Coca-Cola, Other Corporations Face Critics For Olympics Support

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The New York Times

Coca-Cola, Other Corporations Face Critics For Olympics Support

by
Stephanie Clifford

It is getting tougher to be a global brand these days. Just ask Coke.

As one of the most prominent sponsors of the Olympics, Coca-Cola found itself on the hot seat on Wednesday at its annual shareholder meeting in Wilmington, Del. Outside, protesters chanted and waved picket signs. Inside, they engaged the chief executive, E. Neville Isdell, in a rare public dialogue about China's human rights record in Tibet.0417 08

"Will you tell the I.O.C. to stop taking the Olympic torch relay into Tibet, because Tibet belongs to Tibetans?" asked one protester in the audience, Lobsang Choefel, who described himself as a native Tibetan. He was referring to the International Olympic Committee.

Mr. Isdell - who had just described first-quarter results that rose on the strength of international sales in countries like China - stood firm. The torch relay "has symbolized openness, it has symbolized hopes," he said. "I don't believe that stopping the torch run is in any way over the long term going to be the right thing to do."

The moment seemed to encapsulate the quandary the Olympics sponsors face as protests unfurl across various continents. In India, home to more than 100,000 Tibetans in exile and their religious leader, the Dalai Lama, even the official corporate sponsors avoided buying television and radio ads that were timed to the Olympic torch relay on Thursday, media executives there said.

And in China, a different sort of backlash has been taking shape - against the companies from countries that seem to be putting pressure on China. French companies like Carrefour are a particular target because of the mayhem during the Paris leg of the torch relay and because the French president has said he may skip the opening ceremony in Beijing over China's human rights record.

"I think boycotting Carrefour is a peaceful and polite way to express our anger, our Chinese feelings got deeply hurt by France," said Li Meng, a 25-year-old mechanic who is selling T-shirts in support of the boycott movement in the city of Yantai, in eastern China. "France humiliated China during the torch relay and keeps making trouble for the Olympics."

American brands like McDonald's and KFC have also been named as targets of a boycott because some American politicians seem to be supporting the Dalai Lama, whom Beijing blames for instigating violence in Tibet to disrupt plans for the Olympics.

No one knows whether there is widespread support for the boycotts, but the opposition comes at a time when many of the world's biggest brands - including Coke - are expanding aggressively in China and planning huge sales and marketing campaigns to coincide with the Olympics.

Coca-Cola's most recent quarterly results suggest the extent of its reliance on the Chinese market. During the first quarter, Coke's unit case volume sales in China were up 20 percent in the quarter, one of the highest figures from any country. Over all, the company's net income rose 19 percent in the quarter, to $1.5 billion, from $1.26 billion a year ago.

Bill Pecoriello, research analyst at Morgan Stanley, estimates that 5 to 6 percent of Coke's total revenue comes from China (Coca-Cola does not break out the figure).

The importance of China for Coke should increase, Mr. Pecoriello said. He estimated that Coke sold 1.2 billion cases in China in 2007 and forecast that it would sell 1.5 billion cases there in 2008. That compares with larger but slower-growing sales in the United States: 5.4 billion cases in 2007 and 5.45 billion cases in 2008, Mr. Pecoriello said.

Neither Coca-Cola nor any of the other Olympic sponsors has flinched in its public support for the games, but the groups that are protesting China's policies in Tibet and Darfur are vowing to step up their pressure. This could lead to showdowns, or even to a possible whipsaw for the companies if Chinese youths start protesting en masse in the other direction.

"We're not asking Coke to solve Tibet's problems," Lhadon Tethong, the director of an organizing group called Students for a Free Tibet, told Mr. Isdell at the shareholder meeting on Wednesday. "We're not asking you to do anything else but tell the I.O.C. this is not the time for the torch to go to Tibet."

Ms. Tethong added, "You have influence, and you know you have influence. Please don't hide behind a spin."

Mr. Isdell - who will be succeeded by the company's president and chief operating officer, Muhtar Kent, by the time the Olympics start in August - responded politely and at some length. "I want to thank you for your clarification and also for your declared integrity," he said, adding that, technically, the route of the torch was not governed by the I.O.C., but by the Beijing Organizing Committee for the Olympic Games. On a philosophical note, Mr. Isdell added, "We still believe that the torch is a light of hope, and we trust that's what it will be as it goes every single place in the world."

In the future, Mr. Isdell suggested, the company does still want to buy the world a Coke. "We are already a sponsor of the Olympic games - wherever they may go - through 2020, and I trust that will continue through 2028," he said.

Last week, several other sponsors, including Visa International, McDonald's, Johnson & Johnson, Anheuser-Busch, Bank of America, Home Depot, United Parcel Service and AT&T reaffirmed their support of the Olympics and said that their marketing plans had not changed because of the protests.

"As critical as Tibet is, I think sponsors are looking at the situation saying, 'We've still got days to go,' " said Damien Ryan, director of Ryan Financial Communications, a Hong Kong media relations firm that has sponsors as clients. "Things can change quite quickly, and from their point of view, they realize that Beijing has got a long memory."

David Barboza contributed reporting from Shanghai and Heather Timmons from New Delhi.

© 2008 The New York Times

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