Inside Coca-Cola

by Neville Isdell

  This book is dedicated to my two families:

  my parents, who molded me into what I would become; my wife, Pamela; daughter, Cara; son-in-law, Zak Lee; and grandson, Rory;

  and

  to the men and women of the Coca-Cola Company. Without all these great people, none of this would have been possible.

  CONTENTS

  Title Page

  Dedication

  Foreword

  Introduction

  One From Ulster to Africa

  Two In Johannesburg: My Global Career Is Launched

  Three Conquering Pepsi in the Philippines

  Four Stagnation in West Germany

  Five The Wall Falls

  Six Going Back to India

  Seven At the Helm of Coca-Cola

  Eight Connected Capitalism

  Afterword

  Acknowledgments

  Index

  Photographs

  About the Authors

  Copyright

  FOREWORD

  This memoir, penned by my husband, is also about a life shared. You, the reader, might be as surprised as I was that my husband asked me to write this foreword.

  During the past many months, as he wrote this book, he wracked my brains for the perfect person to introduce him, but he decided that this honor must rest on my shoulders.

  I assume that part of his reasoning was that obviously I know him best. This must be true, our having been married for forty-one years and before that “living in sin” for two years in what was then referred to as Zambia, the small country where we met. We were considered very avant-garde at the time but it was the Swinging Sixties and so we were just ahead of the trend and have proved to naysayers that our relationship is a lasting one.

  Even when I first met Neville, I knew he was the one I wanted to marry and as we got to know each other in those first weeks and months, I discovered his amazing work ethic, perseverance, and of course, ambition.

  Over the years, I have watched him grow, but he made me grow also and rise to the occasion as well, and I believe that I was the soft cushion he could return to after a stressful day.

  We realized early on that our personalities really complemented each other’s. Neville is a definite Gemini. He is gregarious, fun-loving, and adventurous but on the opposite side of the coin he can be serious, compassionate, as well as stubborn. I believe that by being a quiet and steady companion I have been the anchor in our relationship.

  This book has been enormous fun, as I have really relived our life all over again and found it fascinating to look back through the mist of memory and re-remember so many things. I must admit that I also shed a tear or two over the “lows,” but they were few and far between, I can assure you, and we faced them together.

  The lows were his constant traveling and focus on the job at hand, and I sometimes felt second best, but this helped me develop a very strong bond with our daughter, Cara, as she was my constant companion when Neville was absent. There were also wonderful highs: the traveling to countries and places that I would never have seen otherwise, basking in the glow of the position Neville finally reached, and the great financial rewards that have helped smooth the bad times and given us a golden life.

  Reading this book has made me see my husband in another light: first as a young man making his way slowly up the ladder to bigger and better positions. Neville was always a very focused man, driven not necessarily to become CEO of the Coca-Cola Company, but to succeed at whatever task faced him at the time.

  He was always excited with the job in hand and his motto was that he should tackle that to the best of his ability while looking for ways to improve the business and, of course, make his mark. He always said that if you fulfill your duties to the best of your ability the next step will come to you.

  The journey with Coca-Cola took our family around the world. Whenever Neville was offered a new position, we would always discuss it in depth, and if it was in another country, we would get out the atlas and pore over the map, especially before we moved to the Philippines as I did not at the time know where they were. Coca-Cola always took great care of its expat personnel when they were transferred, and this was a huge help when facing life in a strange country, often with a new language to contend with.

  The one person in our family who suffered from all our globe-trotting was our darling daughter, Cara. Neville and I had both been uprooted as children, moving from Great Britain to Zambia. We both found travel exciting and stimulating but poor Cara was moved to so many different countries (she has lived on five continents and attended six schools), she found it very disruptive during her early life. Now, however, she is happily married, and she and Zak, her husband, have shared with us our beloved grandson, Rory.

  In today’s increasingly global business world, these are challenges many families will face. Neville and I hope that our story will offer some guidance to those facing similar adventures, which are fascinating but not always easy.

