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Climate Change Driving Beverage Market to Creative Destruction

[fa icon="calendar'] Feb 19, 2014 1:58:30 PM / by Carol Pierson Holding

By Carol Pierson Holding

Last week, the Seattle Times reported on a White House state dinner in honor of Frenchgrapes- carol President Francois Hollande. The wines were chosen for being among the U.S.’s vineyards that are owned or run by French vignerons and included Long Shadow’s Chester-Kidder red blend 2009 from Walla Walla, Washington.

It’s not the first time a Presidential dinner has included wines from the Pacific Northwest. The same vineyard has provided wine to at least four state dinners. Washington State wines won international competitions.

The fact is, the climate has changed so drastically that Washington State – and England and China — are becoming prime regions for wine growing. Global warming and its freak weather events are destroying the once great terroirs of France and California. Vintners, whose reputations and positioning have for centuries rested on the special soil and climate of a certain place (think Champagne), are repositioning themselves from unique land-based attributes to superior skills and experience.

Economist Joseph Shumpeter described this necessary form of business evolution: “creative destruction, (which) incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Wine is not the only industry experiencing creative destruction brought on by threats to vital natural resources. One well-known example is Coca-Cola’s extreme issues around water for both its production processes and its products themselves.

The company’s 2013 Water Stewardship & Replenish Report attempts to minimize damage to its reputation. But pain inflicted by its water misuse has gotten widespread publicity, particularly in India where, since 2000, the company has overseen the over-exploitation of limited water resources and the contamination of groundwater supplies that is bankrupting farmers and driving some to suicide.

The cost to Coke of water in India? Virtually free. But the repercussions of its water misuse have included fierce battles with local authorities that temporarily closed the Kerala plant, costing it millions.

Coke’s public response to its water problems seems admirable. In 2010 CNN Money reported that:

“Coke has been a leader when it comes to environmental issues: It is aiming to be water neutral — meaning every drop of water used by the company will be replenished — by 2020.”

But despite its commitments to water neutrality, Coke still has a long way to go. CSRHub rates its environmental performance only slightly above the beverage industry average. As the leader of the global beverage market, Coke should be doing better.

And not just because of the moral imperative or for good PR. When water becomes scarce or expensive, Coke’s business is threatened. How can Coke expand into products that don’t require water while retaining its franchise in sugar drinks? How does it beat back new water-free competitors such as SodaStream?

The answer is to join them. Earlier this month, Coca Cola announced a deal with Green Mountain Coffee Roasters to sell its drinks through subsidiary KeurigCold, an in-home soft-drink dispensing system. As the Wall Street Journal explained:

Coke is spending $1.25 billion to buy a 10% stake in Green Mountain, which is planning to introduce a new home soda maker to go alongside its Keurig single-serve coffee makers. And Coca Cola’s drink brands — Coke, Fanta, Sprite, Powerade and many more — will be making appearances in the new machines.

The surprising thing about the announcement is that unlike SodaStream, which touts its products as being environmentally friendly or “without the bottle,” Coke’s press release makes no reference to its new product’s sustainability. The largest beverage company in the world is touting this purchase as a competitive decision without trying to use it to blunt criticism over water use.

Potentially even more dire, the pods fight with Coke’s most enduring symbols, the Coke bottle and can.

Coke’s Green Mountain partnership is a perfect example of creative destruction working to benefit climate change adaptation. In a 1997 update to Shumpeter’s theory, Clayton Christensen’s The Innovator’s Dilemma says that there are times when it’s smart not to listen to current customers but to pursue small markets at the expense of larger and more lucrative ones. Climate change is pushing business to take more of the kind of risks that Shumpeter and Christensen advocate, often benefiting both business and the planet, even without exploiting sustainability in its branding. That’s CSR at its very best.


Carol2Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 8,900+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 8,900+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 300+ data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

 

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[fa icon="comment"] 0 Comments posted in Carol Pierson Holding, Chester-Kidder, Clayton Christensen, climate, Coca Cola, corporate social responsibility, creative destruction, CSR, CSRHub, environment, global warming, Green Mountain Coffee Roaster, Joseph Shumpeter, Long Shadow, SodaStream, SRI, terroir, The Innovator’s Dilemma, Uncategorized, vineyards, vintner, wine

Coca-Cola’s Brand of Cultural Leadership Zeros in on Third World

[fa icon="calendar'] Mar 25, 2013 9:00:24 AM / by Carol Pierson Holding

By Carol Pierson Holding

When I was young, I took it as the gospel truth that Coca-Cola could eat the paint off of cars. Then my grammar school classmates reported that baby teeth dissolved in Coke. I learned my lesson: drink Coke at your own peril.

I divested my Coca-Cola stock some time ago for social responsibility reasons —Mark Bittman recounts the health dangers in his New York Times blog — and for financial reasons. I thought that with all the warnings, many of Coca-Cola’s markets were destined to decline.

