Salt Sugar Fat: How the Food Giants Hooked Us (18 page)

In early 1985, he tried in vain for weeks to land an interview with a Coke executive, Charlie Frenette, who wouldn’t return his calls. Undeterred, he got a sympathetic secretary to tell him when Frenette was traveling next, and Dunn flew to Atlanta and boarded the same flight.
“He was up in first class,” Dunn said. “I was in coach. When they turned the seat belt lights off, I walked up and said, ‘Hi Charlie, how are you doing? I’ve been having a hard time getting in to see you, so I thought the best thing would be for us to spend a few minutes on the plane.’ And he looked at with me this kind of look—oh, really—and said, ‘I’m kind of busy. I have a big call. I’ll see if I have any time at the end of the flight.’ ” Dunn still didn’t get an interview, but he did get a test. Just before landing, Frenette had him come up to first class, where he asked him to critique a presentation he’d prepared for the Denny’s restaurant chain. “Next thing I know, he had hired me,” Dunn said. “And what’s funny about that, we got to be good friends, and he would tell that story to sales people all the time. ‘Let me tell you about somebody who figured out how you get to see somebody. You just don’t accept no for an answer.’ ”

Dunn started off in the fountain business at a regional office in Irvine, California, where his first big account was the Carl’s Jr. hamburger restaurant chain. This was also his first experience with the supersize craze that would sweep through the fast food industry and move into the grocery stores with ever larger cups and bottles of soda. “It was bigger, better,”
Dunn said. “We had a whole marketing division within fountain that looked for opportunities. Coke went to its customers, starting with McDonald’s, with the idea of bundled meals that included a Coke. At the time, the restaurant chains didn’t do combos—like hamburgers with fries—but we figured out that if they did this, we’d get a lot more people to buy Coke. From 1980 through 2000 at least, that was the predominant marketing strategy of Coke to build consumption within fast food outlets. At Carl’s Jr., when I was running that account, we not only put Coke into their equivalent of combo meals. We actually had all-you-could-drink beverage bars added, too—you know, buy a drink and get as many refills as you want. All of that was about instilling more value into the fast food experience and ensuring that people bought a soft drink along the way.”

By the early 1990s, Dunn was in charge of his own battalion in Coke’s army—a force of eight hundred people who handled fountain sales to convenience stores, restaurants, and cafeterias, with annual sales of $3 billion. And like any beloved leader, Dunn was given a nickname by the people who worked for him. It happened one day when he had assembled his staff for a pep talk. “Sales people, by definition, like to keep score,” he told me. “You generally don’t make it in sales unless you are good with people and you like to keep score. It’s just the nature of the beast. So here was this big army of sales people and I was giving a speech about Pepsi. Coke has about a 70 to 80 percent market share of the fountain side of the business, and every five years, Pepsi would make a run and decide they were going to take fountain. So I gave this speech about winning and I said, ‘It’s like we’re at war. And the way you keep score in war is how many body bags get carried off the field. The key is to have more of their body bags carried off the field than our body bags. I want you all to go out and ramp up our scorecard. I want to see a lot of body bags.’

“I said it a little more intensely than that,” he told me. “The body bags were the Pepsi sales people who were going to get fired as a result of not getting our accounts. So my nickname for the next ten years was Body Bag.”

I
t would be difficult to overstate the animosity between Coke and Pepsi or the extent to which they looked upon one another with suspicion. But things reached a low point in 1984, after
PepsiCo pulled off a stunning coup by signing the world’s biggest star, Michael Jackson, to film a commercial for them, a move that appeared to seize them the high ground. Relations deteriorated even further the following year when Coke, perhaps feeling some pressure from the Jackson endorsement, prepared to introduce New Coke—and watched helplessly as PepsiCo pulled off yet another publicity coup. A day before Coke’s announcement, PepsiCo ran ads in newspapers around the country, presenting Coca-Coca’s move as a triumph for Pepsi. For years, PepsiCo had been claiming that its sweeter soda was better liked than Coke, and here was Coke, practically admitting to the world that it agreed. New Coke, by PepsiCo’s analysis,
was 4 percent sweeter than regular Coke. And to celebrate the reformulation, PepsiCo gave its employees a day off.

