"Coca-Cola is little more than sugar, flavoring and lots of (carbonated) water," said Geroge Ritzer in The Globalization of Nothing. "It is largely indistinguishable from innumerable other brands of cola, yet people around the world seem to think that Coca-Cola is something and they are eager to ask for it by name and even to pay a premium for it."
Photo:duncan, Creative Commons, Flickr
When I came across this video today, I was reminded why investors like Warren Buffet continue to believe in Coca-Cola (KO – Last trade $58.27). Watch it!
Why should you buy Coca-Cola? I can type away and tell you about the company’s financial ratios, statistics and operational efficiency, but that will probably be a waste of time. Coca-Cola’s value is not necessarily based on rational fundamentals, it is a company built on the irrationality of a brand personality. It is just a fizzy drink with sugar, but somehow it has become a symbol of Western civilization. Coca-Cola is a microcosm of American history, a signature export of the American Century.
If we assume that Coca-Cola is America in a bottle, can we argue that the future of Coca-Cola is dependent on the future of America’s global image?
The recent introduction of Mecca-Cola is a good illustration of this idea. Mecca-Cola is marketed to pro-Muslim consumers as an alternative to Coca-Cola, and the product is a striking example of anti-American sentiment in the Middle East. According to the company’s website, a portion of profits are donated to "associations who work towards peace in the world and especially for peace in the conflict between Palestinians and fascist Zionist apartheid."
It is interesting to note that Mecca-Cola is fraught with Muslim symbolism, but it is encased in the insignia of American capitalism. Mecca-Cola’s founder, a French entrepreneur Tawfik Mathlouthi, explains the paradox: "I have nothing against the Coca-Cola company, and I like the U.S. and its energy and dynamism, but I fiercely object to its foreign policy, particularly in the Middle East and towards the Zionist entity [Israel]. We Arabs love an America open to the world, not this America, dangerous and aggressive to others."
I admit that this sounds like a "pie in the sky" argument, but maybe there is a case to be made for buying Coca-Cola if America can improve its global image. If, on the other hand, America fails to improve its global image, Coca-Cola may soon start losing market share to other companies, like Mecca-Cola.
Disclaimer: I don’t own KO.