The Coke Machine (46 page)
Authors: Michael Blanding
Page 59 realized the scorched-earth tactics . . . “The Pepsi Challenge”:
Tedlow, 106.
Tedlow, 106.
Page 59 more traditional forms of advertising:
Al Reis and Jack Trout,
The 22 Immutable Laws of Marketing
(New York: HarperBusiness, 1993), 81.
Al Reis and Jack Trout,
The 22 Immutable Laws of Marketing
(New York: HarperBusiness, 1993), 81.
Page 60 high of 60 percent after World War II:
Allen, 402.
Allen, 402.
Page 60 just 22 percent . . . “advertising alone couldn’t”:
Oliver,
The Real Coke, the Real Story
, 118.
Oliver,
The Real Coke, the Real Story
, 118.
Page 60 fled the island . . . learned the secret formula:
Hays, 68-77.
Hays, 68-77.
Page 60 rise to the top . . . hotly contested top slot:
Hays, 77-79, 89.
Hays, 77-79, 89.
Page 60 “There are no sacred cows”:
Oliver,
The Real Coke, the Real Story
, 74.
Oliver,
The Real Coke, the Real Story
, 74.
Page 61 The company should have known better:
Oliver,
The Real Coke, the Real Story
, 127.
Oliver,
The Real Coke, the Real Story
, 127.
Page 61 The project was so secret:
Oliver,
The Real Coke, the Real Story
, 138.
Oliver,
The Real Coke, the Real Story
, 138.
Page 61 Company executives stood:
Oliver,
The Real Coke, the Real Story
, 155.
Oliver,
The Real Coke, the Real Story
, 155.
Page 61 montage of cowboys:
Allen, 411.
Allen, 411.
Page 61 press corps leaped . . . Pepsi had nothing to do with it:
Oliver,
The Real Coke, the Real Story
, 159-167.
Oliver,
The Real Coke, the Real Story
, 159-167.
Page 61 more than 400,000:
Roger Enrico and Jesse Kornbluth,
The Other Guy Blinked: How Pepsi Won the Cola Wars
(Toronto: Bantam, 1986), 14.
Roger Enrico and Jesse Kornbluth,
The Other Guy Blinked: How Pepsi Won the Cola Wars
(Toronto: Bantam, 1986), 14.
Page 61 “You’ve taken away my childhood”:
Hays, 118-119.
Hays, 118-119.
Page 61 “Changing Coke is like”:
Allen, 414.
Allen, 414.
Page 61 “We have heard you” . . . “I think, by the end”:
Matt Haig,
Brand Failures: The Truth About the Biggest Branding Mistakes of All Time
(London: Kogan Page, 2003), 17; Enrico and Kornbluth, 238.
Matt Haig,
Brand Failures: The Truth About the Biggest Branding Mistakes of All Time
(London: Kogan Page, 2003), 17; Enrico and Kornbluth, 238.
Page 62 again topped Pepsi in market share:
Reis and Trout, 23.
Reis and Trout, 23.
Page 62 “A lot of people said”:
Sergio Zyman,
The End of Marketing As We Know It
(New York: HarperBusiness, 1999), 49.
CHAPTER 3. BIGGERING AND BIGGERINGSergio Zyman,
The End of Marketing As We Know It
(New York: HarperBusiness, 1999), 49.
Page 63 hundredth-anniversary celebration:
Ron Taylor, “Coke Bills Party as Biggest Ever in Atlanta,”
Atlanta Journal-Constitution
, May 10, 1986; Howard Pousher, “Epic Feast for 14,000,”
Atlanta Journal-Constitution
, May 10, 1986.
Ron Taylor, “Coke Bills Party as Biggest Ever in Atlanta,”
Atlanta Journal-Constitution
, May 10, 1986; Howard Pousher, “Epic Feast for 14,000,”
Atlanta Journal-Constitution
, May 10, 1986.
Page 64 focusing everything on their quarterly earnings:
John D. Martin and J. William Petty,
Value Based Management: The Corporate Response to the Shareholder Movement
(Boston: Harvard Business School Press), 13-28.
John D. Martin and J. William Petty,
Value Based Management: The Corporate Response to the Shareholder Movement
(Boston: Harvard Business School Press), 13-28.
Page 64 “shareholder value movement”:
Betsy Morris, “The New Rules,”
Fortune
, August 2, 2006.
Betsy Morris, “The New Rules,”
Fortune
, August 2, 2006.
Page 64 cutting waste and inefficiency:
Allan A. Kennedy,
The End of Shareholder Value
(Cambridge, MA: Perseus, 2002), 49-61.
