Why Have Soda Companies Funded Nearly 100 Health Organizations in the Last Five Years? Q&A With Michael Siegel

According to a new study, the world’s largest soda companies have sponsored 96 national health organizations during the last five years. 

 

Drawing by: Anne Wang
Drawing by: Anne Wang

Last June, Philadelphia became the first major U.S. city to impose a tax on sugary soft drinks. That is, unless the lawsuit filed by the American Beverage Association (ABA)—the soda industry’s trade group—succeeds in having the law thrown out.  

 

So far, Philadelphia and Berkeley are the only two U.S. cities to impose taxes on sugary and artificially sweetened drinks. At least 40 times before then, similar proposals for taxes on sugary soft drinks were defeated in cities and states across the US. Philadelphia itself made two previous attempts to pass a soda tax, the latest of which failed in 2011, after the ABA lobbied city council members and made a $10 million donation to a children’s hospital to fund research on childhood obesity. 

 

The ABA’s donation to the Children’s Hospital of Philadelphia was controversial—supporters of the soda tax, including the city’s former mayor Michael Nutter, said it subverted their attempts to pass the soda tax in 2011—but it was also indicative of tactics employed by soda companies in recent years.

 

According to a new study published by Michael Siegel and Daniel Aaron from Boston University, the Coca-Cola Company and PepsiCo—the world’s largest soda companies—have sponsored 96 national health organizations during the last five years. Among these organizations are the American Diabetes Association, the American Red Cross, the National Institutes of Health, and the Academy of Nutrition and Dietetics. Organizations who work closely with communities who are deeply affected by obesity, such as the NAACP and the Hispanic Federation—both of which oppose anti-soda legislation—have also received contributions from soda companies.

 

Siegel and Aaron’s study is the first comprehensive study that looks into the relationship between the soda industry and national health organizations. By tracking lobbying expenditures and corporate contributions from 2011 to 2015, the two were able to show a number of instances in which organizations supported public health initiatives meant to reduce soda consumption, then withdrew their support for such measures after receiving industry donations. All in all, Coca-Cola and PepsiCo sponsored at least 63 public health organizations, 19 medical organizations, 7 health foundations, 5 government organizations, and 2 food supply groups.

 

Siegel and Aaron’s study was published at a time of increasing public awareness of the connection between sugar consumption and obesity. On November 8, voters in four American cities—San Francisco; Oakland; Boulder, Colorado; and Albany, California—will vote on proposed taxes on distributors of sugary drinks. The political battle around these proposed measures has drawn record spending by the soda industry and a number of billionaires supporting soda taxes, among them former New York City mayor Michael Bloomberg.

 

In order to better understand the way corporate sponsorship by soda companies could affect the public and political discourse around this issue, we spoke to Siegel, a professor of community health sciences at the Boston University School of Public Health. In his interview with ProMarket, Siegel explained how corporate donations can effectively shut down public health initiatives that are deemed unfavorable by industry groups.

 

Michael Siegel
Michael Siegel

Q: What do you think your study tells us about the nature of the relationship between the soda industry and health organizations?

 

It’s very clear that the soda industry is using corporate sponsorship as an effective marketing strategy that has two purposes—one is to improve their public image, and the second is to soften opposition from organizations that would otherwise be expected to be vigorously lobbying for policies that are going to reduce soda consumption in order to tackle the obesity crisis.

 

From the health organizations’ point of view, we found that that these organizations are really undermining their own stated visions by taking this money, because their stated goal is directly to fight obesity, which soda consumption is a part of. These organizations are, on the one hand, taking this money from soda companies while, on the other hand, soda companies are lobbying against public health policies.

 

In a sense, these organizations are shooting themselves in the foot, because they are giving these companies the opportunity to divert attention away from the fact that they’re actually fighting public health policies by making it look like they’re supporting these health causes.

 

Q: What would you say are the effects of this strategy?

 

There’s a conscious effect and a subconscious effect. The conscious effect is these organizations know that if they say anything harmful or negative about these companies, if they point out the role of these companies in the obesity crisis, they risk losing their funding.

 

That’s the conscious level. There’s also the subconscious level, which is that anytime you have a monetary relationship with anyone, anytime you’re getting something from anyone, there’s going to be an automatic feeling of reciprocity. There’s a feeling of gratitude.

 

Subconsciously, you’re not going to want to do anything to jeopardize that. Psychologically you feel a sense of reciprocity, and you don’t feel comfortable violating that. Even if those organizations are not consciously aware of it, nevertheless this is the way conflicts of interest work, in a subconscious manner. You may not be aware of it, but subtly it is affecting your judgment.

