For God, Country, and Coca-Cola

by Mark Pendergrast

  Yet Coke simultaneously sought to glue more young people to their computer terminals watching YouTube, in order to sell more drinks. In March 2007, an ingenious faux documentary helped to boost Coke Zero sales. In the ad, Coca-Cola Classic executives want their lawyers to sue Coke Zero for “taste infringement” because it is indistinguishable from regular Coca-Cola. The Candid Camera approach captured the reaction of a real Coke lawyer, unaware that actors played the Coke execs. “We’re playing with the Coke equities in a way that makes you think about Coke Zero differently: not as a diet product and more associated with the taste of Coke,” said an executive for Crispin Porter + Bogusky, the edgy Miami firm that made the spots. Aimed at young men, the ads were introduced on YouTube and through e-mail rather than television, part of an innovative shift in Coke’s marketing strategy.

  At first, Coke marketers weren’t sure what to make of the wild, unpredictable, democratic world of the Internet. In 2005, Fritz Grobe, a juggler, and his friend Stephen Voltz, a lawyer, discovered that when they dropped candy Mentos into Diet Coke, it caused a fizzy eruption, which they could enhance by restricting the flow with a nozzle. Experimenting in Grobe’s backyard in rural Maine, they became impresarios, and in June 2006 they posted a hilarious video of their “Experiment 137” on the Web at www.eepybird.com. Dressed in white lab coats and protective goggles, they choreograph a fantastic, varied geyser display using a hundred and one 2-liter bottles of Diet Coke and five hundred and twenty-three Mentos. At the end of the two-minute video, they toast each other with Diet Coke, then spit-spray it at each other and laugh.

  The video went viral, attracting millions of viewers, and Grobe and Voltz appeared on the Late Show with David Letterman and the Today Show. Coke initially distanced itself from the odd phenomenon but then embraced it, inviting Grobe and Voltz to produce their geysers at North Avenue headquarters and hosting “Experiment 214” on the Coke website for several months.

  Packaging also helped sell colas. In Australia, Coke Zero sales took off. Why? Partly because the bottles and cans were a distinctive, macho black. So Coke switched to black in North America, pursuing what Kent called a “red-black-silver strategy”—red for Coke Classic, black for Coke Zero, and silver for Diet Coke. In 2007, Coke also introduced Diet Coke Plus, enhanced with niacin, vitamins B6 and B12, zinc, and magnesium, in an attempt to attract health-conscious women.

  In February 2007, Coke paid $250 million for New Jersey–based Fuze Beverage, a six-year-old company that made enhanced juices and teas called Slenderize, Refresh, and Vitalize in flavors such as Banana Colada and Peach Mango. They came in tall bottles with colorful pictures of fruit. Fuze also marketed two energy drinks, NOS and Rehab, a hangover remedy (one of Coca-Cola’s original selling points).

  Three months later, that purchase was dwarfed by Coke’s acquisition of Glaceau, based in Whitestone, New York, for a staggering $4.1 billion. In 1995, founder Darius Bikoff first made Smartwater, a distilled water with added calcium, then added Fruit-water with natural fruit flavoring. One morning in 2000, Bikoff took a vitamin C wafer with Smartwater and was inspired to create Vitaminwater, which jump-started sales. Five years later, he told a reporter that the surge in healthful drinks wasn’t a fad. “It isn’t going away, and Glaceau is the brand of the revolution.”

  Muhtar Kent agreed, personally wooing Bikoff and agreeing to the whopping sales price, even though Glaceau had posted only $355 million in sales the previous year. Boosted by Coke’s massive distribution and marketing, Kent saw that Vitaminwater and its cohorts could become megabrands not just in the United States, but also overseas. Encouraged by these acquisitions, CCE stopped distributing Arizona Tea and promised to carry only products owned by Coca-Cola.

  The target may have gotten smaller on Coke’s back, but it was still there. The Company sued an Argentinean blogger who defamed Dasani as “cancer water.” The Connecticut attorney general launched an assault on claims that Coke’s green tea drink, Enviga, “invigorates your metabolism to burn calories,” making it a negative-calorie beverage. This was “voodoo nutrition,” he said, and the Center for Science in the Public Interest simultaneously filed a lawsuit. Coke eventually settled out of court, modifying its label to clarify that Enviga alone could not produce weight loss.