Allan A. Kennedy,
The End of Shareholder Value
(Cambridge, MA: Perseus, 2002), 49-61.
Page 64 rushed to please Wall Street:
Betsy Morris, “Tearing Up Jack Welch’s Playbook,”
Fortune
, July 11, 2006; Kennedy, 164-166.
Betsy Morris, “Tearing Up Jack Welch’s Playbook,”
Fortune
, July 11, 2006; Kennedy, 164-166.
Page 64 hurt the long-term success of their companies:
Kennedy, xi, 63-66; “Buy Now, While Stocks Last,”
The Economist
, July 17, 1999; John Cassidy, “The Greed Cycle: How the Financial System Encouraged Corporations to Go Crazy,”
The New Yorker
, September 23, 2002.
Kennedy, xi, 63-66; “Buy Now, While Stocks Last,”
The Economist
, July 17, 1999; John Cassidy, “The Greed Cycle: How the Financial System Encouraged Corporations to Go Crazy,”
The New Yorker
, September 23, 2002.
Page 64 no CEO was associated:
Hays, 90.
Hays, 90.
Page 64 “I wrestle over how to build”:
Faye Rice et al., “Leaders of the Most Admired,”
Fortune
, January 29, 1990.
Faye Rice et al., “Leaders of the Most Admired,”
Fortune
, January 29, 1990.
Page 64 had a computer screen installed:
Hays, 67.
Hays, 67.
Page 64 another screen at the main entrance:
Betsy Morris, “Roberto Goizueta and Jack Welch: The Wealth Builders,”
Fortune
, December 11, 1995.
Betsy Morris, “Roberto Goizueta and Jack Welch: The Wealth Builders,”
Fortune
, December 11, 1995.
Page 64 sloughed off divisions . . .
The Karate Kid:
Pendergrast, 340-342, 346.
The Karate Kid:
Pendergrast, 340-342, 346.
Page 65 “a most unique company”:
Morris, “Roberto Goizueta and Jack Welch: The Wealth Builders.”
Morris, “Roberto Goizueta and Jack Welch: The Wealth Builders.”
Page 65 increasing per capita consumption:
Hays, 92-93.
Hays, 92-93.
Page 65 “If we take full advantage”:
Pendergrast, 367.
Pendergrast, 367.
Page 65 C on the kitchen faucet:
“A Conversation with Roberto Goizueta and Jack Welch,”
Fortune,
December 11, 1995.
“A Conversation with Roberto Goizueta and Jack Welch,”
Fortune,
December 11, 1995.
Page 65 “biggering and biggering”:
Dr. Seuss,
The Lorax
(New York: Random House, 1971).
Dr. Seuss,
The Lorax
(New York: Random House, 1971).
Page 65 As the 1990s dawned . . . annual growth in earnings:
Hays, 41.
Hays, 41.
Page 65 Goizueta personally called the Wall Street analysts:
Hays, 128-129.
Hays, 128-129.
Page 65 “If you weren’t owning Coke”:
Hays, 138.
Hays, 138.
Page 65 “the closest thing we know of”:
“CEO of the Year 1996,”
Chief Executive
, July 1, 1996.
“CEO of the Year 1996,”
Chief Executive
, July 1, 1996.
Page 65 Stock prices rose:
Hays, 129-131.
Hays, 129-131.
Page 66 Goizueta profited handsomely:
Ira T. Kay,
CEO Pay and Shareholder Value: Helping the U.S. Win the Global Economic War
(Boca Raton, FL: St. Lucie Press, 1998), 113; Stacy Perman, “The Man Who Knew the Formula,”
Time
, June 24, 2001.
Ira T. Kay,
CEO Pay and Shareholder Value: Helping the U.S. Win the Global Economic War
(Boca Raton, FL: St. Lucie Press, 1998), 113; Stacy Perman, “The Man Who Knew the Formula,”
Time
, June 24, 2001.
Page 66 largest single payout:
Hays, 136.
Hays, 136.
Page 66 “King Size”. . . “Family Size” bottles:
Pendergrast, 256-257.
Pendergrast, 256-257.
Page 66 “Cheap corn, transformed”:
Michael Pollan, “The Agricultural Contradictions of Obesity,”
New York Times Magazine
, October 12, 2003.
Michael Pollan, “The Agricultural Contradictions of Obesity,”
New York Times Magazine
, October 12, 2003.