  While reading Neville’s memoir, I was full of admiration for the way he quietly faced the many crises and confrontations during his career that I knew nothing about. He kept his equilibrium every time.

  One thing I always appreciated is that Neville would insist on taking his holiday every year, come what may. This was very important to him and our family, and we always enjoyed being able to get away and relax.

  We had never expected that he would become CEO and Chairman of Coca-Cola, and had been looking forward to enjoying the rest of our lives together in a well-earned retirement when the call came that would change both of us and our lives forever. My main worry was over Neville’s health, our relationship, and how this new challenge might change it and his ability to tackle the daunting job of running Coca-Cola. What if he failed? I would be left to pick up the pieces. Reason won the day and now I blush at the thought that I tried to keep him from this pinnacle of success.

  Five wonderful years passed and I saw him continue to grow, become even more confident, and relish all the difficult situations thrown at him almost daily as well as thrive at increasing his knowledge of geopolitics.

  I also learned to appreciate him in a different way. He was able to include me in so many trips, and it was a pleasure to know that he really wanted me by his side and considered us a team.

  When he stepped down as Chairman in 2009 I feared that he would find it difficult to relinquish all the trappings that go with the job, but he took this in his usual stride and was happy to pass the baton on to our dear friend Muhtar Kent and bow out from the stage and spotlight.

  Neville always had a plan for retirement: to be intellectually engaged and stimulated and to live to at least eighty with me beside him. Now I look forward to all these promises.

  I hope you enjoy reading this memoir as much as I have enjoyed living through it.

  —Pamela Isdell

  INTRODUCTION

  I was happily retired as a senior executive of the Coca-Cola Company, living on the island of Barbados and playing golf regularly in the bright Caribbean sunshine, when in February 2004, board member Donald Keough, former president and a great leader in the history of the company, phoned. Douglas Daft, Coke’s Chairman and CEO, planned to resign after only four years on the job.

  Don was named chair of a search committee to replace Daft and wanted to know if I would throw my hat in the ring. There were no guarantees, but he was willing to let them know I was a serious candidate.

  These were dark days at Coca-Cola. Daft’s predecessor, Douglas Ivester, had lasted only two years before he was told on a runway in Chicago by members of the Coca-Cola board of directors, including Warren Buffett, that he no longer had the board’s support.

  Coca-Cola had languished since the October 199
7 death of Chairman and CEO Roberto Goizueta, who in sixteen years had increased the company’s market value from $4 billion to nearly $150 billion. Yet, in the post-Goizueta era, Coke was losing market share. Nothing, it seemed—even thousands of layoffs—had been enough to get the company back on track.

  Coca-Cola has been marketed as a purveyor of happiness. The word itself appears in many Coke advertisements. Yet in 2004, inside Coca-Cola’s headquarters on North Avenue in Atlanta, there was little to smile about.

  The U.S. Securities and Exchange Commission was investigating the company for “channel stuffing” in Japan, artificially pumping up concentrate sales to boost the stock price. The company was accused of hiring right-wing death squads to terrorize union organizers in Colombia. Deval Patrick, the company’s chief counsel and later governor of Massachusetts, had submitted his resignation to Daft, he said, in part over the Colombia controversy. Patrick and another top Coke executive had clashed over other issues, each insisting the other should leave the company. Coke’s hiring practices were scrutinized by a court-appointed task force after the settlement of a major discrimination lawsuit. And abroad, the European Union was looking into whether Coke had violated antitrust laws. The list went on.

  As the board began its search for a new Chairman and CEO, there was only one insider candidate, company president Steven Heyer. He seemed a favorite since Coke rarely looked outside the company for its Chairman and CEO.

  I promised Don I would consult with my wife Pamela, and get back to him within ten days.

