Literal Mayhem » Free Market Malarkey

The New Policy Battlefield: All Eyes On Coca-Cola and Social Media PR

letterhead — Tue, 23 Feb 2010 04:04:38 +0000

If you want to see how future national policy wars will be fought, then keep your eye on Coca-Cola Company and the American Beverage Association. Over the next few years sugar will become the new tobacco – even as they try to quash the movement before it gets going.

"Fructose has nothing to do with obesity" is shaping up to be the "cigarettes don't cause cancer" debate for the 21st Century. Battle lines have been drawn; the fighting has started; the idea of a sugar tax has been getting more and more attention (in CA, NY, MA, MS, among others); and now that the First Lady has made obesity a national issue (calling out high-fructose corn syrup [HFCS] by name), the fighting will only get more intense.

Here we have a terrific case study in the making: the anatomy of a true 21st Century national PR/policy campaign (FYI… the bit about Coke comes at the end):

First Step: Fill The Coffers

The American Beverage Association, one of the primary conduits of sugar into the American bloodstream, is amassing a war chest that's unprecedented in its history.

Last year its lobbying budget swelled from a modest $1 million a year in 2006, 2007, 2008, all the way up to an eye-popping $20 million for FY 2009, with $17 million of that coming in the period October 2009 through January 2010. (According to the U.S. Senate LDA disclosure database.)

What are they getting ready for? All out war.

Step Two: Craft Your Messages

The Corn Refiners Association (CRA) made a good start with its “Sweet Surprise” website and ad campaign. The campaign tells us that high-fructose corn syrup is no worse for you than sugar. Which is like saying heroin is no more addictive than cocaine. But hooray for the effort at clarification.

And while corn refiners were busy on the biochemistry front, the American Beverage Association took a different tack. They added the tax issue to the "education" effort. Their message is that you can't tax people into better health. That's the role of education… helping people make better, smarter choices.

Seems like a reasonable position until you recognize that if the corn refiners succeed in their propaganda war, then refined sugar will remain ubiquitous and "educated" people will still make the same bad choices as before. See how nicely those two initiatives fit together?

The two-pronged approach is actually quite smart: While the aim of the overall program is to avoid taxation on sugar and sugar-heavy products, that goal can't be achieved unless people believe that sugar isn't bad for you – or at a minimum that it's "not that bad for you."

Without a benign public profile, all those sugar-heavy industries would have lost much of their defense against additional taxation. And with hundreds of industries, trillions of dollars, and millions of jobs on the line, we just can't have that. So…

image: fanpop.com

Step Three: "Educate"

Part A of the education program is getting your key representatives out there to talk up your messages. Like this webinar by President of the Corn Refiners Association Audrae Erickson, which is currently up on the website of Supply Side,one of the largest trade shows for the food additives industry (registration required). The goal is to leverage self-interest to recruit key supporters to the cause.

Part B is to get a Spokes-Guru. It appears that the corn refiners have gotten themselves a guy by the name of John S. White, an industry consultant who does business as White Technical Research and brings over 20 of experience in "nutritive sweeteners." (He co-hosted the webinar with Ms. Erickson.) Expect to see a lot of Mr. White blogging, writing articles, lecturing, appearing at government hearings and on TV morning shows as an "independent" analyst.

Part C is to have a whole book of half-true talking points that you can use to coax or cudgel your audience – as required.

Messages like "a calorie is a calorie." In energy content yes. But not metabolically. A calorie of glucose metabolizes differently and in different parts of the body than fructose, with very different results.

Step Four: AstroTurf

The Beverage folks are spearheading an effort called Americans Against Food Taxes, at the charmingly named URL "nofoodtaxes.com." According to the group's profile on the site:

Americans Against Food Taxes is a coalition of concerned citizens – responsible individuals, financially strapped families, small and large businesses in communities across the country – opposed to the Government's proposed tax hike on food and beverages, including soda, juice drinks, and flavored milks. The coalition has twin primary aims: 1) To promote a healthy economy and healthy lifestyles by educating Americans about smart solutions that rely upon science, economic realities and common sense; and 2) To prevent the enactment of this regressive and discriminatory tax that will not teach our children how to have a healthy lifestyle, and will have no meaningful impact on child behavior or public health, but will have a negative impact on American families struggling in this economy.

"A coalition of concerned citizens." Doesn't that sound so… grassrootsy? And if that's not enough, check out these background images lifted from the site:

Not a fat kid in the bunch. All beautiful white teeth. Great skin. Presumably they guzzle soda all day, and still they all look like the pretty, carefree, all-American teenager we all want to be.

