Coca-Cola has been a mainstay at the Olympics ever since 1928. China is Coke’s largest market outside North America, and its biggest in Asia. But Chinese consumers are increasingly turning to well-known homegrown brands like Mengniu milk powder, which Coca-Cola tried but failed to enter last year after five decades of dominance
The “intel olympics sponsorship” is a move by Coca-Cola to take advantage of the Olympics to promote their brand. In China, it’s working. But in America, not so much.
Coca-Cola Co. KO 0.65% has been a sponsor of the Olympics for than a century. After the United States and Mexico, China is the company’s third-largest market. Coke’s obstacles leading up to the Winter Games are similar to those of other Western sponsors, but they’re also unique. As the 2022 Winter Olympics get off in Beijing this week, here’s a look at the company’s commercial transactions in China and its Olympic preparations.
Coke strengthens ties with China
Coca-Cola and China Mengniu Dairy Co. 2319 -0.33 percent agreed in 2019 to share the title of official nonalcoholic beverage sponsor of the Olympic Games until 2032. At a press announcement in Switzerland, Chief Executive James Quincey praised the union as a “deep relationship” as he stood beside the Chinese company’s CEO. The combined sponsorship will be in force for the first time during the Beijing Games, which begin on Friday. Coca-Cola is linked to a Chinese company whose major shareholder is a state-owned food conglomerate under a 12-year agreement. According to those familiar with the subject, the arrangement cost the two businesses more than $2 billion in total, including rights payments, marketing, and other obligations.
Coke had previously owned the Olympic sponsorship rights for soft drinks, juices, sports drinks, and dairy products that may be consumed. Coke increased its reach throughout the whole dairy sector, including ice cream and yogurt, thanks to a relationship with Mengniu (pronounced mung-neo). According to several persons acquainted with the situation, the possibility to split the sponsorship costs was also a factor in Coke’s decision to go forward with the contract.
On Monday, a Coca-Cola exhibit with Olympic themes was set up at a Walmart in Beijing.
Yoko Kubota/The Wall Street Journal photo
Tensions are rising.
The relationship is forming at a time when tensions between the US and China are rising. Beijing’s treatment of primarily Muslim minority in China’s Xinjiang province, according to US authorities, some parliamentarians from other Western nations, and some human-rights organizations, amounts to genocide. Beijing has rebuffed criticism of its record and denounced efforts to politicize the Olympics. It has also sanctioned businesses that it believes have become involved in the controversy.
Coke’s Xinjiang Business Dealings
Coke’s links with Cofco Corp., the state-owned food corporation that is the dairy company’s main shareholder, were enhanced by the Mengniu purchase. For decades, Cofco has collaborated with Coke to manufacture and market its goods across northern China, including a bottling factory and sugar supplier in Xinjiang.
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When the Mengniu transaction was announced in June 2019, human-rights activists were already questioning Coke about alleged abuses at its Xinjiang sugar source. The claims were refuted by the processor, which is owned by Cofco. As the 2022 Beijing Olympics neared, the focus on China’s human-rights record grew. Criticism of Olympic sponsors did as well.
Coca-Cola goods with Olympic themes on display at a Beijing store in July.
Reuters photo by tingshu wang
What Coke Has to Say
Rep. Tom Malinowski (D-N.J.) pressured Coca-global Cola’s head of human rights, Paul Lalli, during a heated confrontation during a July meeting of the US Congressional-Executive Commission on China, to criticize the Chinese government’s imprisonment of vast numbers of individuals in camps.
Mr. Lalli refused, saying instead, “We support all human rights and denounce any violations.” As a sponsor, our job is to instill those essential values in these mega-sporting events.”
Last year, independent audits of Coke’s facilities in Xinjiang found no evidence of forced labor or other human-rights violations, according to the company. China denies utilizing forced labor and claims that its Xinjiang incarceration campaign is part of a larger attempt to combat religious extremism and terrorism.
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In the United States, Coca-Cola is pulling back.
The geopolitical environment has prompted American companies such as Visa Inc. and Procter & Gamble Co. to lower their profile around the Games. Coke, like other sponsors, is all but silent on the Olympics in the U.S. this year. Last year, as U.S. officials called on Coke and other sponsors to encourage the International Olympic Committee to pull out of Beijing, Coke opted not to offer Olympics-themed displays to U.S. stores. The decision was made because of the risk they could pose to Coke’s reputation, according to a person familiar with the matter. Gone, too, are the special-edition Olympic Coke cans, the TV commercials and the Times Square billboard celebrating a U.S. athlete.
Due to Covid-19 limitations and the date of its quarterly earnings announcement, Coke will not be sending its CEO or other key corporate leaders to Beijing. It turned down a request from the Wall Street Journal to make an executive accessible to discuss the Mengniu acquisition. Mengniu and the International Olympic Committee both refused to comment.
At July, a booth in a Beijing supermarket promoted Coke’s Olympic sponsorship.
Reuters photo by tingshu wang
In China, Coke is gaining ground.
Coke is commemorating the Games in China with a series of online and offline advertisements. It has created Coke cans with the Olympic Games emblem and rings, as well as the words “Olympic global partner” on them. At pop-up events in Beijing, a red minivan with Coca-Cola and Beijing Olympics emblems appears, complete with a gift vending machine. In addition, the corporation has decorated several convenience shops in the capital with banners and is handing out Olympic-themed folders and pins to customers. It is urging individuals to collect its commemorative Olympic pins on Chinese social media.
To prevent the spread of Covid-19, China is implementing a tight set of prohibitions during the Winter Olympics. The Wall Street Journal describes how some of these limits would operate, including a “closed-loop” system and a prohibition on yelling, as well as why an epidemic might still disrupt tournaments. Fabrizio Bensch/Reuters/Fabrizio Bensch/Reuters/Fabrizio Bensch/
—This essay was co-written by Yoko Kubota and James T. Areddy.
What You Should Know About the Winter Olympics in Beijing
Jennifer Maloney can be reached at [email protected]
Corrections & Amplifications Coca-Cola’s sugar supplier in China’s Xinjiang region is owned by Cofco Corp., a state-owned foods group. An earlier version of this article incorrectly described the supplier as a joint venture between Coke and Cofco. (Corrected on Feb. 2)
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The “Coca-Cola hearing Olympics” is about the Coca-Cola Company’s sponsorship of the Olympic Games. Coke has been a sponsor for over 30 years and have had their logo on the event since 1928. In China, they are working to change that. They are not doing so well in the United States though. Reference: cecc hearing olympics.
Frequently Asked Questions
Who is sponsoring the Olympics 2022?
A: The Olympics 2022 will be sponsored by the private company, Coca-Cola.
Who is sponsoring the Olympics?
A: The Olympics are sponsored by the International Olympic Committee, not any one individual company.
Will the Olympics be held in China?
A: The Olympics will be held in Beijing, China.
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