From Wall Street to the mass media, this rivalry between the two soda titans became known as the Great Cola War. The companies, however, weren’t fighting each other as much as they were pulling together to drive up consumption overall.
Coke crushed Pepsi in the 1960s, and Pepsi won the 1980s, and Coke came back strong in the 1990s. But what few outside the companies realized was that winning or losing was immaterial: In each of those decades, the sales of Coke and Pepsi
both
went up. Roger Enrico, the CEO of PepsiCo, was the first to let slip that, in reality, the Great Soda War caused neither company to shed much blood.

“If the Coca-Cola Company didn’t exist, we’d pray for someone to invent it,” he wrote in his 1986 autobiography,
The Other Guy Blinked
. “You see, when the public gets interested in the Pepsi-Coke competition, often Pepsi doesn’t win at Coke’s expense and Coke doesn’t win at Pepsi’s. Everybody in the business wins. Consumer interest swells the market. The more fun we provide, the more people buy our products—
all
our products.”

To be sure, much of the “fun” they provided came from the product itself, and in this matter, sugar was key. It is the largest ingredient, after water, with caffeine not far behind. From time to time, other elements of the company’s well-guarded recipe would leak into the media, and these reportedly include extracts of coca, lime, and vanilla.

As Dunn would learn, however, what makes Coke’s formula so addictive goes beyond sugar or any secret flavorings. The precise nature of this allure was not even known to Coke until the late 1990s, when Charlie Frenette, the man who had hired Dunn and was now the chief marketing officer, decided to dig deeper into Coke’s formula. With the utter secrecy that shields all matters relating to Coke’s recipe, he hired a famous Swiss manufacturer of flavors and fragrances, Givaudan, to divine the fundamental aspects of Coke’s appeal. Reporting back to Frenette, Givaudan pointed out that the bubbles in the soda themselves are quite enticing, which a sip of flat Coke will demonstrate. But Givaudan found something else as well, and it stems from a quirk of our biology—one that the entire processed food industry has, of course, learned to exploit. Its premise is this: We like foods that have an identifiable strong flavor, but we tire of them very quickly.

So, for instance, meat eaters will give out on a plate of highly seasoned turkey tetrazzini much faster than they will on a serving of plain hamburger of the same size, even though the first bites of the turkey will be more exciting. Even more problematic for food manufacturers, those same meat eaters are likely to remember this the next time they go shopping and buy the plain hamburger more often. Food scientists speculate that this behavior stems from our instinctual need for varied nutrients, which are more easily attained by eating a variety of foods. Get too much of one thing, and the brain starts sending out signals of satiety, or fullness, to compel us to move on to different foods.

This was the phenomenon known as “sensory-specific satiety,” or the power of one overwhelming flavor to trigger the feeling of fullness, which would complicate the efforts of food scientists like Howard Moskowitz to hit the perfect bliss point for sugary foods and drinks. In creating products
that will sell consistently, they learned to walk a line between the extremes of an exciting first bite or sip and the utterly familiar. More than any other product, Coke had mastered this balancing act, Givaudan told the company’s marketing officer.
“They said what’s fascinating about Coke versus the other soft drinks is that it really, truly is the most balanced,” said Dunn, who was looped into the project. “When you drink it, there is no edge to it. Their analogy was a fine wine that’s balanced so you drink it and you’re not left with any kind of lingering edginess. I think, intuitively, the technical guys at Coke knew that all along. But from a marketing standpoint, this was the moment of ‘A-ha.’ ”

