Coca-Cola Co. (KO) is broadening distribution of its low-calorie drinks and said it would put calorie counts on the front of its packaging around the world as it ramps up global efforts to counter criticism its sugary drinks are fueling obesity.
The Atlanta-based beverage giant also promised to sponsor physical activity programs and reiterated its commitment to not market its drinks to children under 12 years old in each of the more than 200 countries and territories that it operates. It declined to give a target date for completing the global overhaul or say how much money it would spend.
The moves come as Coke and other soda makers such as PepsiCo Inc. (PEP) find their products under rising scrutiny in a growing number of countries amid climbing obesity rates. Coke, the world's biggest drink company, is the main target despite diversifying beyond its namesake cola into dozens of other categories including fruit juices, bottled water and sports drinks.
Coke says roughly one-third of its sales volume in North America is derived from low- and zero-calorie drinks, including Diet Coke and Coke Zero, but that such drinks aren't as widely distributed in other parts of the world. In Latin America, for instance, such drinks only make up 18% of company volumes. In China, zero-calorie cola sales make up less than 10% of Coke's cola sales.
"The key here is to ensure that in every market where we operate to have no- or low-calorie beverages of our main brands available," Muhtar Kent, Coke's chairman and chief executive, said in a conference call. "We do not have that consistently across the world today."
Some soda critics are skeptical about Coke's latest initiatives. "The company's objective is to deflect criticism of sugary drinks and forestall meaningful government action to reduce soda consumption,'' said Jeff Cronin, a spokesman for the Center for Science in the Public Interest, a public-health advocacy group in Washington, D.C.
Coke already has moved aggressively to try and fend off critics in the U.S., launching television advertisements earlier this year arguing soda shouldn't be singled out for weight gain and encouraging Americans to have "fun" burning calories through physical activity. On Wednesday it unveiled $3.8 million in grants for "active'' lifestyle programs like dancing and cycling in its home state of Georgia.
The soda industry has spent nearly $100 million in the U.S. since 2005 lobbying as it opposed various measures, including proposed soda taxes by states and cities, according to the Center for Science in the Public Interest. A judge in March sided with the soda industry in blocking a plan by New York City to cap soda sizes at 16 ounces in many city stores and restaurants.
But Coke and soda makers are also being targeted in Europe and elsewhere. France introduced a soda tax last year and Hungary introduced a broader tax against products high in sugar, salt or fat. Several prominent public health groups have called for soda taxes in the U.K. since last year.
"Soft drinks are the devil product at the moment,'' said Jack Winkler, emeritus professor of nutrition policy at London Metropolitan University.
Coke said it would start adding calorie counts to the front of all its drink packaging around the world, something it already does in the U.S. and a handful of other countries. It also plans to ramp up physical activity programs in every country it sells its products, up from 115 countries currently.
Coke said in 2010 it wouldn't advertise its products on TV, radio or other media programs in which more than 35% of the audience is younger than 12, compared with an earlier 50% threshold.
But the company reiterated Wednesday it has no plans to pull the plug on Santa Claus or polar bears, which are popular with children and have been fixtures in Coke ads since the 1920s.
"It's not about what's shown in the ad, it's about the audience for the ad," said April Jordin, a Coke spokeswoman, adding that Coke will also keep showing families in its ads.
Coke, which says it is present in every country but Cuba and North Korea, also has begun to feel some heat in Mexico, which drinks more of the company's cola on a per capita basis than any other country. Last year lawmakers proposed a 20% soda tax that could be revisited later this year during budget negotiations amid growing concern over obesity. In 2010, the government recommended that sugary soda not be sold in schools.
Some Mexican consumer groups want the government to do more. One such group, El Poder del Consumidor, petitioned authorities in January to require more transparent labeling on soda bottles. It is also pushing for Coke to roll back marketing to youth and says ads for its famous cola can still be found on the walls of school buildings in rural areas.
"We have a great problem with soda drinks,'' said Alejandro Calvillo, the director of the group, which focuses on obesity issues.
Coke hasn't faced the same level of criticism or regulatory scrutiny in Asia, where soda consumption is lower. But obesity, particularly among children, is a growing concern in countries like China.
"I think [Coke] realizes it's a global thing,'' said Caroline Levy, a global beverage analyst with Crédit Agricole Securities who travels frequently to Asia.
