The Coke Machine (8 page)

 

 

 

In the
“Milestones of Refreshment” exhibit at the World of Coca-Cola, there is a whole room devoted to World War II, full of wartime advertisements and newspaper clippings. Among them, one black-and-white photo stands out: “Charles B. Hall was the first African-American fighter pilot to down an enemy aircraft in World War II,” reads the caption. “His reward was a bottle of Coca-Cola.”

When war struck America, it struck Coca-Cola, too, with the inevitable return to sugar rationing. Determined not to be left behind again, the company lobbied furiously for an exception, collecting a slew of testimonials from military bases about Coke’s power to keep up morale. The crowning move was a twenty-four-page pamphlet titled “Importance of the Rest-Pause in Maximum War Effort,” featuring pages of scientific “authorities” attesting to the increased productivity of well-rested soldiers and factory workers. Archie Lee’s fanciful “pause that refreshes” was now opportunistically being applied to the real fight against the Nazis. “A nation at war strains forward in productive effort in a new tempo,” it urged. “In times like these Coca-Cola is doing a necessary job for workers . . . bringing welcome refreshments to the doers of things.”

Incredibly, the American government bought the line. One of Coke’s own execs was appointed to the rationing board, and Coke was offered an exemption to quotas even as all other sugar users were limited to 80 percent production. Coke’s next move was even more masterful. In an act of genuine patriotism, calculated scheming, or both, Robert Woodruff publicly promised that every soldier could buy a Coke for a nickel anywhere in the world—expenses be damned! In fact, Woodruff may very well have known that the company would never have to pay a dime, since Coke reportedly had been in talks with the government well before Pearl Harbor about aid in establishing Coca-Cola bottling plants overseas in order to spread American influence.

Sure enough, an order signed by General George C. Marshall himself informed commanders they could order bottling equipment to the front lines as an essential military priority—all paid for by Uncle Sam. The biggest taker was General Dwight D. Eisenhower, who requested 6 million Cokes a month during the North Africa campaign of 1943. (So much for the “military-industrial complex.”) A war correspondent nearly met his end on a plane so overloaded with Coke bottles it could barely clear the sand dunes. “You don’t fuck with Coca-Cola!” the pilot told him when he complained.

But the soda did seem to genuinely perk up morale. Thousands of letters poured in from dirty foxholes and heat-baked islands from soldiers grateful for the familiar taste of home. “If anyone were to ask us what we are fighting for . . . half of us would answer, the right to buy Coca-Cola again,” wrote one. “To my mind, I am in this damn mess as much to help keep the custom of drinking Cokes as I am to help preserve the million other benefits our country blesses its citizens with,” wrote another.

Never particularly patriotic before, Coke seized upon the sentiments for a new wartime ad campaign. Dozens of full-color ads depicted soldiers and airmen around the world, bottles in hands, greeting the natives with the words “Have a Coke!” In one, a soldier spots a sign for Coke; the caption reads: “Howdy, Friend . . . When you drink ice-cold Coca-Cola, you know it’s
the real thing
”—the first appearance of Coke’s most famous slogan. Almost overnight, Coca-Cola suddenly seemed worth fighting tyranny for, a stunning transformation from refreshing pause to all-American symbol in less than a decade.

And Coke’s new association with its home country would stick well beyond the war. One ad in 1946 read, “As American as Independence.” A sign at Coke’s own 1948 bottlers’ convention crowed: “When we think of Nazis, we think of the swastika, when we think of the Japs, we think of the Rising Sun, and when we think of Communists we think of the Iron Curtain, BUT when THEY think of democracy they think of Coca-Cola.”

One little fact, however, marred Coke’s newfound support for its country: During World War II, it continued to do business with the Nazis. Germany had long been one of Coke’s best markets under the leadership of American expat and Coke franchise owner Ray Powers, a fan of the rising Nationalist Socialist party who sent telegrams to Woodruff ending “Heil Hitler.” But the real power was German businessman Max Keith, a six-foot-six giant with a Hitler-inspired mustache who distributed Coke at Nazi Youth rallies, advertised on Nazi educational pamphlets, and draped the stage in swastikas at bottler conventions.