  Never before in more than thirty years at Coke had I been seriously considered for Chairman and CEO. I had never really aspired to the job and never thought it possible, even though in the summer of 2003 some company retirees (as retirees do) began speculating that Daft would soon be replaced. Some said they were recommending that I succeed him. I told them all firmly that I would not take the job. I meant it, and Pamela fully endorsed my stance. I was now sixty years old and financially secure. I had lost ten pounds in retirement, was physically fit, and finally finding time to spend with my family after decades of moving all over the world and working countless fifteen-hour days. After Don’s call, Pamela reiterated that she did not want me to take the chairman’s job, worried that it would seriously damage my health and disrupt our happy retirement. “What will happen to you if you fail?” she asked.

  There had not been a successful chairman since Goizueta, and Pamela worried that I would be the third in the line of those who tried, but failed, to break the streak. However, as always, she promised to back me in my decision.

  “If I do it, I will not fail,” I told Pamela forcefully, but agreed with her about the stress. I had already experienced an amazing career and we were very happy in retirement. The real question was, “Could I live with myself if I turned down the ultimate challenge?”

  The answer for this former rugby player was clearly, “No, I could not.”

  A week after Don’s first call, I told a rather shocked Pamela my decision that I would do the job for five years. The game was on.

  I had spent much of my life fighting battles for Coke worldwide, often in markets where the company had lost its way and was losing market share. Now I had the chance to attempt the ultimate turnaround and, perhaps, revitalize the entire company. Talks and interviews with all the board members progressed. The press portrayed Heyer as the front-runner and there were rumors that he even hired a public relations firm to promote his candidacy. My name was rarely mentioned but it was clear to me that I was the leading candidate.

  Enter Jack Welch.

  Welch is a business icon, having engineered the remarkable turnaround of General Electric and raising its market value from $14 billion when he became CEO in 1981 to $410 billion when he retired in 2001. A 1995 Fortune magazine cover labeled Welch and Roberto Goizueta the “Wealth Builders.”

  In April 2004, Jack married, and at his wedding he was approached about the job of Coca-Cola Chairman and CEO, the job I had been all but offered.

  Jack said he would consider it and then left for his honeymoon in, of all places in the world, Barbados. He was only a few miles from me on the tiny Caribbean island as active negotiations with board members ensued. The thinking was that hiring Welch would energize the company and prompt an immediate spike in the stock price, and I am sure that would have been the case.

  On April 28, I had just arrived from Barbados on a business trip to Edinburgh, Scotland, when I received a call from Herbert Allen, a member of the Coke board. Herbert wanted to know if I would consider serving as president under Welch for a year or two, after which I would succeed Jack as Chairman and CEO.

  I refused. There were so many problems at Coke, a turnaround was risky, at best. I was willing to take the chance if I were calling the shots, but would not be another man’s fall guy. Welch had performed amazing feats at GE but knew little about the soft drink business. I had spent my entire life in the Coca-Cola system, starting at a bottling plant in Zambia and working my way up almost to the top. Also, I felt our management styles would clash, even though I did recognize that to the board, this team seemed attractive. Jack had a real track record as head of a major corporation while I had only acquired CEO and chairman experience at the bottler level in Europe.

  As I put down the phone following the discussion with Herbert, a man I trusted and admired, I turned to Pamela and told her it was over.

  Then Welch, still on his honeymoon, started having cold feet.

  “When I thought about traveling around the world, I said to myself, ‘I already did this once,’” Welch recalled in an interview for this book. “For forty-eight hours, seventy-two hours, whatever it was, I thought about it. Then I woke up.”

  Shortly after I returned to Barbados from Scotland, I took the call from Keough offering me the job as Chairman and CEO, which would make me the twelfth person in the history of the company to hold the chairman’s job.

  Coca-Cola announced my appointment after the close of business on May 4, and I was scheduled to meet with employees at headquarters the next day.