And speaking of non-pimply teens… why is an anti-taxation website targeting 14-19 year olds? Because the Beverage Association believes 14-19 year olds are experts on tax policy? Because they're the next generation of Alex P. Keatons? Hell no. It's because kids are the primary market for soda and other sweetened drinks.

In reality — despite the fact that "big companies" comes last on their list of "concerned citizens — this AstroTurf group is bankrolled by more than 400 of the biggest names in food production and distribution, including:

National Association of Convenience Stores
Corn Refiners Association
American Beverage Association
Grocery Manufacturers Association
National Supermarkets Association
Florida Chamber of Commerce
Georgia Agribusiness Council
National Association of Theater Owners
National Retail Federation

It even includes these unlikely groups:

U.S. Hispanic Chamber of Commerce, U.S. Hispanic Leadership Institute, Hispanic Alliance for Prosperity, Hispanic Association of Colleges and Universities, Hispanic Federation, Hispanic Institute, The Hispanic Media Council, National Hispanic Caucus of State Legislators, National Hispanic Foundation for the Arts, National Hispanic Leadership Agenda…

Even the National Hispanic Medical Association! A medical association? Really?

How on earth did a medical association get behind a campaign to defend our kids' right to guzzle sugar? This is where we get to the part about The Coca-Cola Company.

Step Five: Mobilize Your "Communities"

Coca-Cola invests millions in Social Media. The company is so far ahead of the curve that it's getting top billing at this week's Ragan Communication's Social Media Conference and is even hosting the event at its Atlanta headquarters. (Feb 22-24).

And this, I believe, is going to be the most interesting part of the policy debate to watch: the Social Media mobilization. It will be the first real test of a corporation's ability to use social media PR not to sell product, but to mount a substantive defense of its business in a bare-knuckled policy fight.

Which brings us to the Hispanic Medical Association… this article from the L.A. Times reports that as part of its "minority marketing" efforts, Coke gives money to a lot of the Latin organizations mentioned above and even has executives on some of their Boards.

And a reporter from MinnPost confirmed with the LAT reporter that something got left out of his story: Bill Clinton spoke out against the sugar tax, but when the reporter checked the donor list for the Clinton Foundation: he found that Coke had given $5 million. Coke is even getting its workers into the act – protesting local sugar taxes.

Yeah so what. Most of this is old hat. No? Well, it is and it isn't.

Back in 2007, the head of Coke's PR department gave a presentation to the Georgia Chapter of the PR Society of America. In that presentation he showed the following graphic. (via O'Dwyer's, subscription required)

The key thing that's different today is that Social Media PR will give Coke the tools necessary to unite and mobilize all of its "communities" in business, government and civil society all at once in ways that "marketers" never imagined: as a PR army focused on fending off a threat to its business.

It will take the form of Facebook and Twitter and MySpace; contests, pages, groups, petitions, ringtones, and iPhone apps; it will be micro-targeted regionally, by age, by employment, by product preference, and by lifestyle choices like recreations and hobbies.

In short: this engine was built for marketing products. But now, it is about to be geared up and mobilized for another purpose: war. Specifically, to protect the profit interests of the corporation and maintain a business model that is potentially harmful to the "communities" that will be defending it.

The nofoodtax website has a few Social Media tools, but it pales in comparison to what a pioneer like Coke brings to the effort… not to mention Pepsi. From a PR point of view it will be a fascinating thing to watch.

If you're a parent worried about your obese pre-diabetic teenager… I'd have to imagine it'll be infuriating.

A Sugar Addict Confesses

sugar skulls by aliciapolicia.blogspot.com

I am a sugar addict. I love the stuff. Can't get enough of it. Takes all my willpower to walk past the dessert tray in the company cafeteria. I tend to cycle up and down and am currently about 180 pounds at 5'10" tall. This is my tipping point. The pants are a bit tight. The face feels a bit fleshy around the jowls… All the warning signs that I'm about to pork out. And yes even with a regular work-out routine and diet of mostly whole foods, sugar still does me in. (Could it be the eggs, butter and flour that the sugar is packaged with? You think?)

And yes, I love Coke. A big frosty glass of Coke with loads of ice. I like to wait until it's so cold it's almost frozen. And then I take little sips. Letting the caramel taste wash over my tongue before I let it slide down. So freakin' delicious.