  The Company also settled another frightening health-related lawsuit. Benzene, a flammable ingredient in solvents, had been found in Vault Zero and Fanta Pineapple, due to a chemical reaction between benzoate salt, an antibacterial agent, and ascorbic acid. Sugar impedes the reaction, so it happens only in artificially sweetened drinks. Coke removed the ascorbic acid.

  THE NEW WORLD OF COCA-COLA

  Few consumers paid attention to these health flaps, however. Instead, Atlanta tourists could visit the new World of Coca-Cola Museum, which opened in May 2007 across from the huge new Georgia Aquarium at the north end of Centennial Olympic Park. The new building had twice the capacity of its predecessor near the moribund Underground Atlanta. Finally giving the morphine-addicted Coke creator his due, Isdell had commissioned a statue of John Pemberton to greet visitors at Pemberton Place before they shelled out $15 to enter the phantasmagoria of Coke-drenched memorabilia and advertising.

  First they had to sit in the Happiness Factory Theater, where a bubbly red-clad “Coke ambassador” gave a pep talk before screening an eight-minute version of the Rube Goldberg commercial inside a vending machine. Then visitors were free to wander through the slow-motion bottling line, get bumped and sprayed in the 4D Theater, view classic commercials in the Perfect Pauses Theater, sample Coke drinks from around the world, grab a free 8-ounce bottle, and exit through the Coca-Cola Store, where they could spend more money on some 5,500 Coke-embossed products. One million people a year would visit the Coke museum.

  On an interactive video wall outside the 4D Theater, Coke touted its do-good initiatives, though most people didn’t pay much attention to this poorly designed feature. Neville Isdell clearly thought that these initiatives were important, however. In January 2007, he spoke at the World Economic Forum in Davos, Switzerland, emphasizing that Coca-Cola was trying to reduce emissions and conserve water, while working with Greenpeace to deploy energy-efficient refrigeration units that didn’t use hydrofluorocarbons (HFCs), which are 1,000 times worse than carbon dioxide in causing global warming. Since Coke owned 10 million coolers and vending machines worldwide, a switch to HFC-free units would help substantially to reduce greenhouse gases. Later, a CARE executive praised Coke for “leading the way in water steward-ship” and helping to fund a CDC/CARE program to provide safe water in rural Kenyan schools.

  In June 2007, Isdell spoke at a news conference hosted by the World Wildlife Fund in Beijing. There, he announced that Coke would give the fund $20 million to help conserve seven of the world’s most vital river basins, including the Yangtze, Mekong, Rio Grande, and the Danube. Isdell also emphasized the Company’s commitment to reduce its water usage and improve water recycling at its bottling plants. In the previous five years, Coke had improved water efficiency by 19 percent. “Far too many people suffer from a lack of access to safe water,” Isdell said, so “we at the Coca-Cola Company have placed highest priority on being responsible water users.” Critics pointed out that saving water was also saving the Company money.

  By the end of the year, shareholders were very happy, regardless. That summer, Coca-Cola had been voted the top brand in the world in the annual Harris Interactive Poll, unseating Sony. Coke Zero and Glaceau became the twelfth and thirteenth Coke brands to hit $1 billion in annual retail sales. Coca-Cola stock had risen steadily from its long-term doldrums around $40 and crested at $60 in December 2007, the same month that Isdell announced that Muhtar Kent would become the next Coca-Cola CEO on July 1, 2008. Isdell would remain as chair of the board for another year to ensure a smooth transition.

  The turnaround was complete. “The winning culture is back,” Isdell and Kent asserted in a jointly signed letter in the 2007 annual report. “Winning changes ever
ything.”

  “Big Jim” Farley served as a roving ambassador for Coca-Cola for three decades, routinely consorting with government heads, religious leaders, and welcoming committees, such as these Japanese geishas. Japan would grow to become the Company’s largest profit center.

  On a 1945 radio set, crooner Morton Downey shares his favorite drink with young Margaret O’Brien. One of Robert Woodruff’s closest friends, Downey served as a Coke goodwill ambassador and achieved fabulous wealth from his Coca-Cola stock and bottling plants. Despite his smooth public appearance, however, he regularly beat his children and had his daughter lobotomized.

  From the Depression on, Coca-Cola men received rousing messages at Company conventions. By the sixties, the Jam Handy Corporation produced the skits using professional actors and singers.