Page 67 rolled out a 50 percent . . . 100 percent HFCS version:
“Sugar: A Sticky Boom,”
The Economist
, October 18, 1980; Rosalind Resnick, “Bad News for Latin Sugar,”
Miami Herald
, March 16, 1986.
“Sugar: A Sticky Boom,”
The Economist
, October 18, 1980; Rosalind Resnick, “Bad News for Latin Sugar,”
Miami Herald
, March 16, 1986.
Page 67 concept of “supersizing” really caught on:
Melanie Warner, “Does This Goo Make You Groan?”
New York Times
, July 2, 2006.
Melanie Warner, “Does This Goo Make You Groan?”
New York Times
, July 2, 2006.
Page 67 in the 1990s a 21-ounce medium soda:
Eric Schlosser,
Fast Food Nation: The Dark Side of the All-American Meal
(New York: Houghton Mifflin, 2002 [orig. pub. 2001]), 54.
Eric Schlosser,
Fast Food Nation: The Dark Side of the All-American Meal
(New York: Houghton Mifflin, 2002 [orig. pub. 2001]), 54.
Page 67 customers could request . . . a quarter of soft drink sales:
Greg Critser,
Fat Land: How Americans Became the Fattest People in the World
(Boston: Houghton Mifflin, 2003), 20-28.
Greg Critser,
Fat Land: How Americans Became the Fattest People in the World
(Boston: Houghton Mifflin, 2003), 20-28.
Page 67 It was the same story at the 7-Eleven:
Warner, “Does This Goo Make You Groan?”; Francine R. Kaufman,
Diabesity: The Obesity-Diabetes Epidemic That Threatens America—And What We Must Do to Stop It
(New York: Bantam, 2005), 152.
Warner, “Does This Goo Make You Groan?”; Francine R. Kaufman,
Diabesity: The Obesity-Diabetes Epidemic That Threatens America—And What We Must Do to Stop It
(New York: Bantam, 2005), 152.
Page 67 “The Beast”:
Ellen Ruppel Shell,
The Hungry Gene: The Inside Story of the Obesity Industry
(New York: Grove Press, 2002), 205.
Ellen Ruppel Shell,
The Hungry Gene: The Inside Story of the Obesity Industry
(New York: Grove Press, 2002), 205.
Page 67 With two-thirds of the fountain sales:
Scott Leith, “Fountain Sales Are a Weak Point for Coca-Cola,”
Atlanta Journal-Constitution
, December 31, 2002.
Scott Leith, “Fountain Sales Are a Weak Point for Coca-Cola,”
Atlanta Journal-Constitution
, December 31, 2002.
Page 68 “Bigger is better”:
Hank Cardello,
Stuffed: An Insider’s Look at Who’s (Really) Making America Fat
(New York: HarperCollins, 2009), 18-19.
Hank Cardello,
Stuffed: An Insider’s Look at Who’s (Really) Making America Fat
(New York: HarperCollins, 2009), 18-19.
Page 68 new 20-ounce bottle:
Martha T. Moore, “Coke’s Curvy Shape Is Back,”
USA Today
, March 28, 1994.
Martha T. Moore, “Coke’s Curvy Shape Is Back,”
USA Today
, March 28, 1994.
Page 68 reversing years of discounts:
Kent Phillips, “Re-Profitizing the Industry,”
Beverage World
, September 1996.
Kent Phillips, “Re-Profitizing the Industry,”
Beverage World
, September 1996.
Page 68 “Our goal was to make Coca-Cola ubiquitous”:
Cardello, 134.
Cardello, 134.
Page 68 “We’re putting ice-cold”:
The Coca-Cola Company, Annual Report, 1997.
The Coca-Cola Company, Annual Report, 1997.
Page 68 “the most important meal of the day”:
Chris Warren, “Start the Day Right: Harness the Profit Potential of Breakfast,”
Refreshing News,
Spring/Summer 2006, Coca-Cola Food Service.
Chris Warren, “Start the Day Right: Harness the Profit Potential of Breakfast,”
Refreshing News,
Spring/Summer 2006, Coca-Cola Food Service.
Page 68 56.1 gallons . . . been in 1970:
Marc Kaufman, “Fighting the Cola Wars in Schools,”
Washington Post
, March 23, 1999; Michael Jacobson,
Liquid Candy: How Soft Drinks Are Harming Americans’ Health,
Center for Science in the Public Interest, 2005 (rev. ed.); Bill Lohmann, “Soft Drinks Vie for Top Position,” United Press International, April 14, 1985.
