Waiter, there's a shamrock in my Georgia Coffee

There's a little bit of Ireland in all of us, say the Irish tourism promotion ads in the USA. And a lot of our taxable profits in the Republic of Ireland, says Coca-Cola. In fact, so much of their profits that it's attracted the attention of US investigators. Today's Irish Times (subs. supposedly not req'd) picks up on a story in yesterday's Wall Street Journal (subs. req'd) that the US Securities and Exchange Commission is investigating a practice called "channel stuffing" in which Coca-Cola's Irish bottling plants appear to have sold unusually large amounts of concentrate to a Japanese drinks firm. Especially suspicious is that that the Japanese firm is itself in the Coca-Cola chain of production, in that it distributes the concentrate to Coke's Japanese bottlers.

To the US investigators, it looks like Coke was temporarily trying to pump up its sales numbers to meet sales targets (which perhaps in turn were linked to executive bonuses). There can't be any long-term gain to Coke from doing this, because it doesn't of itself boost the final sales of any Coke drinks.

There are some side details of the transactions which reveal quite a bit about the Republic's place in the globalised economy:

Coke has consolidated a considerable amount of its concentrate production in countries with lower corporate taxes, such as Ireland. Coke's two plants in Ireland produce most of the concentrate for Georgia coffee, a popular line of drinks in Japan.

So we have Japanese consumers buying a drink clearly marketed as "American" but for which the key ingredient is actually made in the Irish Republic, and not because the Republic has any comparative advantage in things linked to Georgia (Scarlett O'Hara's father excepted), but because of a tax angle. Indeed, it's likely that the alleged goal of meeting a sales target was secondary for Coke with these transactions, the primary goal being to pump up the sales of the Irish subsidiary so as to locate as much of Coke's profits as possible in Ireland. Good for Coke shareholders and the Celtic Tiger boosters, bad for US and Japanese taxpayers.

Finally, in foisting an Irish "Georgia Coffee" on the Japanese, the nation is at least extracting revenge for the outrage of Guinness Surger, a method of serving the brew in Japan in which a special bottle is zapped with soundwaves to produce the fabled head.