  Coca-Cola photographers loved to snap pictures of presidents and other rulers with the proper soft drink. Here Truman, Eisenhower, Kennedy, and Johnson were caught imbibing, and even Fidel Castro enjoyed the fizzy beverage.

  Bill Clinton – shown here chugging Coke with wife Hillary at the Moscow bottling plant – joined a long line of U.S. presidents who appreciated Coca-Cola.(AP WIDE WORLD PHOTOS)

  The Beatles didn’t mind posing with Cokes, and they nearly signed a deal to sing commercials, but the proposed fee was too stiff for Robert Woodruff.

  Clasping their Cokes like talismans of peace, world youth taught the world to sing in perfect harmony while encouraging consumption of the right soft drink in the 1971 “Hilltop” commercial.

  By 1973, the company finally appealed to hippies and blacks in this relaxed, integrated magazine spot.

  “Mean” Joe Greene chugged eighteen 16-ounce bottles of Coke for his famous 1979 commercial, vomiting after the sixth. After all that, the producers used the first take.

  Coke CEO Paul Austin, looking depressed, worried, and lost in his 1979 executive suite, suffered from undiagnosed Alzheimer’s disease. (The Atlanta Journal-Constitution/Louis Favorite)

  The implacable, inscrutable Boss at his desk.

  CEO Robert Goizueta and president Don Keough stand outside Atlanta’s first World of Coca-Cola museum, which opened in 1990. During the eighties and early nineties, the two executives complemented one another perfectly—at least in public.

  Doug Ivester, who took over as CEO after Roberto Goizueta’s death in 1997, looked mildmannered, but he liked to think of himself as a predatory wolf. After a brief reign, he was ousted in late 1999. (The Atlanta Journal-Constitution /Renee Hannans)

  Australian Doug Daft was unprepared to assume the CEO mantle after Ivester was forced out. He fired thousands and morale sank as investigations and scandals mounted. He left in 2004. (Courtesy Coca-Cola Company)

  In the late 1990s Coke and Pepsi offered millions of dollars to American school districts for exclusive vending privileges. (©Jerry Dolezal)

  The Campaign to Stop Killer Coke, begun by activist Ray Rogers in 2003, claimed that The Coca-Cola Company was responsible for the murder of union members who worked in Coke bottling plants in Colombia. Rightwing paramilitaries committed the violence, but who ordered it? (Illustration by Jay Lynch, Corporate Campaign, Inc.)

  Coca-Cola also faced international protests and censure for allegedly depleting the water table in India in the early twenty-first century, though the Company claimed that it added back water through rain harvesting and that the real water problems were caused by drought and poor agricultural practices. (Illustration by Carlos Latuff, www.KillerCoke.org)

  Irish native Neville Isdell came out of retirement in 2004 to restore morale and turn the Company around. He brought back Muhtar Kent, son of a Turkish diplomat, despite an old insider trading scandal. Kent took over as CEO in 2008 and continued the world-wide Coca-Cola conquest. (Courtesy The Coca-Cola Company)

  In 2012, Coca-Cola returned to Myanmar, leaving Cuba and North Korea as the only countries where Coke does no official business. CEO Muhtar Kent flew to Myanmar to deliver one of the first cases to a shop owner. (Courtesy The Coca-Cola Company)

  __________________

  * Asking former adversaries to join ranks would become an Isdell trademark. As part of the settlement of the racial discrimination suit, Coke had agreed to allow an independent task force to monitor its progress towards a diverse workforce. It was due to end soon, but in November 2004 Isdell personally appeared before U.S. District Judge Richard Story to ask him to extend it another year. After the task force was finally dismantled, Isdell invited its chair, former U.S. Labor Secretary Alexis Herman, to join the Coca-Cola board of directors.

  * Chief marketing officer Chuck Fruit, in poor health, resigned in July 2005.

  * The National Soft Drink Association had renamed itself in 2004 as non-sodas gained market share.

  * A year later, a U.S. judge would dismiss the case, saying that Turkish courts should adjudicate it.

  * Following the devastating Indian Ocean tsunami of December 26, 2004, Coca-Cola gave away 1.2 million bottles of clean drinking water, along with food, medicine, clothing, tents, and $10 million in cash.

