Coca-Cola Co. (KO) will expand calorie labeling to the front of all packages and reiterated its pledge not to advertise to children under 12 anywhere as the world’s largest soft-drink maker fights criticism that it is contributing to obesity.
The plan, which includes expanding physical activity programs, will apply to the more than 200 countries where it operates, Atlanta-based Coca-Cola said yesterday in a statement. The company also will emphasize low- and no-calorie drinks in emerging markets. Coca-Cola didn’t set deadlines or targets for the initiatives.
Chief Executive Officer Muhtar Kent has been working to counter the perception that the soft-drink maker contributes to America’s obesity epidemic. Coca-Cola earlier this year introduced advertisements highlighting the company’s low- and zero-calorie products and suggesting people pay attention to how many calories they consume in order to manage their weight.
“People in these countries are going to be aware of these health issues so Coke wants to be prepared,” Jack Russo, an analyst with Edward Jones & Co. in St. Louis, said yesterday in a telephone interview. “The regulators and governments are going to get more involved with this entire issue.”
On a conference call yesterday, Kent declined to discuss costs for the initiatives or say how they will affect spending for marketing and advertising. No- and low-calorie drinks are currently offered in most markets, he said.
“This is not just about making them available but also merchandising them and also ensuring that there is sufficient point of sale material around them,” Kent said.
Coca-Cola first pledged not to advertise to children under age 12 globally in 2007.
In 2009, the company said it would offer calorie counts on the front of packages in every country where it operates, with some exceptions. Yesterday’s pledge expands that to all packages. The timetable is uncertain because returnable bottles that are refilled and reused in many emerging countries will take time to replace, said Kent Landers, a spokesman.
“This is the issuance of an invitation for partners to come and join us,” Kent said. “We know we can’t do this alone.”
About 41 percent of products that carry a Coca-Cola trademark in the U.S., including Diet Coke and Coke Zero, are low- or no-calorie, Kent said. That compares with about 30 percent during the late 1990’s, he said. In China’s coastal areas, the percentage is in the single-digits, while higher in big cities, he said. As of last year, almost half of PepsiCo Inc.’s (PEP) U.S. beverage sales volume was comprised of low- and no-calorie drinks, sports drinks and juices, according to the Purchase, New York-based company.
Coca-Cola’s “objective is to deflect criticism of sugary drinks and to forestall any meaningful government action to reduce soda consumption,” said Jeff Cronin, a spokesman for Washington-based Center for Science in the Public Interest, which published its “Liquid Candy” report in 1998 blaming sugary soda for helping make kids obese. “This is a campaign to sell more Coca-Cola and not a campaign to combat obesity.”
Cronin said he sees little new in yesterday’s announcement and took issue with the company’s efforts to defeat soft drink taxes and size limits.
Coca-Cola now supports physical activity programs in about 100 countries and will add programs in the rest of its countries, Landers said.
“We want to create awareness for more regular exercise,” Kent said. “We know it is more fun to consume calories than to spend calories. We want to make spending calories more fun.”
PepsiCo has responded to the critics, as well. The company embarked on a global voluntary commitment in 2007 to limit advertising aimed at children under age 12 to products that meet specific nutrition criteria. The effort has been focused on the U.S. and select markets, such as India, China, Mexico and the European Union. The company says it has used an independent third-party to monitor its progress.
PepsiCo’s Gatorade brand provides active sports opportunities to more than 500,000 children by way of summer camps at universities. The company also works with YMCAs to encourage healthy lifestyles. Jeff Dahncke, a PepsiCo spokesman, declined to comment on Coke’s announcement.
Coca-Cola fell 0.6 percent to $42.46 at the close in New York yesterday. The shares have gained 17 percent this year, compared with a 22 percent advance for PepsiCo and a 14 percent gain for the Standard & Poor’s 500 Index.
Almost 36 percent of adults and about 17 percent of children are obese in the U.S., according to the Centers for Disease Control and Prevention in Atlanta. Obesity is measured by using weight and height to calculate a number called body mass index, according to the CDC. An adult who is 5 feet, 9 inches tall and weighs 203 pounds or more is considered obese.
The city’s Board of Health last year approved the plan to cap the size of sugary soft drinks sold in restaurants, movie theaters, stadiums and arenas at 16 ounces (473 milliliters) a cup. In October, groups representing beverage makers, restaurants and theaters asked the court to end the regulation, citing “unprecedented interference.”
Between 2009 and 2011, Coca-Cola, PepsiCo and the American Beverage Association spent as much as $70 million on lobbying and issuing ads, according to the Center for Science in the Public Interest, a proponent of soda taxes. The money helped defeat efforts to enact such levies in 30 states.
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