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Where Coke Is It--If the Trucks Get Through


By Peter Lagerquist, with Charmaine Seitz

On a slender road running through Ein Arik village outside Ramallah, Yusuf Ghanem is backing up his Coca-Cola delivery van to let a truck and four taxis squeeze past. The passengers look like they're about to melt in the heat. Just ahead sits today's third Israeli checkpoint, manned by three soldiers. A car and a van are turned away on the other side.

"They search everyone, even the ambulances," says Ghanem. "It can take from five minutes to two hours. If they are happy that day, they will let you pass. If not, they make you wait." Adds his assistant, Nidal Abed: "About four days out of the week, they turn us back. We used to deliver to 40 stores a day before the intifada. Now we deliver to about 10." We sit, the van idling.

Since the uprising began last fall and brought the Israeli army onto the roads, the West Bank has become one of the world's most inaccessible markets--and a daunting frontier for Coca-Cola Co.'s vaunted distribution system, whose goal is to put 230 beverages within arm's reach anywhere in 200 countries. It's a model of corporate globalization--doing things the local way, everywhere--belied by the crisp look of Ghanem and Abed. In pressed Coca-Cola shirts, they might have walked out of a brochure for U.S. investors. But in the territories these days, maneuvering a global product is anything but business as usual.

Of course, operating in the West Bank and Gaza was never easy. Israeli security controls at major roads and border crossings made transport account for a world record 35% of production costs, more than triple any regional world average, according to World Bank economist Sebastien Dessus. Ramallah-based National Beverage Co., which secured the Palestinian Coca-Cola franchise in 1998, embraced the challenge. It pioneered direct distribution in the territories; from its state-of-the-art bottling plant in Ramallah, the seat of Yasir Arafat's government, it supplies distribution centers in four Palestinian cities. A fleet of 60 trucks in turn did the rounds of 10,000 shops, vending machines, and restaurants, often as frequently as twice a week.

Now the trucks are running a blockade. Although it was supposed to ease during the current shaky cease-fire, Ghanem and Abed don't find the going any easier. Checkpoints straddle today's route to the nearby villages of Qibya, N'aleen, and Shuba at regular intervals. Beyond Ein Arik, it's finally our turn.

"What company?" inquires the soldier, ignoring the red billboard on the van.

"Coca-Cola."

"How much do you sell it for?"

"Five shekels ($1.25)."

"And for me?"

"For you, it's free."

The soldier takes a liter and says he wants one coming back. "If they take Coke, we pass. If not, we're in trouble," says Ghanem. "We're supposed to go to Qibya once a week. We're lucky if we make it once a month. In Jericho, we can't pass without a woman in the truck. We find a woman, pay her something, and then pass and let her out." And if that doesn't work? "We park next to the checkpoint and carry the things over to a car on the other side."

It's dangerous work: In June, a settler threw a rock that sliced open Ghanem's shoulder. Relations with Israeli soldiers are scarcely better. "This month, I have taken maybe four or five slaps. That's no problem. The important thing is that they don't kill me," he says. In March, on the way to Nablus, soldiers took him out of the truck with a gun at his neck and confiscated the keys. Only calls to the company, and then the U.S. embassy, brokered his and his assistant's release.

But flying U.S. colors isn't always an asset in the West Bank and Gaza these days. When the uprising erupted, Coke sales in neighboring Egypt and Jordan were hit by local boycott calls. "Coca-Cola was an early boycott target as an American company--there were lots of threats," confirms Farouk Fannoush, general manager for National Beverage, which is privately owned by Palestinian investors, with Coca-Cola International holding a 15% share. During the intifada, he has been fighting on two fronts from his Ramallah offices. "I have done a lot of lobbying to show that this is a Palestinian company, with Palestinian capital and Palestinian workers. I don't employ any foreigners."

With unemployment in the territories at 50%, officials lend a sympathetic ear. "Coca-Cola employs 400 people here, so we resisted the boycott calls," says Salah Al Hanieh, coordinator for the official National Boycott Committee. Plus, the boycotters have other priorities. "There are enough Israeli products to target, particularly from the settlements," explains Renan Qubej, who oversees a volunteer-led campaign. "That's not the case in other Arab countries, so they turn to U.S. goods. Realistically, we can't ban everything--we are dependent on foreign imports."

Prior to the intifada, Palestinians had a healthy thirst for cola, drinking more per head than their neighbors in Jordan, Egypt, and Syria. They picked up the taste from Israel, says Fannoush: The Jewish state ranks fifth worldwide in per capita cola quaffing. Taking no chances, he is now marketing the one thing that still sells in bulk here--nationalism. "At local exhibitions," he says, "I put the Coke label in one corner with a Palestinian flag."

In any case, the blockade has been more punishing than politics. Palestinian gross national product has dropped 40% to 50% in eight months. Around 1 million, or one in three Palestinians, now live below the poverty line of $2 a day. Half the stores on Ghanem's route decline to buy for lack of money. "It has been like this almost a year now," complains Ahmad Al Dhawar, a shopkeeper in the village of Der Ammar, who buys 17 cases. At least the competition isn't doing any better. "It's the same with the other--the Pepsi," says Al Dhawar.

Neither the cola wars nor boycott rhetoric are of much concern to Umm Khaled, 52. She has eight children with her unemployed husband. "People who are shopping, they don't buy for politics, they buy the things that they need. There isn't money for bread, so how can I think about buying cola?"

For some Palestinians, the choice is even starker. Water trucks sometimes can't reach villages in the northern West Bank that have no piped water. Such woes don't deter Fannoush, who sees himself as a national economic champion: "It is expected of us to lead the way during this difficult time, to inject some energy into the economy. So we are running promotional campaigns."

National Beverage has already had more luck than Arafat in negotiating territory. Before 1998, Palestinian retailers bought Coke from Israel, though its bottler's franchise extends only to the Jewish state's 1967 borders. While Arafat has gained control of 20% of the territories, Fannoush's reconquest has been more substantial: "Our franchise became all of the West Bank and Gaza, without East Jerusalem, pending peace talks--and every single settlement," he points out.

If Coca-Cola has succeeded in dividing some of the world's most hotly contested real estate, it may be because at this global commercial crossroads, some borders are better for everyone's business. When Burger King's Israeli franchise operator opened an outlet in the settlement of Ma'ale Adumim in 1999, boycott threats from Arab-American groups soon forced the new restaurant to give up the Burger King tie. Having a Palestinian company cover Israeli settlements saves Coca-Cola similar embarrassment.

But for Ghanem, it's soft drinks, not fences, that make good neighbors. Near the settlement of Halmish, where we were turned back this morning, the soldier on guard eventually produces two bottle caps and asks if he gets a prize. Ghanem checks the tops for him and hands over a 2-liter bottle. We pass.

Eight hours, 118 kilometers, and 10 checkpoints later, the truck is nearly out of gas. We have sold 111 cases out of 500. Ghanem complains that he hasn't had a pay raise in four years. Why doesn't he look for other work? "There is no other work," says Abed. Returning through the last checkpoint at Ein Arik, we are stopped by five soldiers. They take three bottles, tossing away the caps. Abed yells out the window as we drive through: "Wait, there are prizes inside!" So business goes on, whatever it takes, in this corner of the global bazaar. Lagerquist and Seitz cover the intifada.

EDITED BY Edited by Harry Maurer


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