> 00:30:10.930 less and fired more often. However, the court 00:30:10.930 --> 00:30:13.390 mandated changes did eventually force some progress. 00:30:13.650 --> 00:30:16.769 By 2004, a diversity rating organization noted 00:30:16.769 --> 00:30:18.750 that because of the pressure from the settlement, 00:30:18.930 --> 00:30:21.369 Koken implemented management practices that actually 00:30:21.369 --> 00:30:23.690 put them in the top 10 for diversity efforts. 00:30:23.990 --> 00:30:26.490 But despite those improvements, the litigation 00:30:26.490 --> 00:30:28.630 just kept coming, which suggests the problem 00:30:28.630 --> 00:30:32.390 was systemic and cultural. In 2012, 16 workers 00:30:32.390 --> 00:30:34.990 of color sued the company again, alleging they 00:30:34.990 --> 00:30:37.470 were still working in a cesspool of racial discrimination. 00:30:37.549 --> 00:30:40.029 And as a final example, just showing how fraught 00:30:40.029 --> 00:30:42.630 this has become, in 2021, an employee training 00:30:42.630 --> 00:30:45.549 course instructed employees to be less white. 00:30:46.609 --> 00:30:49.049 The course materials equated whiteness with being 00:30:49.049 --> 00:30:51.670 arrogant and oppressive, and it led to significant 00:30:51.670 --> 00:30:55.049 public backlash. So what does this all mean when 00:30:55.049 --> 00:30:57.910 you put the whole picture together? We've traced 00:30:57.910 --> 00:31:00.410 the Coca -Cola company from this tiny dose of 00:31:00.410 --> 00:31:02.769 medicine made by a morphine -addicted pharmacist 00:31:02.769 --> 00:31:05.109 through brilliant marketing to an absolutely 00:31:05.109 --> 00:31:07.890 dominant financial machine. The central story 00:31:07.890 --> 00:31:09.849 of this deep dive is really the tension between 00:31:09.849 --> 00:31:12.869 a brilliant, profitable strategy and a massive, 00:31:12.930 --> 00:31:15.750 complex global consequence. It's a company that 00:31:15.750 --> 00:31:18.970 became a global icon through the genius of franchising 00:31:18.970 --> 00:31:21.430 and branding, only to find itself facing intense 00:31:21.430 --> 00:31:24.549 scrutiny over its environmental output, its influence 00:31:24.549 --> 00:31:27.230 on public health and systemic issues in its workplace. 00:31:27.549 --> 00:31:29.650 And when we connect the dots for you, the learner, 00:31:29.789 --> 00:31:32.190 the formula for their power becomes crystal clear. 00:31:32.519 --> 00:31:34.940 The staggering financial success of Coca -Cola, 00:31:35.000 --> 00:31:36.960 which comes from focusing only on that high margin 00:31:36.960 --> 00:31:39.059 concentrate and selling off the bottling risk. 00:31:39.240 --> 00:31:41.789 That generates a massive global war chest. And 00:31:41.789 --> 00:31:44.289 this war chest is what funds their ability to 00:31:44.289 --> 00:31:47.410 spend $4 billion a year on advertising, to exert 00:31:47.410 --> 00:31:49.789 political leverage like that ultimatum in Atlanta 00:31:49.789 --> 00:31:53.490 in 1964, and to finance these sophisticated networks 00:31:53.490 --> 00:31:56.029 and front groups designed to defend their product 00:31:56.029 --> 00:31:58.509 against scientific criticism. The business model 00:31:58.509 --> 00:32:00.430 directly funds the corporate defense strategy. 00:32:00.730 --> 00:32:02.789 Exactly. So we're left with this final thought 00:32:02.789 --> 00:32:05.640 for you to mull over. Given that the Coca -Cola 00:32:05.640 --> 00:32:07.640 company has demonstrated this immense power, 00:32:07.799 --> 00:32:10.859 the power to intervene in major moments of civil 00:32:10.859 --> 00:32:13.299 rights history, the power to influence global 00:32:13.299 --> 00:32:16.460 health discourse, the logistical capability to 00:32:16.460 --> 00:32:19.029 deliver billions of servings a day. What are 00:32:19.029 --> 00:32:21.009 the inherent responsibilities of a single brand 00:32:21.009 --> 00:32:23.690 whose packaging and product are arguably the 00:32:23.690 --> 00:32:26.009 most ubiquitous consumer goods on Earth? What 00:32:26.009 --> 00:32:28.049 does it really mean when a company says they 00:32:28.049 --> 00:32:31.230 need the world to sell their product? When the 00:32:31.230 --> 00:32:34.210 data clearly shows that the world, especially 00:32:34.210 --> 00:32:37.630 our oceans and our local water sources, is struggling 00:32:37.630 --> 00:32:39.970 under the weight of the sheer scale, the volume 00:32:39.970 --> 00:32:42.170 and the influential political maneuvering of 00:32:42.170 --> 00:32:44.509 that same company. It really demands that we 00:32:44.509 --> 00:32:47.390 as consumers look beyond the red logo and scrutinize 00:32:47.390 --> 00:32:48.599 the machine. working underneath.