Coca Cola crime!

The story of the Mexican corner-shop owner who sued Coke made my day yesterday. Hee hee hee!

I have to say admit I might feel a bit differently if I liked their product (in fact it makes me feel a bit queasy) but I first started my anti-Coke campaign when I was in Ecuador. I'm not a charity, but when I'm visiting places I like to think much of my money is going to help the local economy, particularly in places like Ecuador where there are large numbers of displaced, disadvantaged people. Even though a proportion of them seem to be very keen to rob me. I also like to experience things I can't get at home: even soft drinks, though to be honest I get more excited about the local beers and wines.

Anyway, back to the story. The restaurants in Quito offer water with your meal. And guess who makes (or at least owns the brand of) the only water on offer? Yeap, Coca Cola. Bon Aqua, I think they were offering. So the dollar I was paying for each small bottle was at least partly going on keeping Coca Cola executives (and Warren Buffett) in the style to which they've become accustomed.

As I travelled the world I started trying to avoid Coca Cola products. It's not always easy (especially if you try to avoid Pepsi as well). In Estonia, for example, I was proudly drinking a local product only to be told that Coca Cola had bought the company that produced it! I'm informed that the kiosk guys in Tallinn just did what they were told when Coke gave them fridges and told them they couldn't use them for drinks from other suppliers (why is this practice legal?; is it legal?). [Funnily enough, as local companies copy Coke, there is now a proliferation of fridges in some places: I remember one store in a small town in Estonia with no less than 3, 2 of them for drinks from particular suppliers, the third for everything else!].

When we looked at the "Cola Wars" during my MBA I was naive enough to suppose that Coca Cola and Pepsi are so dominant simply because they've spent so much on advertising over the years (building up "brand equity"). It turns out, though, that this is only part of the story. It was also exclusive (read anti-competitive) deals with bottlers (that is, local drink manufacturers and distributors) that led to the dominance of the duopoly in the US. They have both repeated this strategy throughout the world. Curiously their strategy includes supplying the concentrate, so when Coke moved into supplying water they've stretched the envelope and done the same thing. Bon Aqua and Dasani are manufactured, not spring water.

Yesterday I read that the EU is asking for more powers to rule on mergers within countries. This is good news as it seems the only world body (barring perhaps the Chinese government) that has the power, will and understanding to really promote competition. Today's Guardian leader, for example, comments on Nellie Kroes' (the EU Competition Commissioner) ruling on English Premiership football rights (what a day it was!). According to the football club chairmen this is the end of the world, but I believe it's in the best interests of the fans and, in the long term, the game.

I'm sure the public perception of what drives capitalism is that key is competition between companies. But in so many areas there is hardly any competition. The existence of so many sheltered near-monopolies doesn't bode well for "Western" economies as China and India get going.