[csrhubwidget company="The-Coca-Cola-Company" size="650x100" hash="c9c0f7"]

I was right, for now. Starting in about 2004, sales of all sodas began to tank. More recently, regulation entered the picture, when New York’s Mayor Bloomberg tried to ban sales of fast food soft drinks over 16 ounces.

Then the breakthrough: earlier in March, Beverage Digest reported  water consumption once again exceeds soda consumption. Common sense was finally winning out over the immense marketing power of soda companies, without the lawsuits that forced other dangerous and addictive products such as liquor and cigarettes to limit their advertising and promotion. Even a former Coca-Cola marketing executive quit amid public mea culpa’s for the harm he was doing by pushing Coke in the poverty stricken pavelas in Brazil. It seemed Coke might be doomed.

So it was with some interest I read that the new head of marketing for Coca-Cola was speaking to the Harvard Business School Club of New York. His talk, called “Bringing the Fizz Back,” was promoted on the HBSCNY web site as follows:

“With all the negative news surrounding carbonated beverages, you would be led to believe the end was near for storied companies such as the Coca-Cola Company and its brethren. Yet the legendary Atlanta-based firm is thriving with a strong focus on international markets, educating consumers about obesity, and being resilient in what Coca-Cola CEO Muhtar Kent calls ‘the reset world;’ a world where new consumer attitudes, the role of government in economic and commercial affairs, and geopolitical, economic, and demographic shifts collide.

“Clearly this is a major challenge. As the Chief Marketing Officer of the firm, Joe Tripodi is among those at the forefront trying to address these issues.

‘Coca-Cola is also in the middle of an ambitious plan to double its business by 2020. …Just how does the venerable firm plan to execute this goal? …Mr. Tripodi will talk about ‘the brand as cultural leader’ –the imperative for many brands today to take a leadership position on issues and challenges that are important to their consumers and integral to the company’s DNA.”

Hmmm…Coca-Cola as cultural leader? Mr. Tripodi’s bio tells us that he has worked in global marketing for liquor (Seagrams) and oil (Mobile Oil, now part of ExxonMobil), so he knows a thing or two about marketing dangerous, addictive products as “cultural leaders” – recall Mobil’s series of small space ads on the New York Times Op-Ed pages about their efforts to clean the environment.

One wonders if Tripodi was the one who came up with the brilliant idea of supporting educational and non-profits in minority communities, so that when and if government leaders such as Mayor Bloomberg tried to limit soda consumption, Coca-Cola would have staunch allies among minorities, as it did in New York.

But even more pernicious than pushing Coke in this country, where information about its dangers is plentiful even at the grammar school level, is Coca-Cola’s intention to addict people in the third world. I’m reminded of the movie The Gods Must Be Crazy, where a pilot drops his Coca-Cola bottle from his plane at the feet of an African tribesman. Initially, the bottle causes conflict in the tribe, because, as the narrator tells us, “A thing they have never needed before suddenly became a necessity.” Of course, the story is about a glass bottle, not its former contents. Still, one might be forgiven for imputing this lesson: Nobody on earth is safe from Coca-Cola’s brand of cultural leadership.


Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on nearly 7,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on nearly 7,000 companies from 135 industries in 82 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.


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[fa icon="comment"] 11 Comments posted in carbonated beverages, Carol Pierson Holding, Coca Cola, CSR, CSRHub, Cultural Leadership, Uncategorized

CSRHub’s Bahar Gidwani Speaking at the Centre for Sustainability and Excellence

[fa icon="calendar'] Oct 2, 2012 11:13:49 AM / by Bahar Gidwani

CSRHub CEO and Co-founder Bahar Gidwani will be speaking at CSE’s Certified Centre for Sustainability and ExcellenceSustainability (CSR) Practitioner Training on October 11, 2012 in Brussels, Belgium.

CSE is a leading global sustainability (CSR) consulting, coaching, and training firm. CSE is offering a two day Certified Sustainability (CSR) Practitioner Training. This IEMA Approved challenging 2-day course enables participants to acquire the skills and competencies required to become qualified CSR practitioners. Over the past three years, executives from Fortune 500 companies, Local Governments and Universities have participated in CSE’s Global Certified trainings, including Supervalu, Unilever, ABM, Lockheed Martin, Baker Hughes, Noble Energy, United Airlines, Coca Cola, ITW, Stanford University, Walmart and Chevron.

CSE has been approved by IEMA (Institute of Environmental Management and Assessment), a leading not for profit global institute offering certified trainings for CSOs, CSR Managers, Communication Directors, HSE Managers and other executives. At the end of the trainings, professionals have the opportunity to complete a Final Assignment, which allows them to qualify for certification and earn the recognized CSR-P Certification (CSR-P Seal).

CSE is also offering Certified Sustainability (CSR) Practitioner Training at the following locations:

Vancouver, BC, Canada, November 1 - 2.
Atlanta, GA, November 29 - 30.
Chicago, IL, December 4 - 5.

If you haven’t already, register to attend one of CSE’s Certified Sustainability (CSR) Practitioner Trainings today!