That support of the regime may have been simple self-preservation, but Keith took it further. When Powers was killed in a bicycle accident, Keith wangled an appointment as overseer of all soft drink bottlers in the Third Reich, taking over bottlers as the blitzkrieg roared through Holland, Belgium, and France. At the same time Woodruff was securing special treatment for Coke as an essential item to keep up American troop morale, Keith was reserving the last bottles of Coke to succor wounded Nazi soldiers and using Coke trucks to deliver relief supplies to bombed-out enemy cities. When supplies of concentrate ran out, he created a new grapefruit-flavored beverage, naming his new concoction “Fanta,” and using forced labor from concentration camps to produce it. He stopped short only of changing the name of the company, risking death at the hands of a Nazi general when he refused.

After the war, Coca-Cola investigators from the United States concluded that Keith himself had not been a Nazi. Nevertheless, during each of the years he had sold Fanta in Nazi Germany, he had made a modest amount of profit. The Coca-Cola Company was now only too happy to cash the checks, despite the advertising blitz assuring consumers it was leading America to victory against a ruthless enemy. The discrepancy, virtually unnoticed at the time, only shows how malleable Coke’s allegiances were—and how, whatever genuine patriotism the company’s executives might have felt in support of the American war effort, it paled before the
image
of that patriotism. In fairness, it might be said that Coke had no choice to but to play both sides of the war effort. Legally, its true allegiance was its shareholders, who required only one thing: that the company continue to churn out a profit. If the company had an enemy, it wasn’t a foreign country or tyrannical government, but the competition of a home-grown adversary that had been slowly growing to challenge Coke for years. Now that World War II was over, Coke went to war against its real opponent: Pepsi.

 

 

 

By the end
of the war, Coca-Cola’s supremacy seemed unassailable. Where decades of marketing had failed, American military might had succeeded overnight in cracking open the foreign market. By war’s end, the company had sixty-three overseas bottling plants, financed for $5.5 million—just 20 percent of one year’s net profits. And everywhere the GIs went, the natives seemed to develop a taste for the sugary beverage. In 1950,
Time
magazine published a cover image of a smiling planet Earth being suckled with a Coca-Cola bottle, praising without irony Coke’s “peaceful near-conquest of the world.”

In this new era, the company increasingly thought internationally in its advertising, shifting from D’Arcy to a new agency, global giant McCann-Erickson, to handle its accounts. Not that the ads themselves changed much; Coke did little more than translate the copy, producing a remarkably homogenized image as the quintessential American product. The ads worked for the same reason Coke’s images of “conspicuous consumption” had worked half a century earlier—creating an idealized vision of luxury at a time when the war-torn world hungered for U.S. prosperity. Just at its moment of global triumph, however, Coke lost its way back at home. When Archie Lee died suddenly of a heart attack, the company was unexpectedly rudderless, floating a string of clunkers such as “Have a Coke and Be Happy.” Halfhearted attempts at patriotic slogans were abandoned—the jingoism that worked in the epic battle against the Nazis falling flat in the messier conflict with Korea.

Fact is, advertising itself was changing after World War II. Faced with another postwar boom, Madison Avenue again turned to the hard sell, emphasizing the bells and whistles that made new cars, stoves, TV sets, and other durable goods indispensable. “Do you want fine writing? Do you want masterpiece? Or do you want to see the goddamned sales curve start moving up?” said ad guru Rosser Reeves of Ted Bates & Co., who encouraged companies to think of their “unique selling proposition,” or USP—the one, and only one, attribute that sets a product apart. Suddenly there were as many products as there were unique reasons to buy one, and market segmentation was born. In this new selling environment, Coke might still be the leader in the soft drink category. But upstart company Pepsi-Cola could seek dominance in a new demographic: youth.

Like Coke, Pepsi had its origins in the patent medicine era, the creation of a North Carolina pharmacist named Caleb D. Bradham, who sold a brew of kola nut and the stomach enzyme pepsin as a cure for stomachache. It nipped successfully at Coke’s heels for a while, with some three hundred bottlers in twenty-four states by 1910, but foundered during World War I, when the spike in sugar prices all but put it out of business. The company probably would have died if not for the intervention of a temperamental New York City department store owner, Charles Guth, who bought it out of bankruptcy in 1931 after Coke refused to cut him a discount for his soda fountains. Despite sweetening Pepsi’s formula and reviving bottling, Guth failed spectacularly at first—even offering to sell the company to Coke for $50,000 in 1933.

