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New York University bans Coke products

Issue: 12/9/05
Atlanta Journal-Constitution

New York University is the latest school to ban Coca-Cola products from campus, citing concerns about the company's labor practices in Colombia.

Allegations that Coke has been complicit in violence against union members in Colombia have prompted demonstrations on college campuses for several years. Coke has vigorously denied the charges.

NYU's decision Thursday to drop Coke comes after months of negotiations between the company and an independent commission made up of university representatives and labor activists.

Both groups agree in principle to an independent study on Coke's labor practices in Colombia, said Coke spokeswoman Kari Bjorhus.

However, the two sides can't agree on things like how much security will be provided for employees being interviewed. Another issue is whether the findings of the study will be admissible as evidence in a related lawsuit against Coke bottlers. Coke doesn't want the findings to be admissible, but plaintiff attorneys have not acquiesced, Bjorhus said.

Much of the anti-Coke tension has centered on college campuses, where student activists at schools including Bard College in New York, Rutgers in New Jersey and the University of Michigan have tried to put an end to Coke contracts. Coca-Cola has tried to clear its name, but the issue has grown in prominence, largely because of a grass-roots campaign orchestrated by a longtime labor activist, Ray Rogers. A handful of schools have banned Coke.

"This company is getting into more and more hot water," Rogers said. "They've tried to undermine any meaningful third-party study."

Pepsi has a larger presence on NYU's campus than Coke, though there are Coke machines in the athletic facilities. The ban at NYU — or any other college campus — will not amount to a major financial hit for Coke but adds to its public relations damage.

... Also: As executives at both Coca-Cola and Coca-Cola Enterprises, the largest bottler of Coke products, try to turn their companies around, one industry analyst says the best fix is for Coke to buy CCE.

Marc Greenberg, an analyst at Deutsche Bank, issued a report this week, arguing his case.

"Such a deal might strain cash flow but solves conflicts, enables freer route-to-market decisions for retailers and restores system health," Greenberg said.

Greenberg estimates that Coke, which already owns 36 percent of CCE, could buy the rest for $18 billion.

The industry is watching CCE now because its chief executive resigned last week, and the company is searching for a replacement.

"Perhaps the CEO resignation at CCE opens the door for such a bold move, without which valuation will remain in a holding pattern," Greenberg said.

— Caroline Wilbert

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