 

Q: Would you characterize this as intellectual capture?

 

That’s exactly right, it is intellectual capture. These companies are, in a way, able to dictate the way the issue is discussed. They’re essentially able to dictate the discourse on the issue, because they’re successfully diverting attention from the corporate responsibility and the corporate role in these health problems. The way they’re controlling the agenda is by giving money to organizations that otherwise would be speaking out most strongly against them. 

 

Q: Would you say that the strategy of soda companies is to specifically target organizations—health organizations and others—that might otherwise pose a problem?

 

Yes. I think there are two targets: one is really just any reputable health organization, because essentially by partnering with any kind of reputable health organization they are able to adopt the goodwill of that organization.

 

Part of it is giving money to any health organization, doesn’t matter whether that organization’s specific mission relates directly to obesity or has anything to do with soda consumption. If you give money to the Center for Disease Control and Prevention—the CDC has a good reputation, and by saying “we partner with CDC” you are automatically able to portray yourself as being a good corporate citizen that’s trying to contribute toward solving health problems.

 

But I do think that another specific part of this is that they are specifically focusing on organizations that would otherwise oppose them and are therefore kind of buying their silence.

 

We’ve seen this with the tobacco industry. The tobacco industry did a great job co-opting organizations that might be expected to speak out against them and really prevented that kind of opposition by getting to these organizations with money before they did that. We saw the same thing with the tobacco industry and the African American community, a community that was disproportionately affected by smoking. By funding organizations like the National Black Chamber of Commerce they were able to basically quiet down the African American community.

 

I think we’re seeing the same thing with the soda companies. They’re going after the dietitians, the people in the exercise field, the nutrition field, the heart disease field, people in the diabetes field. It can’t just be a coincidence. Clearly they are focusing on specific organizations whose mission is to fight obesity. They have funded two diabetes organizations, they funded a heart disease organization, they funded the number one nutrition dietitians’ association. I don’t believe that’s a coincidence. I think they are clearly going after the groups that would otherwise be most likely to give them problems.

 

Q: Is this strategy similar to the one employed by sugar manufacturers who also deny the link between sugar and obesity?

 

Absolutely. People need to understand this is just corporate marketing 101. You learn this in marketing school. This is a basic public relations strategy; it’s been around for many decades. If you look at the marketing literature there’s hundreds of articles about corporate sponsorship.

 

It’s been well recognized in the marketing literature that corporate philanthropy serves two functions: one is to improve image, and the other is to silence organizations that might otherwise cause problems. The ultimate effect of this is a negative one on the public’s health.

 

What’s new here is that I don’t think the light has previously been shone on soda companies. There really hasn’t been a systematic attempt to identify all the sponsorships of these companies and expose the extent of this problem in public health.

 

Q: Your study shows that soda companies also fund and cooperate with health organizations who are not primarily concerned with obesity, like the CDC, along with organizations that work primarily with communities affected by obesity.

 

One of the major roles that sponsorship plays is that by partnering with these organizations, the soda companies are able to take on and share the good name, goodwill, and reputation that’s associated with these organizations. It does a great job of diverting attention from the negative things companies are doing.

 

Q: You say that in the last five years lobbying and corporate sponsorships by soda companies have increased. What happened during the last five years that caused this increase?

 

I think there has been more and more attention given to the obesity problem, more and more legislation that states have considered, things like increased soda taxes and Mayor Bloomberg’s  soda portion limit in New York City, an increasing number of public policies designed to tackle the obesity epidemic by reducing soda consumption. I think that’s why the companies have had to kind of build up their lobbying at the city and the state level, to fight off this legislation.

 

Q: Despite these efforts, public awareness is still growing. It seems this strategy is not all that effective. 

 

It’s very effective. We saw very concrete examples where soda company sponsorship directly caused this issue to fail. Philadelphia is the best example, where a soda tax was proposed and soda companies gave a bunch of money to a children’s hospital. Because of this donation, the city decided “All right, we’re not going to go through with this.” So they literally killed this legislation by making a donation. To put it in other words—they bought them off. The city of Philadelphia was bought off by the Coca-Cola Company.

 

Not every example is as blatant as that, but in a subtler way we were able to document a lot of examples of them buying off organizations. For example, we found that the American Academy of Family Physicians’ website essentially didn’t say anything negative about drinking soda. It actually used language that we saw on the Coca-Cola website about how important hydration is. We also found that the American Dietetic Association had sponsored a conference in which they discussed the problems with soda taxes and the reasons why we shouldn’t enact soda taxes.

