Maximising the wealth of few at the expense of the health of many: a public health analysis of market power and corporate wealth and income distribution in the global soft drink market

Abstract

Background Many of the harms created by the global soft drink industry that directly influence human and planetary health are well documented. However, some of the ways in which the industry indirectly affects population health, via various socio-economic pathways, have received less attention. This paper aimed to analyse the extent to which market power and corporate wealth and income distribution in the global soft drink market negatively impact public health and health equity. In doing so, the paper sought to contribute to the development of a broad-based public health approach to market analysis. A range of dimensions (e.g., market concentration; financial performance; corporate wealth and income distribution) and indicators (e.g., Herfindahl Hirschman Index; earnings relative to the industry average; effective tax rates; and shareholder value ratios) were descriptively analysed. Empirical focus was placed on the two dominant global soft drink manufacturers. Results Coca-Cola Co, and, to a lesser extent, PepsiCo, operate across an extensive patchwork of highly concentrated markets. Both corporations control vast amounts of wealth and resources, and are able to allocate relatively large amounts of money to potentially harmful practices, such as extensive marketing of unhealthy products. Over recent decades, the proportion of wealth and income transferred by these firms to their shareholders has increased substantially; whereas the proportion of wealth and income redistributed by these two firms to the public via income taxes has considerably decreased. Meanwhile, the distribution of soft drink consumption is becoming increasingly skewed towards population groups in low and middle-income countries (LMICs). Conclusions Market power and corporate wealth and income distribution in the global soft drink market likely compound the market’s maldistribution of harms, and indirectly influence health by contributing to social and economic inequalities. Indeed, a ‘double burden of maldistribution’ pattern can be seen, wherein the wealth of the shareholders of the market’s dominant corporations, a group over-represented by a small and wealthy elite, is maximised largely at the expense of the welfare of LMICs and lower socioeconomic groups in high-income countries. If this pattern continues, the appropriate role of the global soft drink market as part of sustainable economic development will require rethinking.

Strategies used by the soft drink industry to grow and sustain sales: a case-study of The Coca-Cola Company in East Asia

“…TCCC’s corporate power supports the firm’s ability to create wealth for its shareholders and control resources, and this has in turn supported TCCC’s ability to sell its harmful products. 146 In contrast, the proportion of TCCC’s income that is redistributed to the public through income taxes has decreased. This is increasingly the case in LMICs as well.…”

“…However, research shows that TCCC’s profits and distributions to shareholders have increased significantly over time, with little improvements seen in workers’ incomes or conditions. 146 While TCCC’s funding of Sari-Sari stores in the Philippines in the wake of the COVID-19 pandemic may be marketed as altruistic, these stores represent a key distribution network for TCCC beverages, and it is reasonable to expect that Coke’s support for these stores is likely to result in additional profits. Likewise, TCCC promotes its environmental activities, in this region and elsewhere, as evidence of its social responsibility.…”

An inflection point in global public health

“…India [ 8 ], much of Latin America [ 9 ], and small island countries in the Caribbean and Pacific Ocean [ 10 , 11 ] are illustrative examples of the obesity crisis. The traditional risk factors—hypertension, hypercholesteremia, smoking—have been and will continue to be confronted by traditional public health interventions as well as clinical care systems, although they, too, are exacerbated by the commercial determinants of health [ 12 , 13 ] that dominate the obesity epidemic.…”

“…The corporate pushback has been and will be fierce [ 13 ], arguing that their freedom to market products desired by the public cannot be abridged, that their products satisfy public demand, that they make life in both emerging and advanced economies more satisfying and comfortable. And there will be some truths in these arguments.…”

“…A tax on these components, designed not to force a new eating pattern by a patronizing, all knowing state, but levied to help defray future medical costs, will be a stimulus for both sides of the transaction to change. The commercial determinants of health are powerful [ 13 ]. Relying on good will and corporate social conscience will not work; across the board policies will work.…”