Givaudan’s findings remained locked up at Coke, since they weren’t exactly the makings for a flashy ad campaign. The flavor experts from Switzerland were basically saying that Coke was so dominant because of a recipe that made it
forgettable
—at least in the way the balance of flavors caused the brain to flash a continuous green light for more. To parse this out a bit, I reached out to John Hayes, a food scientist who directs the Sensory Evaluation Center at Penn State University. In evaluating the seductive powers of Coke, he drew on more than scientific expertise. In his younger days, he had been a true soda junkie, drinking
six
12-ounce cans a day until, realizing that “that was not good for me in a whole host of ways,” he cut back. Reformed as he was, I could still hear excitement in Hayes’s voice as he spoke about Coke. “From an anatomical sense, we always mention smell and taste,” he said. “But in terms of flavor, there is that third leg of the stool that everyone forgets about, and that is the somatosensory, or the touch component, and this includes things like the tingle from carbon dioxide bubbles, or the bite from chili peppers, or the creaminess. In the case of Coca-Cola, what’s so interesting about it is you’re really activating
all
those modalities. You have those nice aromas from the vanilla and the citrus and the whole family of brown spices, like cinnamon and nutmeg. Then you have that sweetness. And there’s the bite of phosphoric acid, the tingle of the carbon dioxide. You really end up stimulating all the different parts of the flavor construct that we experience.”

Still, as good as Coke is—with a world-class formula of incredible
power—it became clear to Dunn in his years at Coca-Cola that there was more than sensory power behind the soaring sales. Coke’s allure, he realized, is derived as much from what goes onto the can or bottle as from what goes into it. This is the logo, the brand known as Coke. “Everybody asks, why couldn’t you just match Coke by finding out what’s in it,” Dunn said, holding up an imaginary can as he spoke. “But once you take the trademark off, it’s a different brand.”
Studies have found that people like Coke much better when they know what they are drinking is in fact Coke and not one of the knockoff colas sold by grocery chains.

Coke’s efforts in marketing its brand were restrained through much of the 1970s, when Dunn was watching his father establish the sports endorsement business at Coke. But 1980 was a watershed for Coke, just as it was for America’s obesity rate, which had started to surge. That year, Coke switched from using table sugar to high-fructose corn syrup, which was less expensive and blended more readily with the flavoring concentrate. The revered but aging chairman, Robert Woodruff, chose an unsmiling taskmaster, the Cuba-born Roberto Goizueta, to be the new CEO. This was also the year that Coke intensified its marketing, more than doubling the money it spent on advertising, reaching $181 million by 1984.

The executive who commanded the company’s marketing at the time, Sergio Zyman, was known as a merciless pursuer of the consumer. With Zyman leading the charge, Coke hired Bill Cosby to tout Coke as “the real thing,” which implied Pepsi was not. It designed 12-packs to look like cheerfully wrapped gifts during the Christmas season, and then, being an equal-opportunity marketer, targeted Muslims by shifting its advertising to run at night during the Ramadan holiday, when they abstain from food and drink until sundown. “The job of marketing is to sell lots of stuff and make lots of money,” Zyman wrote in
The End of Marketing as We Know It
, his account of the battles with Pepsi. “It is to get people to buy more of your products, more often, at higher prices. In fact, though some marketers will tell you it’s impossible, the real job of a marketer is to sell everything that a company could profitably make, to be the ultimate stewards of return on investment and assets employed.”

To illustrate the global scope of Coke’s take-no-prisoners approach to marketing, Zyman tells the story of the crisis Mexico found itself in when the government devalued the peso in 1994. He was skiing, he writes, when he heard the grim news, and he got to a phone as fast as he could to call Douglas Ivester, Coke’s president. He urged Ivester to make sure that Coke’s operators in Mexico did not cut their marketing campaigns. Overnight, the rich became poorer and the poor got hungry, struggling with the soaring prices. But Zyman saw that as more reason to work harder at getting them both—rich and poor—to drink Coke.
“We were no longer in a battle for share of market or share of mind,” Zyman explained. “We were in a battle for disposable income. We were going to have to compete with every other product and service in the Mexican marketplace; the idea was to get in and make sure that consumers remembered to buy Coke.” The strategy worked perfectly. Coke sales didn’t slump with Mexico’s economy; in fact, they grew—three times as fast as the competition, as Mexicans from all walks of life responded to Coke’s advertising.
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