  * The idea for a Happiness Factory ad originated with the Red Cell agency, inspired by the 2005 Charlie and the Chocolate Factory movie remake. But the Dutch outlet of Wieden+Kennedy executed the spot with its own interpretation.

  ~ 25 ~

  Surging Ahead

  Our Mission: To refresh the world . . . Inspire moments of optimism and happiness . . . Create value and make a difference.

  —“2020 Vision” (The Coca-Cola Company, 2009)

  By the time Muhtar Kent became CEO of the Company in the summer of 2008, the U.S. economy was sliding into recession as the housing bubble burst. The entire stock market declined, dragging Coca-Cola stock back down to $50 a share. As gas prices simultaneously rose to $4 a gallon, people cut back on buying drinks at convenience stores after filling up at the pump, and Dasani sales declined as people drank more tap water.

  Despite these setbacks, Kent remained upbeat. “The strategy is in place,” he said. “What we need to do is execute that strategy better.” Coke would continue to snap up alternative beverages—it bought 40 percent of Honest Tea in February 2008—but despite declining cola sales, Kent insisted that “sparkling beverages are the oxygen of our company.” Still, he emphasized that he wasn’t satisfied, remaining “constructively discontent,” an echo of Robert Woodruff’s old mantra.

  In many ways, Muhtar Kent was the ultimate international Coca-Cola man, associated with the Company since he was 25. The son of a Turkish consul general, Kent was born in December 1952 in New York City, but he was educated in private schools in Turkey, otherwise living in Thailand, India, and Iran as his father served as ambassador to those countries. In British universities, where he obtained an MBA, Kent was not the best student. He loved to party, and with his dark good looks and flashing smile, he was something of a playboy. In the summer of 1977, just after graduation, he toured California with a friend and loved it. “In America,” he said, “if it makes sense, people do it.” The next year he joined Coca-Cola, working mostly in Europe. He spoke fluent English, Turkish, Italian, and French.

  Kent became a hard-charging Coke man who worked long hours. “I call him Bulldozer,” said his former boss at Efes Beverage Group in Turkey. “He’s very stubborn. He never stops pushing.” At 6'1", Kent had a commanding, though nonthreatening presence, with a friendly, gregarious demeanor. He loved fast cars, driving a classic Porsche and following Formula One racing. He and his wife, Defne, had a daughter, Selin, and a son, Cem.

  Necdet Kent, his father, had served as a role model. Always immaculately dressed, the elder Kent was an international diplomat with a strong humanitarian bent. During World War II, as consul general in Marseilles, Kent saved Turkish Jews from the gas chambers. Muhtar Kent, a nonpracticing Muslim, was friends with Ecumenical Patriarch Bartholomew, the head of the Eastern Orthodox Christian Church.

  Kent’s tolerance for diversity ended with the cola wars, however. Ear
ly in his career, a beggar in Morocco asked for spare change to buy a Coke. To encourage his good taste, Kent gave him a $10 bill and said, “Buy a case of Coke.”

  THE CONTROVERSIAL BEIJING OLYMPICS

  The 2008 Summer Olympics, scheduled to open in August in Beijing, would mark the eightieth anniversary of Coca-Cola’s Olympic sponsorship. Coke was going all out for this event because China, with its 1.3 billion people, was an extraordinarily important market. There were already 36 Coca-Cola bottling plants in China, with 30,000 employees. Even with the low per capita annual average Chinese consumption of twenty-five servings of eight-ounce Coke products (compared to nearly four hundred in the United States), China was already Coke’s fourth biggest market, and Kent expected it to become the Company’s top market “in the not-too-distant future.” In 2001, the day after the announcement that Beijing would host the Olympics, Coke began distributing 1 million congratulatory cans throughout China. Now the Company splashed signage all over Beijing while funding fifty-eight rural Chinese schools to build goodwill.

  Coke would literally roll out the red carpet for the Olympic torchbearers as they ran across China, as shown in Chinese TV ads. Declaring 2008 to be the “Year of Shuang” (according to officials, Shuang meant “a physical and emotional state of refreshment”), Coca-Cola prepared to spend some $90 million on the event, including a 40,000-square-foot Shuang Experience Center, a Chinese version of the World of Coca-Cola Museum, featuring a film showcasing Coke’s sponsorship of the Olympic torch relay around the world.