Marc Kaufman, “Fighting the Cola Wars in Schools,”
Washington Post
, March 23, 1999; Michael Jacobson,
Liquid Candy: How Soft Drinks Are Harming Americans’ Health,
Center for Science in the Public Interest, 2005 (rev. ed.); Bill Lohmann, “Soft Drinks Vie for Top Position,” United Press International, April 14, 1985.
Page 68 reclaimed 45 percent of the market:
Frank Gibney, Jr., “Pepsi Gets Back in the Game: The Company Is on the Rebound with a New Vision, and an Old Problem: Coke,”
Time
, April 26, 1999.
Frank Gibney, Jr., “Pepsi Gets Back in the Game: The Company Is on the Rebound with a New Vision, and an Old Problem: Coke,”
Time
, April 26, 1999.
Page 69 more than $4 billion in net income:
Associated Press, “Coke CEO Aims at 2B Servings Daily,” March 3, 1998.
Associated Press, “Coke CEO Aims at 2B Servings Daily,” March 3, 1998.
Page 69 3,500 percent increase . . . $88 a share by 1998:
Dean Foust, “Coke’s Man on the Spot,”
BusinessWeek
, May 3, 1999.
Dean Foust, “Coke’s Man on the Spot,”
BusinessWeek
, May 3, 1999.
Page 69 “We don’t know how”:
Morris, “Roberto Goizueta and Jack Welch: The Wealth Builders.”
Morris, “Roberto Goizueta and Jack Welch: The Wealth Builders.”
Page 69 Coke’s annual spending on advertising:
Naomi Klein,
No Logo: Taking Aim at the Brand Bullies
(New York: Picador, 1999), 471.
Naomi Klein,
No Logo: Taking Aim at the Brand Bullies
(New York: Picador, 1999), 471.
Page 69 alienating many:
Hays, 123-124; Pendergrast, 400.
Hays, 123-124; Pendergrast, 400.
Page 69 “move the needle”:
Zyman, 3-5, 118, 172.
Zyman, 3-5, 118, 172.
Page 69 “The sole purpose of marketing”:
Zyman, 11.
Zyman, 11.
Page 69 “spending to sell” . . . “we poured on more”:
Zyman, 15.
Zyman, 15.
Page 69 The domestic ad budget rose:
Klein,
No Logo,
471.
Klein,
No Logo,
471.
Page 70 It was Zyman’s job:
Zyman, 138.
Zyman, 138.
Page 70 “These are the consumers”:
Zyman, 125.
Zyman, 125.
Page 70 “dimensionalizing”... at every occasion:
Zyman, 124, 129.
Zyman, 124, 129.
Page 70 compete for Coke’s vast advertising war chest:
Zyman, 207.
Zyman, 207.
Page 71 Hollywood powerhouse Creative Artists Agency:
Naomi Klein,
No Logo,
59.
Naomi Klein,
No Logo,
59.
Page 71 computer-generated family of polar bears:
Matthew Grimm, “Coke Plans to Put Its Polar Bears to Work,”
Adweek,
June 21, 1993; Dottie Enrico, “Coke’s Polar Bear Is a Papa Bear,”
USA Today
, December 8, 1994.
Matthew Grimm, “Coke Plans to Put Its Polar Bears to Work,”
Adweek,
June 21, 1993; Dottie Enrico, “Coke’s Polar Bear Is a Papa Bear,”
USA Today
, December 8, 1994.
Page 71 Philip Morris cut the price . . . death knell for the brand:
Klein,
No Logo
, 12-13.
Klein,
No Logo
, 12-13.
Page 71 “We are getting a bum rap”:
John Huey, “The World’s Best Brand CEO,”
Fortune
, May 31, 1993.
John Huey, “The World’s Best Brand CEO,”
Fortune
, May 31, 1993.
Page 71 companies that succeeded . . . top of her list:
Klein,
No Logo
, 21.
Klein,
No Logo
, 21.
Page 71 original World of Coca-Cola:
Klein,
No Logo
, 29.
Klein,
No Logo
, 29.
Page 72 worth more than a billion dollars:
Hays, 170.
Hays, 170.
Page 72 able to avoid paying:
David Cay Johnston,
Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else
(New York: Portfolio, 2003), 51.
David Cay Johnston,
Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else
(New York: Portfolio, 2003), 51.
Page 72 if anything, more relentless . . . “From his earliest”:
Hays, 31-34.
Hays, 31-34.
Page 72 buying up any bottlers that were for sale:
Oliver,
The Real Coke, the Real Story
, 31-42.
Oliver,
The Real Coke, the Real Story
, 31-42.