The first 10 people to register for a CSE’s training and let us know will receive a 25% discount on a subscription to CSRHub. Contact sales@csrhub.com for the discount link.


Bahar Gidwani is a Cofounder and CEO of CSRHub. Formerly, he was the CEO of New York-based Index Stock Imagery, Inc, from 1991 through its sale in 2006. He has built and run large technology-based businesses and has experience building a multi-million visitor Web site. Bahar holds a CFA, was a partner at Kidder, Peabody & Co., and worked at McKinsey & Co. Bahar has consulted to both large companies such as Citibank, GE, and Acxiom and a number of smaller software and Web-based companies. He has an MBA (Baker Scholar) from Harvard Business School and a BS in Astronomy and Physics (magna cum laude) from Amherst College. Bahar races sailboats, plays competitive bridge, and is based in New York City.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on nearly 5,000 companies from 135 industries in 65 countries. By aggregating and normalizing the information from over 170 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

 

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[fa icon="comment"] 3 Comments posted in ABM, Bahar Gidwani, Baker Hughes, Centre for Sustainability and Excellence, Chevron, Coca Cola, CSE, ITW, Lockheed Martin, Noble Energy, Stanford University, Supervalu, Sustainability coaching, sustainability (CSR) consulting, Sustainability (CSR) Practitioner Training, training firm, Uncategorized, Unilever, United Airlines, WalMart

Plastic Solutions from the Producers

[fa icon="calendar'] Aug 22, 2011 11:29:28 PM / by Carol Pierson Holding

By Carol Pierson Holding

Americans are as addicted and repelled by plastic as residents of Los Angeles were by cars in the 1960s. Los Angeleans had to experience stinging eyes and hacking coughs, then school closures, closed government offices and businesses before the city and state governments enacted legislation that tightened emissions standards.

0903feat1_scavengers-250x379 With plastics, equally potent images come to mind: Plastic bags covering park hillsides, the island of plastic in the Pacific Ocean, plastic bottle dumps, and the much-publicized health risks associated with plastics. This includes the latest from Utne Reader, whose piece on healthy sex toys sums up the dangers posed by the plasticizer phthalates used in jelly-rubber sex toys (the same ingredient recently banned in teething rings): Possible infertility, hormone imbalances and other health problems.

Outrage is growing, especially those who remember pre-plastic grocery stores and rubber teething rings. How could plastic have been allowed to take over our lives and endanger our loved ones?

But plastic bottles are just one scourge. Regulation can’t be passed on a national level because of the objections from the massively powerful beverage industry, which spent nearly $60 million on lobbying in 2009 and $42 million in 2010. Instead bottle recycling mandates pass at the city or state level, where people experience the damage.

But now, anti-plastic bottle sentiment in the US is reaching a tipping point. Beverage companies are sensing the outrage from their customers and, fearing Federal legislation, are finally addressing it. It’s exactly what’s happening with cars.

A new report from the advocacy group As You Sow cites two companies, both with predictably higher than average overall environmental ratings, for sponsoring regulation on how to deal with empty plastic bottles. The Coca-Cola Company and Nestlé Waters North America are pressing publicly for “state extended producer responsibility (EPR) laws for post-consumer packaging similar to those in place in Canada and Europe.”

Not only are beverage companies stepping up to improve bottle recycling, business innovators are looking for opportunities to make money from the ocean of discarded plastics that aren’t recycled. Components of the Ford Focus car, such as underbody shields, wheel arch liners and air cleaner assemblies, are created in part from old pop bottles and milk jugs.  Not only does this re-direct plastic that can’t be recycled into more bottles, but it replaces car parts made of potentially non-recyclable materials.

Producer-led environmental innovation is also happening at even more promising stages of the plastics life cycle. For example, cleaning products: Replenish is marketing reusable cleaner bottles shipped without the 99% water that fills most cleaner bottles. Instead, a reservoir shoots pre-measured concentrate into the bottle for consumers to mix with their own tap water. Founder Jason Foster plans to license his design to other companies as well.

The tipping point on plastic bottles is also being carried along by cultural changes. The trend to smaller houses means less storage space and appreciation for smaller packaging and less plastic. Washing machines with an Energy Star rating require HE (High Efficiency) detergent, which comes in smaller, sometimes non-plastic containers. A reverse vending machine is envisioned to allow easy bottle returns and promises higher recycling compliance.

These innovations all require collaboration between citizens, government and producers. We’ve watched the auto industry lower their mileage and produce hybrids and electric vehicles. The beverage market, though further behind, is working seriously on its own problem – plastic. It’s nice to see all parties invested in bottled beverages — even producers — join in the solution.


Carol Pierson Holding is a writer and an environmentalist; her articles on CSR can be found on her website.

Inset photo courtesy of J. Tanodra/ UNEP

 

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[fa icon="comment"] 4 Comments posted in Carol Pierson Holding, Coca Cola, corporate responsibility, corporate social responsibility, CSR, CSRHub, garbage, Nestle, plastic, recycling, socially responsible investing, SRI, sustainability, Uncategorized

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