When Coke refused, the company went for broke with a new strategy: bottling the drink in 12-ounce beer bottles and selling “Twice as Much for a Nickel.” The tactic worked; Pepsi sales rocketed back during the value-conscious Depression, with profits topping $2 million in 1936, $3 million in 1937, and $4 million in 1938. The new medium of radio drilled the drink more firmly into the public’s mind with an infectious jingle first introduced in 1940 that became the most successful radio spot in history: “Twice as Much for a Nickel, Too . . . Pepsi-Cola Is the Drink for You.”

Coke wasn’t about to take such vibrant free-market competition lying down. It went straight to the government to quash the young upstart, arguing in a series of court cases in the United States, Canada, and the United Kingdom that Coke had exclusive rights to the word “cola.” Pepsi countersued, charging Coke with illegally trying to constitute a monopoly. In the end, Pepsi’s arguments carried the day, with a British court finally ruling in 1942 that “cola” was a generic term any company could use. Coke sued for peace, with Woodruff personally agreeing with Pepsi’s new president, Walter Mack, that the two companies would no longer compete in the court of law.

Instead, they competed in the arena of image—and here, for the first time, Coke was losing. In 1950, Pepsi hired as its president Al Steele, a former D’Arcy executive and Coke VP of marketing, who out-coked Coke with a new lifestyle-oriented campaign. While Coke still marketed itself as the product for everyone—workmen and businessmen, soldiers and socialites—Pepsi focused solely on young middle-class families moving into suburban tract houses in droves.

“Stay young and fair, be debonair, be sociable, have a Pepsi!” the new radio jingles urged. Pepsi’s USP had nothing to do with its product, but in the idea that it represented: youth, energy, upward mobility. And the campaign was wildly successful. After dipping as low as $1.25 million in 1950, Pepsi’s net profit shot up to $14 million by 1955. For the first time, Coke’s market share began slipping, and sales slumped. “Coke can hardly be said to be foundering,” wrote
The Wall Street Journal
. “But it is faltering.” Pepsi, meanwhile, distilled its message to take advantage of the burgeoning “generation gap” with a new slogan: “For those who think young.” Eventually, the campaign would become a direct appeal to the new generation of “baby boomers”—the Pepsi Generation—and establish the most important battleground for the Cola Wars: young people.

 

 

 

Despite Pepsi’s
upper hand in advertising, however, Coke had something the upstart could never match: money. In 1956, Coke poured $11 million into its advertising, one of the top ten ad budgets in the country. By 1963, it was number one, spending $53 million a year. Much of it was spent on increasingly targeted research, surveying customers in all of 1.6 million retail outlets. McCann-Erickson led the way in the newfangled approach of “motivational research,” a doubling-down on the psychological advertising techniques of the 1930s that used “depth interviews” to plumb what consumers really wanted in their products. Maidenform, for example, exploited what it said was women’s subconscious exhibitionist tendencies. GM put a convertible in the window to entice men with a “possible symbolic mistress,” then once in the showroom pushed the security of the sedan.

Eventually, the practice paved the way for a new “creative revolution” in the 1960s, a backlash against the overly utilitarian USP that would forever put the
idea
of the product above the product itself. “The greater the similarity between products, the less part reason really plays in brand selection,” noted the revolution’s chief architect, David Ogilvy. “There really isn’t any significant difference between the various brands of whiskey or the various cigarettes or the various brands of beer.” (He might have included soft drinks.) As a result, argued Ogilvy, it was the advertiser’s job to create an emotional response that consumers would unconsciously associate with a brand—the kind of advertising at which Coke had excelled for nearly a century.

In 1957, journalist Vance Packard exposed the “depth boys” in his best-selling book
The Hidden Persuaders
. The public outcry that followed, however, focused on a short section of the book about subliminal advertising—a part that directly implicated Coke. At the time, a researcher named James Vicary flashed the words “Hungry? Eat Popcorn” and “Drink Coca-Cola” for up to a three-hundredth of a second every five seconds during a showing of the movie
Picnic
in a New Jersey movie theater. According to Vicary, popcorn sales increased 57 percent and Coke sales 18 percent. Vicary later backtracked, all but admitting he made the whole thing up. Advertisers further denounced the practice, and the furor subsided. (Modern research has since debunked the technique.)