The COCA COLA Company
Founder: Dr. John Stith Pemberton.
Distinction: Made soft drinks a global obsession.
Primary Products: Coca-Cola Classic, Diet Coke, Sprite, Minute
Annual Sales: $19.805 billion.
Number of Employees: 37,400.
Major Competitors: Cadbury Schweppes, PepsiCo, Quaker
Chairman and CEO : Douglas N. Daft
Headquarters: Atlanta, Ga.
Year founded: 1886.
It’s odd to think of a company like Coca-cola as being in need of an
overhaul. Its products, after all, are sold in every corner of the globe and
have dominated the soft-drink industry for more than a century. But even
companies that change the world can take missteps and stumble, and
Coke is no exception. Forget all the mesmerizing slogans and
heartwarming ads; the distinctively shaped bottles and nostalgic
memorabilia; the high-profile presence everywhere from sports arenas and
fast-food restaurants. Coke may be “the real thing,” as first proclaimed in
1942, but it knows it won’t stay that way without a substantial makeover.
The Atlanta-based company is hardly at death’s door, of course,
and it remains the top purveyor of soft drinks on earth. Its hugely popular
menu of products, now sold in 200 countries, includes the world’s first and
third best-selling beverages (Coca-Cola Classic and Diet Coke) as well as
about 160 other soda pops, coffees, juices, sport drinks, teas, and bottled
waters boasting a virtual who’s-who of familiar brand names (Sprite,
Barq’s, Cherry, Coke, Fanta, Minute Maid, Hi-C, Fruitopia, Butter
Nut, and POWERaDE among them). Even its ubiquitous red-and-white
logo and associated imagery are in demand, with licensed Coke
merchandise widely available through retailers such as Wal-Mart and
F.A.O. Schwarz, along with a corporate Web site.
But there also have been extensive tarnishes to the company’s
public image and fiscal fitness in recent years that demanded serious
attention. These included a racial discrimination lawsuit filed by black
employees in the Untied States, an extensive product recall, stymied
expansion efforts in Europe, a controversial severance package awarded to
a recent CEO who vacated his position after just two turbulent years, a
strained relationship between the company and its critical network of
independent bottlers, and a steep and continuing stock price decline.
As befits a world-changing corporation, however, such attention has
indeed been paid since a new top executive took control at the turn of the
millennium. And while beverage industry analysts described even his initial
moves as comprising the most significant “sea change” that Coke had
undergone in decades, the company indicated that such 21st-century finetuning
of its 19th-century product was not yet complete.
Soft drinks have always been an odd product. Their history dates
back to 1767, when carbonated water was introduced. This so-called
“soda water” was flavored for the first time in the 1830s. Various con
men, hucksters, and legitimate entrepreneurs have been trying to find
profitable way to peddle it ever since. The longest lasting of these efforts
initially appeared in 1876, when Charles Hires sold his root beer as
medicine. A long line of hopeful competitors—including Dr Pepper—
followed. Among them were Coca-Cola in 1886 and Pepsi-Cola in
1890. All were originally considered medicinal products, with Coke
supposedly good for headaches, indigestion, and hangovers. One of its
earliest sales was “The Ideal Brain Tonic.”
Once the century turned, the soft drink was publicly repositioned as
a beverage for everyone. Colas monopolized the market from the start,
with Coke and Pepsi beginning their lifelong battle for industry supremacy.
Coke moved to sew up mass-market sales by granting exclusive bottling
rights to a pair of men in Chattanooga, Tenn. The contract, for one dollar,
also marked the birth of the company’s unique strategy of using
independent bottlers to mix specific ingredients locally and deliver the time
Atlanta banker Ernest Woodruff and a group of investors bought the
company for $25 million in 1919, some 1,000 of these bottlers were
making Coca-Cola available across the United States, Cuba, Puerto Rico,
Panama, the Philippines, and Guam.
Robert W. Woodruff, Ernest’s son, took the corporate reins in 1923
and embarked upon a remarkable six-decade stewardship that elevated
Coca-Cola from mere beverage to world’s most valuable brand. Under his
watch Coke first began emphasizing bottle sales over fountain sales. It
kicked off a long-standing relationship with the Olympics by giving the
U.S. team 1,000 cases of Coke before it left for Amsterdam in 1928. It
regularly introduced memorable ad campaigns with catchy slogans such as
“The Pause that Refreshes,” It’s The Real Thing,” and “Things Go Better
with Coke.” It promised “every man in uniform a bottle of Coca-Cola for 5
cents, wherever he is and whatever it costs” during World War II. It even
hired Edgar Bergen and his wooden sidekick Charlie McCarthy in 1950 to
star in a live network television show. Nothing seemed out of reach, and
consumers responded in droves. Soda-pop became king of all nonalcoholic
beverages, and Coke was the industry leader.