Page 72 own 49 percent:
Hays, 42.
Hays, 42.
Page 72 forced the new bottling company:
Hays, 52-53.
Hays, 52-53.
Page 73 “anchor bottlers”:
Roberto C. Goizueta, “The Emerging Post-Conglomerate Era: Changing the Shape of Corporate America,” January 1988.
Roberto C. Goizueta, “The Emerging Post-Conglomerate Era: Changing the Shape of Corporate America,” January 1988.
Page 73 rolled right off Coke’s books:
Hays, 62.
Hays, 62.
Page 73 “new era in American capitalism”:
Goizueta, “The Emerging Post-Conglomerate Era.”
Goizueta, “The Emerging Post-Conglomerate Era.”
Page 73 force bottlers to buy syrup:
Hays, 151.
Hays, 151.
Page 73 “marketing support”:
Hays, 154.
Hays, 154.
Page 73 enormous amounts of debt:
Hays, 157.
Hays, 157.
Page 73 “iceman” . . . phones were tapped:
Hays, 174-176.
Hays, 174-176.
Page 73 “360-degree landscape of Coke”:
Hays, 7.
Hays, 7.
Page 73 “What I always wonder”:
Hays, 175.
Hays, 175.
Page 74 all but howling along:
Hays, 35.
Hays, 35.
Page 74 Coke showed no quarter:
Hays, 190.
Hays, 190.
Page 74 restrictive advertising agreements:
Hays, 242-243.
Hays, 242-243.
Page 74 Royal Crown Cola sued:
Hays, 245.
Hays, 245.
Page 74 difficulty meeting its high earnings expectations:
Huey, “The World’s Best Brand CEO.”
Huey, “The World’s Best Brand CEO.”
Page 74 less than 20 percent of Pepsi’s business:
“Coca-Cola Boosts Water Sales, Still Trailing Pepsi,” Bloomberg News, August 20, 2006.
“Coca-Cola Boosts Water Sales, Still Trailing Pepsi,” Bloomberg News, August 20, 2006.
Page 74 more than 80 percent of its sales:
Joe Guy Collier, “Worldwide Sales a Tonic for Coke,”
Atlanta Journal-Constitution
, November 16, 2008.
Joe Guy Collier, “Worldwide Sales a Tonic for Coke,”
Atlanta Journal-Constitution
, November 16, 2008.
Page 75 “Coke fiends” . . . overtly racist coverage:
Allen, 46-47.
Allen, 46-47.
Page 76 “increased amounts of poisonous and toxic matters”:
Harvey W. Wiley,
The History of a Crime Against the Food Law
(Washington, DC: Harvey W. Wiley, 1929), 29.
Harvey W. Wiley,
The History of a Crime Against the Food Law
(Washington, DC: Harvey W. Wiley, 1929), 29.
Page 76 “poison squad”:
Wiley, 57-62.
Wiley, 57-62.
Page 76 weren’t exactly scientifically rigorous:
Clayton A. Coppin and Jack High,
The Politics of Purity: Harvey Washington Wiley and the Origins of Federal Food Policy
(Ann Arbor: University of Michigan Press, 1999), 55.
Clayton A. Coppin and Jack High,
The Politics of Purity: Harvey Washington Wiley and the Origins of Federal Food Policy
(Ann Arbor: University of Michigan Press, 1999), 55.
Page 76 went on the attack . . . self-promoter:
Coppin and High, 3-5.
Coppin and High, 3-5.
Page 76 nemesis, however, would be . . . railed against Coke:
Pendergrast, 115.
Pendergrast, 115.
Page 77 addition of “free caffeine” . . . neither coca leaves nor kola nut:
Coppin and High, 142-145.
Coppin and High, 142-145.
Page 77 couldn’t be considered an additive:
Coppin and High, 151.
Coppin and High, 151.
Page 77 having left town . . . Wilson force him out:
Allen, 62-64.
Allen, 62-64.
Page 77 all the way up to the Supreme Court . . . Coke’s new formula:
Pendergrast, 121-122.
Pendergrast, 121-122.
Page 78 policy on Southwest Airlines:
Charles Passy, “Little Wiggle Room for XXL Passengers,”
New York Times
, October 15, 2006; Michelle Higgins, “Excuse Me, Is This Seat Taken?”
New York Times
, February 28, 2010.
Charles Passy, “Little Wiggle Room for XXL Passengers,”
New York Times
, October 15, 2006; Michelle Higgins, “Excuse Me, Is This Seat Taken?”
New York Times
, February 28, 2010.
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