But I also know it's a potential killer. I say "potential" because there are a lot of caveats to that statement. To get an idea of the content and temperature of the debate, do two things:

Watch this video (link)… in which Dr. Lustig makes a pretty compelling case that the metabolic pathways for fructose can create exactly the physiological effects that are the hallmarks of metabolic syndrome. (It's about 90 minutes)
Then read this post AND all the comments (link). In the comments Mr. Aragon debates Lustig. And Aragon makes a pretty compelling case that despite the chemistry, clinical research has yet to make a causative link between fructose and obesity. (Took me about 1 hour to read all the comments)

Notwithstanding the histrionics, both camps seem to agree on a couple of key points: the health effects of fructose are dose and context dependent; and excessive consumption of refined fructose really is bad for you.

So a few cents extra to make me think twice before I slug down a 16-ouncer is probably a very good thing. And if you don't drink soda then why the hell do you care if I'm paying a few cents extra in tax?

And if it makes soda more expensive, and kids drink less of it, isn't that the whole point? Foes of the tax need to explain how it's a "burden" on families to drink water and eat fresh fruit, as opposed to buying expensive sodas and sugar-laden, over-processed foods in a box. How can reducing sickness and healthcare costs be a burden?

It can't.

Who's Lobbying for You? Mobilize Yourself!

image: www.eatsugarmusic.com

And this is why a Social Media PR campaign on sugar will be so interesting to watch. All our incentive is to eat less refined fructose. Food companies have no such incentive. All their incentive is to get us to eat more of it.

To food companies, refined fructose (especially HFCS) is an important competitive advantage, in terms of taste, texture, shelf life, cost, among other things. It helps them sell. That's why they want to put more of it in more products, to get you to buy more of those products today than you did yesterday, last week, last month, last year. It's how they grow revenues and profits and generate returns for shareholders.

Their goals are to sell more and keep barriers at bay.

And to the latter point, Coke works with power-player Glover Park Group (GPG), a "strategic communications" firm in DC. It's no coincidence they picked GPG, which has had two consecutive assignments with the Grocery Manufacturers Association on ethanol… GPG knows corn.. and the Senators that support it!

For their part, the Corn Refiners have retained a lobbying firm called DTB Associates. Their home page explains what they do:

We are committed to helping our clients find and use the most effective legal, lobbying, or negotiating tools to respond to whatever obstacles stand in the way of achieving their objectives in the global marketplace.

The goal of food companies in the "global marketplace" is to sell more product, and if it takes more refined sugar to do that, then that's what they'll do.

It's why corn refiners want to sell you sugar… grocery stores want to sell you sugar… beverage makers want to sell you sugar… bakers and cereal makers and dairy producers and convenience store owners and Burger King and the Hospitality Association and vending machine operators and movie theaters owners… they all want to sell you sugar… as much of it as you'll eat.

Preferably a hell-of-a-lot more than you need. And preferably in food that you don't even know it's there. That's their goal in the "global marketplace" and they're not going to let any "obstacle" stand in their way, not even your health.

Will they be successful in harnessing Social Media PR to get customers (who should be eating less sugar) to mobilize in "communities" in defense of companies who want customers to do just the opposite and eat more sugar?

We'll come back to this in 12 months or so and deconstruct it.

In the meantime, when you get hit up to participate in a fructose community mobilization, before you dive in, ask yourself: when it comes to the negative effects of sugar on your health… Who's really lobbying for your interests? Coke?

Taxpayers Choking on Detroit's Free Market Malarkey

letterhead — Tue, 18 Nov 2008 01:19:18 +0000

So Detroit wants a bailout. Wonderful. The question is, why?

Yeah, they’re waving the red flag of economic catastrophe to blackmail taxpayers and steamroll Congress. But let’s take a quick trip down memory lane and review the industry’s recalcitrance over the past few decades before we bite off a big chunk of what they’re now selling.

Detroit is on a PR tear, using the latest tools like web-based video, and old-fashioned media outreach. It was amusing to see a recent NY Times piece on the Chevy Volt, and how GM is trying to pump up the car’s mileage to 100 mpg. Presumably we should assume that Detroit has turned over a new leaf spring and is committed to a new way of doing business.

Um. Not so fast. Here is what the Volt article made me think of: the “Supercar.”

All Hail The Supercar

Back in 1993 Al Gore pushed Detroit into participating in a Federally sponsored program to build an 80 mpg passenger car and get it to market within 10 years (which would have been 5 years ago if the car companies had not killed the program.)

Gore offered to back off higher CAFE standards in exchange for a Supercar commitment. The Feds ended up spending more than $1.5 billion on the program. But in the end the car companies dragged their feet and Bush 43 killed the program in 2001.

The Chicago Tribune has an EXCELLENT three-part series on the life and death of the program… here.

