coke, sugar, and war -- 5/9/22
Today's selection -- from Citizen Coke: The Making of Coca-Cola Capitalism by Bartow J. Elmore. Coca-Cola’s influence during World War II was such that it was designated a “wartime essential:”
"With the Office of Price Administration putting a cap on sugar prices, it appeared that the government would help Coke avoid costly losses in the face of uncertain international market conditions.
"The company's praise for the government's price control interventions, however, was tempered with frustration about sugar-usage restrictions imposed by the Office of Production Management (OPM), the predecessor agency to the War Production Board (WPB). These restrictions went into effect on January 1, 1942, limiting sugar usage for Coca-Cola and other soft drink manufacturers to 70 percent of 1941 consumption. Coke executives were livid about the measure and believed that the government controls would severely impact domestic sales.
|This refurbished Coca-Cola advertisement from 1943 is still displayed in Minden, Louisiana.|
"Determined to get around the OPM restrictions, Benjamin Oehlert, a Coca-Cola executive and company lobbyist in DC, wrote to Robert Woodruff just weeks after the OPM restrictions went into effect suggesting the company look into 'the practicability of manufacturing Coca-Cola syrup in Canada, Mexico, Hawaii, Cuba, Puerto Rico, the Virgin Islands, and any other place outside the territorial confines of the United States, for shipment to and use in the United States.' Ultimately, the Atlanta office tabled the proposal, recognizing that transportation and import fees would make the plan cost-prohibitive. Oehlert, unfazed, decided to approach the OPM to see if he could secure a better sugar deal for Coke.
"Ben Oehlert was well suited to act as Coke's liaison to the government, having spun in the revolving door separating private and public worlds. Before joining Coke's legal team in 1938, he had served as an attorney for the Department of State since 1955. He was just the type of recruit Robert Woodruff was looking for in the 1930s, someone with the diplomatic acumen to help the company break into new markets. An Ivy League graduate, he was bright and confident, a man with a knack for brokering tough deals, a talent both businessmen and public officials recognized (including President Lyndon Baines Johnson, who in 1967 snagged Oehlert from Coke, sending him to Pakistan to serve as US ambassador). Woodruff initially brought Oehlert in to handle issues related to foreign sales but soon recognized that his talents could be better used negotiating tough deals with Washington bureaucrats. Within a few years, he became one of the company's chief government liaisons.
"Oehlert, drawing on his State Department experience, knew that he had to prove to the government that increasing Coke's sugar quotas was a matter of national security. He recycled World War I propaganda that positioned Coke as a dedicated public citizen committed to the war effort, a product that brought much needed energy to a war-weary nation. Oehlert also sold thousands of pounds of Coke's inventoried sugar to the US military to improve the company's 'psychological and public relations position.' The ploy worked, with major newspapers, such as the Washington Post, praising Coke's government sales, citing the company's claim that it sold the sugar below market price. Citizen Coke was once again coming to the aid of its mother country. In the eyes of the American public, the Coca-Cola Company was sacrificing its bounty for the common good, aiding the federal government while asking nothing in return.
"Behind closed doors, however, Coke worked hard to capitalize on its 'charitable' donations, relying heavily on its inside man, Ed Forio, a Coke executive well versed in DC lobbying tactics. Again, the boundary between Coke and government was blurred. In addition to working for Coca-Cola, Forio was also a consultant for the Beverage and Tobacco Branch of the WPB. Working from within the government, Forio sought to raise Coke's status on WPB quota charts from a luxury item associated with candies to a wartime necessity. Explaining his chief objective, Forio told the Coca-Cola Bottler after the war that 'an untiring effort was made to point out the tremendous part that soft drinks play in the ordinary every day lives of average people to those highest in authority in government. This effort was crowned with the publication of the Civilian Requirements Bedrock Report, which stated that a minimum of 65 per cent of the products of this industry was necessary to the maintenance of civilian morale.' The Bedrock Report also treated tobacco as a wartime essential, suggesting that the government take action to ensure civilian access to at least 71 percent of all tobacco products produced in 1941. Coke and cigarettes were apparently provisions essential to the good health and happiness of American citizens.
"In addition to its Washington lobbying efforts, Coca-Cola leaned on the talents of its advertising men to shape public policy in the company's favor. Coke's promotional team produced a series of publications in 1942, such as 'Importance of the Rest-Pause in Maximum War Effort' and 'Soft Drinks in War,' that portrayed Coke as an essential foodstuff of the American worker. These propaganda pieces proclaimed that Coke was simply channeling energy, both chemical and psychological, to the working men and women of America. To silence those individuals who questioned the company's scientific assertions about the benefits of soft drinks, Coke brought in a team of scientists to fight for its cause. One passionate appeal came from US Surgeon General Thomas Parran, who exclaimed, 'In this time of stress and strain, Americans turn to their sparkling beverage as the British of all classes turn to their cup of tea and the Brazilians to their coffee. From that moment of relaxation, they go back to their task cheered and strengthened, with no aftermath of gastric repentance. There is no undue strain upon the purse; no physiological penalty for indulgence.'
"Ultimately, the federal government bought Coke's pitch and increased the company's sugar quota to 80 percent of 1941 consumption. The OPA transferred the company from the Beverage and Tobacco Branch to the Food Section, a division overseeing production and consumption of basic agricultural necessities.
"But the government deal got even sweeter. The US Army persuaded the OPA to offer sugar credits to Coke for all company shipments to military installations both at home and abroad, including post exchange stores at domestic army bases. Under the arrangement, Coke could sell virtually unlimited supplies of syrup to US soldiers without affecting its 80 percent cap on civilian sugar sales. This request for exemption came from the top: General Dwight D. Eisenhower issued an order on January 28, 1945, for equipment, bottles, and Coke syrup adequate to supply 6 million monthly servings to the troops.
"Coke's military contracts allowed the company to make immense net profits, $25 million in 1944 alone, not only because it enjoyed exclusive access to army markets but also because it could purchase unlimited supplies of sugar at government-controlled prices -- ceiling prices that would have been far higher in a turbulent wartime economic climate had the OPA not intervened to regulate inflation. With government controls keeping the cost of sugar down and new military contracts being signed as the war progressed, Coke expanded its operations and increased its sugar consumption throughout the war, Coke's industry rival, Pepsi-Cola, was furious."