One increasingly influential customer base that did not come
running, however, was the American dieting public, which collectively
turned its back on all soft drinks because of their high sugar content. Royal
Crown, a competing cola, first reached out to this rapidly proliferating
demographic group in 1961 with an artificially sweetened caffeine-free
drink called Diet Rite. Coke entered the fray with Tab in 1963. The
industry was still a long way from capturing popular attention and
successful mass sales, but it ultimately would prove as commercially
significant to its industry.
The Coke bottle was so recognizable by that time and such a symbol
of America and consumerism, that Andy Warhol incorporated it into
popular works of art later in the 1960s (along with Campbell Soup cans
and Marilyn Monroe portraits). The company turned that image on its ear
in the following decade, marketing itself as a feel-good consumable that
was perfect for the fractured times. The zenith of this effort came in 1976,
when a group of young people from around the world assembled on a
hilltop in Italy to produce what was perhaps the most indelible advertising
jingle of the ear: “I’d like to teach the world to sing, in perfect harmony,
I’d like to buy the world a Coke, and keep it company.” (The commercial
proved so popular, coke refilmed it on the same hilltop for a 1990 Super
Bowl broadcast with 16 members of the original cast and their children.)
Nothing stays the same in the corporate world, of course, and
Pepsi’s sales were rising faster than Coke’s when Roberto C. Goizueta was
named board chairman and chief executive officer in 1981. In the 16 years
that followed until his cancer-related death, Goizueta made his mark by
introducing Diet Coke (which immediately be came so popular it
revolutionized the market segment as well as the company’s profit picture)
and New Coke (which was laughed out of the picture by universal rejection
almost immediately upon its highly touted release). When Pepsi diversified
by acquiring restaurants like Taco Bell and Pizza Hut, Goizueta countered
by buying Minute Maid orange juice, Butter Nut coffees and teas, and Hi-C
juice drinks. In 1995, Financial World magazine ranked Coke the most
valuable brand in the world. But within two years, Goizueta was dead and
M. Douglas Investor had been appointed to fill his shoes.
Although total sales of Coke and other company products in markets
from Luxembourg to Turkmenistan exceeded 1 billion servings per day as
the end of the century neared, all was not well. The company’s carefully
cultivated goodwill among consumers, regulator, and bottles was battered
regularly by errors of commissions and omissions. Cheaper new
competitors were appearing in parts of Europe, South America, and Asia.
Global efforts at retaliation were alienating local officials. Sales projections
proved unattainable. Bottlers were coerced into major new acquisitions,
and the cost of their raw materials was continually increased although they
were constrained from commensurately raising prices. And while Goizueta
remained a revered corporate legend despite his New Coke fiasco, the illfated
Investor was universally denigrated for the mess in which Coca-Cola
now found itself.
Not surprisingly, Investor's term in office ended quickly and
unceremoniously just as the new millennium began. (He was given a
golden parachute that totaled an estimated $120 million and raised
hackles long after his position was vacated.) He was replaced by Douglas
N. Daft, a 56-year-old Australian who had been with Coke for three
Because he had risen up though the ranks, Daft felt he knew exactly
what needed to be done—and he immediately set about doing it. Within
months, he had decentralized operational and marketing functions
worldwide to give local managers more authority, slashed costs
dramatically by eliminating 6,000 jobs, disbanded the in-house advertising
agency that ran the flagship account during the 1990s, redirected the
previous focus on licensed-product sales from in-house retail stores to
cyberspace, appointed a respected second-in-command, convinced the
company’s highest-ranking black executive to rescind his recently
tendered resignation, and met with the Rev. Jesse Jackson to discuss the
discrimination lawsuit and related matters. He also publicly conceded that
Coke could not meet long-term earnings-growth targets, and
acknowledged past managerial mistakes.
With extensive experience selling Coke abroad—where most future
growth will undoubtedly be realized—Daft is positioned perfectly to restore
the company’s glory. The key to his plan is transferring authority to local
mangers; which will make critical determinations on products, advertising,
and other vital matters according to local tastes. Observers, as always, will
be watching closely to see whether Coke remains “the real thing”—or
becomes a relic of the past, much like those long-forgotten hangover and
indigestion cures that surfaced with it more than a century ago.
Coca-Cola was the first commercial sponsor of the Olympic
games, at the 1928 games in Amsterdam, and has been an
Olympics sponsor ever since.
Since 1978, Coca-Cola has sponsored each FIFA World Cup
Coca-Cola sponsors the annual Coca-Cola 600 and Coke
Zero 400 for the NASCAR Sprint Cup Series at Lowe's Motor
Speedway in Charlotte, North Carolina and Daytona
International Speedway in Daytona, Florida.
Coca-Cola has a long history of sports marketing relationships,
which over the years have included Major League Baseball, the
National Football League, National Basketball Association
and the National Hockey League, as well as with many teams
within those leagues. Coca-Cola is the official soft drink of many
collegiate football teams throughout the nation.
Coca-Cola was one of the official sponsors of the 1996
Cricket World Cup held on the Indian subcontinent. Coca Cola
is also one of the associate sponsors of Delhi Daredevils in IPL.