  Joel Rousseau, who had been Roberto Goizueta’s driver, met me, Pamela, and my daughter Cara at the airport in Atlanta. It suddenly occurred to me to ask Joel if he had the phone number for Roberto’s widow, Olguita. He knew it by heart and I called Olguita immediately, telling her I had just landed and was back in Atlanta.

  “I’m going to bring the Coca-Cola Company back to where it was under Roberto’s great leadership,” I promised her.

  At headquarters, employees assembled in the courtyard for a meet and greet with Daft, Heyer, and myself. There was a podium in place, but Daft insisted that he had ordered no speeches. Heyer agreed with me that we were going to have to make a few impromptu remarks. After all, this was my first appearance before the people I was going to lead. I spoke briefly, emphasizing my belief in the power of the Coca-Cola brand. “And it’s all about you,” I added. “It’s all about the people.”

  That is what the employees were looking for. It hit the right note.

  I was scheduled to start June 1, but first had to obtain a work permit at the U.S. embassy in Barbados. I stood in line before reaching the booth where I encountered rough treatment from an embassy officer who spoke to me through a bulletproof glassed window. Due to my height of six foot five inches, the microphone was positioned somewhere near my chest, forcing me to bend down.

  “Why are there no Americans who can do your job, why do we need a foreigner?” the embassy officer asked me.

  That was a good question, but not one for me to answer. “That was the decision the board of the Coca-Cola Company made,” I replied. “They are all Americans. I’m sure they know what they’re doing.”

  It was expected to take weeks for the work permit to be approved, so Coca-Cola dispatched a team of executives to Barbados to brief me on the state of the company. We were on the verandah overlooking the Caribbean, poring over documents, when I suggested we wind down over beer. Gary Fayar
d, the chief financial officer, watched the sun set over the blue Caribbean Sea and wondered aloud why I was willing to leave this peaceful place to plunge back into corporate combat.

  “Are you mad?” Gary asked.

  It was another good question but the die was cast.

  The work permit arrived earlier than expected and so I was back in Atlanta more than a week before my official start date. Doug Daft had already left so I sat down at my new desk and phoned Warren Buffett.

  “I am working for the Coca-Cola Company pro bono,” I told Warren, reminding him that I was not yet on the payroll yet sitting behind my desk.

  “I think that’s a very good arrangement,” Warren joked. “Why don’t we keep it that way?”

  I offer this book because so many friends have urged me to write it, but also for the lessons it may impart about the Coca-Cola Company and my role in rebuilding the world’s most popular brand. I strongly believe the story should not be told by a disembodied voice. In order to fully understand me and the company, it’s important to trace my career from the early days in Zambia, to South Africa, Australia, the Philippines, Germany—the amazing era after the Berlin Wall fell and the former Soviet empire opened—Coke’s reentry to India and the Middle East, and the five years I spent as Chairman and CEO.

  Coca-Cola, designed as a hangover and headache remedy, was founded in May 1886 by an Atlanta pharmacist, John Pemberton. Today, Coca-Cola is sold in all but three countries in the world: North Korea, Cuba, and Myanmar. Coke is a low-cost, high-quality product. As artist Andy Warhol once pointed out, whether the customer is a king or a bum on the street, the taste is always the same.

  Coca-Cola is a ubiquitous company. Its advertising helped shape the modern-day image of Santa Claus. Coca-Cola is the world’s second most recognized term, trailing only “OK.” At the same time, Coca-Cola has a secretive allure. Only a few people know the ingredients. Even I don’t know the secret formula.

  Coca-Cola manufactures the secret concoction at a few plants around the world. It is then blended with other ingredients to form a concentrate which is then further processed into a syrup form and delivered to restaurants and bottling plants. Historically, Coca-Cola made most of its profit from concentrate sales to independent bottlers. But over the years, the parent company has purchased many of the bottlers. In 2010, the company acquired the North American operations of its largest bottler, Coca-Cola Enterprises. Coke now owns 90 percent of the bottling operations in the United States and Canada.