It’s an eerie foreshadowing of today’s situation… optimistic liberal minded president takes office… amid energy chaos and sliding domestic auto sales… car companies resist and then capitulate to an aggressive technology program…politicians fail to keep Detroit’s feet to the fire… Detroit moans about how hard it is and then sticks in the shiv.

It’s even interesting, and a bit infuriating, to note that one of the main areas of technological development for the Supercar program was regenerative braking. It’s the exact same technology that Toyota uses in its category-winning Prius… technology Toyota is now licensing to Ford, among others.

1989 — Taking Credit While Killing CAFE

Following 10 years of success in raising mileage standards, Detroit was quick to claim credit for itself, denying that CAFE had anything to do with it, and at the same time pushing back on any further demands on their technological and managerial prowess… (NY Times):

Those car makers that oppose mandated mileage requirements contend that it was largely market forces in the form of high gasoline prices that led to their production of more efficient vehicles. But Clarence M. Ditlow 3d, executive director of the Center for Auto Safety, a Washington-based consumer advocacy group, insisted that the Government standards were ”a spectacular success” and were responsible for two-thirds of the improvement.

General Motors and Ford contend that satisfying a demand for bigger cars will make it very difficult to meet higher efficiency standards. William Nowack, a spokesman for General Motors, said that the efficiency standards ”restrict the production of full-size cars and that makes a buyer hang on to an older, less efficient car or maybe buy a truck or van.”

This is the “free market” position that Detroit will use for nearly two decades to fight any steps to force them to produce more efficient cars and trucks.

1996 — Killing Zero-Emission Vehicles (ZEVs)

California and other states (NY and MA) once had in place requirements for a certain percentage of cars to be zero-emission vehicles. What happened? California backed off its plans in 1996 (NYT). Oil and car companies killed it. They said that car companies needed more time to develop technologies. (Like, um, the exact same ones they were in the process of undermining in the Supercar program.)

And they claimed that consumers would not want the limited range vehicles. For an alternate take, watch “Who Killed the Electric Car.” Actual living breathing people who drove them loved them. (As opposed to the brain-dead auto CEO’s who bad-mouthed them.)

Industry claimed that the product just would not be competitive in its current state. By the way… this is the same year that Toyota begins road testing the Prius.

1997 — Killing CAFE… Again

In 1997 the Clinton Administration tried to force a foot-dragging Detroit to boost mileage on trucks. Domestic automakers were increasingly reliant on trucks for sales and profits, but selling more trucks lowered the companies’ overall mileage figures. In response Detroit howled…(from NYT):

The auto makers argue that Americans like their trucks sturdy and powerful, and that it would be too expensive to make engines for such vehicles burn less fuel. Further, the Big Three auto makers say, any stiffening in the regulations would hand a chunk of the light-truck market, which they dominate, to Japanese companies, which make more efficient truck engines.

Instead, the auto companies’ own research shows, it has become a nation of overprepared commuters, as millions of Americans use the rugged vehicles only to drive to work and haul youngsters and groceries.

“It’s utterly outrageous,” said Daniel F. Becker, director of the global warming and energy program at the Sierra Club. Because of the lower standard for trucks, he said, “we have more pollution, more oil consumption and a higher trade deficit in oil.”

The Big Three say that strengthening the truck mileage standard would benefit the Japanese auto makers, just as they contend that strengthening the car standard did in the late 1970’s. Then, the Japanese sold a higher proportion of fuel-efficient small cars, just as they now sell a higher proportion of fuel-efficient compact trucks.

In the end the industry killed higher CAFE standards with the argument that it would hurt competitiveness and kill jobs.

2002 — Killing CAFE… Again and Again
Detroit mounted a huge advertising campaign to defeat a Senate proposal to increase CAFE standards. As usual, Detroit won. But what was interesting was the position adopted by Honda, which refused to take part in the campaign. Honda told Senators that mileage standards should indeed be higher.

Detroit, as usual, howled about the Fed’s job killing, anti-competitive regulation. But the truth is not quite so neat … (SF Chronicle):

General Motors, Ford and Chrysler say they can remain profitable only by selling sport utilities and pickups because they lose money on their cars. By contrast, Honda is making money in the United States and elsewhere by selling mostly passenger cars.

Indeed, the company’s profit was four times that of GM, the most successful among the Big Three, even though its revenue last year was less than a third of GM’s.

The average new vehicle sold by Honda in model year 2000 got nearly 30 miles per gallon, about 6 miles more than the average American automobile and more than any other automaker.