 

These are subtler, but nevertheless they’re evidence that these strategies really are working.

 

Q: Is all this activity happening at the local, state, and federal level?

 

It’s really at all levels: local, state, and federal. There are many states and cities that have considered policies like soda taxes or nutritional guidelines for schools, and there have been federal nutrition legislation proposals. The companies are spending money at all levels to fight off these public health policies.

 

Q: Yet you chose to focus on just two companies, Coca-Cola and PepsiCo, and only on national initiatives, whereas many public health initiatives in this field are municipal or state-wide. Why?

 

There was a limit to what we really could accomplish in this one study. There is a need to look at the subsidiaries of these companies, to see what kind of activities they’re doing, and also to look internationally. We only looked at domestic sponsorships, but we did see anecdotally a lot of examples of international sponsorships, of funding many organizations overseas.

 

Q: In the conclusion to your paper, you write that your findings are likely an underestimate of current sponsorship levels. Why do you think that?

 

I think it’s an underestimate because first of all, the Coca-Cola Company actually put out a report in which they disclosed many of their sponsorships, so we feel we were able to get relatively complete information from Coca-Cola. PepsiCo does not have a similar disclosure mechanism, so we were relying on internet searches, and there’s only so much that you come across that way—you’re always going to miss something. We’re pretty sure we’re not coming up with all of the sponsorships.

 

The other reason we think we underestimated the sponsorships is that we were only looking for sponsorships in the name of the parent company. But these companies also have subsidiaries—for example Coca-Cola also makes Gatorade. We didn’t look at the subsidiaries and their sponsorships, we didn’t look at brand sponsorships under any other name but PepsiCo and Coca-Cola. It’s possible we missed a lot. It’s almost certain that we missed a lot. We’re sure it’s definitely a conservative estimate.

 

Q: In 2015, The New York Times reported that Coca-Cola had provided millions of dollars in funding to scientific research that “sought to play down the link between sugary drinks and obesity.”  Did you locate any industry funding for scientific research in your research?

 

We didn’t find any large number of sponsorships that were clearly being spent on research funding. Most of the programs we found are more public health initiatives. Their concern is more on public policy, which is literally going to reduce their profit.

 

Q: Following your paper, would you say that corporate philanthropy can be used against the public interest and not only for the public interest?

 

Absolutely. I think that when you look at what these companies are doing, it’s very clear that their corporate philanthropy is not a pure attempt to improve the public health or the welfare of society. If that was their goal, if they had a pure goal of improving the public’s welfare, they would not continue to oppose public health legislation.

 

They’re basically doing things out of two sides of their mouths: on the one side they are supporting these health causes, and on the other side they’re fighting all of these health causes. So it’s obviously not a pure philanthropic motive that they have here.

 

Q: We rely on health organizations and other nonprofits that, according to your study, are targeted by soda companies to protect us when the government fails to do so. Would you say there is a danger here of eroding the public trust?

 

I think that definitely erodes the public trust. We rely on these organizations for all the important information we get about protecting our health; the public more than anything expects these organizations to be objective. We can’t trust them if they are being unduly influenced by industry.

 

And so I think there’s going to be some shock to the public to find out that organizations like the CDC are partnering with Coca-Cola. I think putting this information in the public is going to cause many of these health groups to rethink their position. They are going to understand that they’re risking the public trust and that in the long run, the public trust is worth a lot of money, probably more than the amount they’re taking from the soda companies. I expect many of them to make the decision that to protect their own public image they’re going to need to reject this money in the future.

 

Q: Is there a reputational cost to this behavior? And if there is, why would they risk it—because they think no one will notice or because it is pretty low?

 

There’s no question that there’s a reputational cost. If you look at the tobacco sponsorship, what happened with tobacco is initially the reputational cost was quite low, but as the public’s image of the tobacco companies deteriorated, overtime the reputational cost got higher and higher and higher. Finally, it reached the point where it completely outweighed any monetary benefits from taking the money. In fact, today there are very few medical and health organizations that would take tobacco money. If they’re exposed publicly as taking money from tobacco, it’s going to look really bad and hurt their reputation. 

 

The reason I think we don’t think we see that yet with soda sponsorship is that it hasn’t gotten the same kind of attention as tobacco funding has, and therefore the reputational cost is not very high at this point. But I think it’s going to change. This type of research is going to change it. As we shine a light on what these companies are doing, as we expose that they’re using the same tactics as big tobacco, I think that the public image of these companies is going to deteriorate and the reputational cost will start to rise. And then we’ll see a lot of these organizations turning down this funding as they realize the reputational costs are higher than the benefits that they’re getting.

 

Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.