We believe in capitalism, but capitalists are just as prone to lying to generate profits as politicians are to generate votes. We believe the world’s largest purveyors of single use plastic, Coca Cola (stock symbol KO) and Pepsico (PEP), are big time liars. They lie about single use plastic recycling to give comfort to consumers that their products are okay to buy because they’ll be recycled. As concerning, Coke and Pepsi are not addressing, much less studying, research that micro and nano plastics are leaching into their beverage products and then into human blood streams.
But public opinion is already shifting. As it accelerates, their revenues decline and the wheels come off their stock prices. Good riddance.
In her new book, “The Problem with Plastic” Judith Enck explains why single use plastic NEVER HAS AND NEVER WILL be recycled at scale. And she tells how damaging plastic is to the environment and in our bodies – where we are increasingly finding it. For decades, the idea of recycling has been a scam foisted on us by the petrochemical and consumer goods companies that profit from single use plastic. Those profits easily fund sophisticated marketing and other sneaky campaigns to protect and increase those profits. Conversely, there aren’t any profits available to tell the other side of the story, just researchers like Ms. Enck. She is the founder and President of the think tank Beyond Plastics. She’s our national expert on the topic, a Rachel Carson (Silent Spring) of our day.
We’ve gotten to know Judith and highly recommend her book so you can understand the consequences of the volumes of plastic that comes into your household, and where it goes when it leaves your door. Enck tells us that most plastic is never recycled. When it is, “recycling” usually does more harm than good. (Just an FYI, cardboard, glass and aluminum cans mostly do get recycled.) Judith also shares the concerning research about micro and nano plastic particles that leach from plastic bottles into Coke and Pepsi beverages, ending up in our blood streams and deposit themselves into our vital organs. Judith says we are better off drinking and using tap water (filtered or not).
We’ve shared our view that Coca Cola (Coke the Taste of Pollution) and Pepsi (Pepsico's Big Green Lies) are the unheralded corporate King and Queen of plastic pollution. They make it safe for all single use plastic products. How? For at least 35 years they’ve been justifying their leading roles in single use plastic production with the forever false promise of recycling. They sell 150 billion single use virgin plastic bottles globally EACH YEAR. That’s almost 20 bottles for each of the 8 billion of the planet’s inhabitants. Most of those bottles go into landfills or end up as litter across our lands and in our seas. Enck also explains that the “new” idea of “chemical recycling” is also a canard.
BUT THERE ARE MORE COKE AND PEPSI DEPLORABLES. Ms. Enck tells us about the toxic air, water and climate polluting petrochemical plants that use natural gas and crude oil to create all that plastic in the first place. And how about the fact that the sodas and beverages in the Coke/Pepsi bottles that, along with water, mostly contain salt, sugar and chemicals and are a cause of obesity.
Coca Cola and Pepsico stocks are also problematic for your financial health. While investment professionals consider these two stocks to be resilient, good cash flow and dividend stocks, we see them as VALUE TRAPS. Pepsi’s stock price over the past five years is FLAT, while Coke’s price is only up 31%. In contrast, the S&P Index is up over 80%. They’ve been relatively lousy investments. And they continue to trade at price earnings ratios that, illogically, are close to the S&P index PE ratio.
Slowly but inevitably consumers are coming to understand just how nefarious Coke and Pepsi products are. In the developed world, Coke and Pepsi sales are already flat to down. They get all their revenue growth from developing countries where the concept of plastic as pollution is in its infancy. We think consumer perception is a one-way train: downward for Coke and Pepsi. Investment professionals get paid to project trends and growth. At this point, most of them are in the dark about Coke and Pepsi.