2004 — Killing John Kerry

One of John Kerry’s campaign promises was a $10 billion program of incentives for Detroit to improve fuel efficiency of cars. In gratitude, the auto industry fought tooth and nail to keep him out of the White House. Why? Because the money came with strings attached: higher mileage requirements.

Only this time, Detroit had two friends in the White House. Once again Detroit trotted out the job-killing anti-competitive ruse, enlisting the help of the Bush Adminstration to come up with lots of scary numbers about how much Kerry’s plan would cost in jobs and lost productivity. (NY Times).

2007 — Still Whining, and Still Trying to Kill CAFE

I know… this is getting boring. But just last year Detroit was up to it all over again… (Ward’s Auto):

… fuel-efficiency improvement contained in the EPA report shows the gains are “incremental” and “hard-fought.” The clear suggestion, the GM spokesman adds, is that the Senate’s CAFE proposal is unreasonable.

“The standards proposed in the Senate far exceed what auto makers can attain in their timetable,” he says.

Meanwhile, The Whole Entire Time…

The entire time that Detroit has been fuming, fussing, and fighting any and all attempts from outsiders to push them toward new markets and new technologies, their market share has been in free fall. And now they are broke, can’t sell so much as a damn spark plug, and are about to take the whole economy down with them. Just look at these numbers from The Wall Street Journal.

The top three lines (from top down) are GM, Ford and Chrylser:

For years they have ignored the writing on the wall, designed uncompetitive products, weighted their product lines toward a vulnerable segment, and crushed anyone who dared challenge their wisdom. Now… tell me again who are the job-killing, anti-competitive zealots?

Over a Cliff, Without a Barrel

Every step of the way… for decades… Detroit failed to see market trends, failed to pay attention to their falling market share, made bogus claims about customer preferences, floated bogus free-market arguments to defend their misguided strategies, failed to see new product niches, failed to see new competition (e.g., Kia, Hyundai), stymied every attempt to increase efficiency, stomped all over those who would help them…

And now the rabid free-market loving Detroit CEO’s don’t think that government intervention is such a bad thing. But should we?

The blog The Truth About Cars put it this way:

“Detroit wants a re-do after chasing SUV profits off a cliff… clearly we haven’t lost our ability to create or manufacture things. After all, auto factories in America build competitive products for profitable companies every day. They just happen to have names like Toyota, Honda and BMW.

“The American ‘automotive sector’ has not failed. Nor have Americans forgotten how to make stuff. The Big 2.8’s plight is the simple, inevitable result of tragic mismanagement. Using tax money to enable them, promoting this policy, is not patriotic. It’s a complete betrayal of the principles of hard work and fair competition, and the necessary balance of risk and reward, that made this country great.”

Another choice quote:

“As anyone who’s ever worked for a company with its head up its ass will tell you, giving copious amounts of fresh capital to execs in charge of a dysfunctional corporate culture to ‘fix’ their business is like trying to extinguish a log fire with gasoline.”

From ABC News:

“Ford and GM really haven’t done a very good job of understanding what consumers want,” said Global Insight auto analyst Rebecca Lindland

And from the Cleveland Plain Dealer:

“They handed that market over to the competition. The Big Three really put no resources in the passenger car side of the market,” Merkle said.
Erich Merkle, an analyst with IRN in Grand Rapids, Mich.

Detroit Needs To Fail

The irony should not be lost on us that the free-market GOP is hanging their one-time ally out to dry. It appears that the labor friendly Dems — long the nemesis of Detroit’s freewheeling free-market-obsessed CEO’s — are offering the only friendly ear in Washington right now. Also no surprise that the unions are making no consessions. (Though they are far from innocents in this debacle.)

So we are faced with two questions:

#1) What happens if we don’t bail them out? They file chapter 11. They lay off hundreds of thousands. Retirees get dumped on the PBGC and other federal agencies. The companies stay in business, in smaller, leaner form. They limp along, probably with help from the taxpayer, until they have a competitive product to sell. And then the resurgence can begin. Likely cost is in the billions… but one day we just might see the return of American power in the auto industry.

#2) What happens if we give these chumps $25 billion? They limp along until next year when they comeback for $25 billion more. Then they file Chapter 11 in 2010 or 2011, and then we are back to option #1, above, $50 or $100 billion the poorer. And in the meantime we are treated to wonderful new products from the executive geniuses who brought all this down on our collective heads.

If past is prologue, then our taxpayer investment will bring all-new American vehicles that the world market will gobble up… more of the auto industry equivalent of spam we’ve been seeing for the last 20 years… behold America’s newest SUV:

The Spam Utility Vehicle!

How is this all relevant to PR pros?… More on that to come…