COCA COLA COMPANY

The COCA COLA Company

Fact File:

􀀹 Founder: Dr. John Stith Pemberton.

􀀹 Distinction: Made soft drinks a global obsession.

􀀹 Primary Products: Coca-Cola Classic, Diet Coke, Sprite, Minute

Maid.

􀀹 Annual Sales: $19.805 billion.

􀀹 Number of Employees: 37,400.

􀀹 Major Competitors: Cadbury Schweppes, PepsiCo, Quaker

Oats.

􀀹 Chairman and CEO : Douglas N. Daft

􀀹 Headquarters: Atlanta, Ga.

􀀹 Year founded: 1886.

􀀹 Website: www.cocacola.com.

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

decades.

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.

Sport Sponsorship:

􀀹 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.