How Coca-Cola's Ruthless Business Tactics Created a Despicable Global Powerhouse
Photo Credit: ronstik/ Shutterstock.com
Stay up to date with the latest headlines via email.
For God, Country, and Coca-Cola by Mark Pendergast is the definitive history of the product so many see as a symbol of America itself. This impressive tome – recently released as a third edition with added new material – is not a critique of Coca-Cola, nor is it a fan’s tribute, as Pendergast reveals things the Coca-Cola Company doesn’t want you to know. (Yes, it used to contain cocaine.) He even reveals the drink’s original secret formula (which is less exciting than you might think).
Coca-Cola is not fascinating for what it is – colored sugar water with bubbles – but for what it represents. And that’s a point long known by the company’s marketers, with the exception of when they forgot it during the New Coke fiasco in the 1980s. Today, marketing students in business schools everywhere study that famous gaff.
Despite the decades-old slogan, “Delicious and Refreshing,” people do not drink Coca-Cola for the taste. They drink it because they associate it with positive things like friendship, fun, patriotism, and athleticism. Careful to market the drink to all people, everywhere, without alienating anyone, the ads are often vague. “Coke is It!” What is “it”? It’s whatever you want it to be, just as long as it makes you want to buy more Coke!
The book guides readers through the decades of marketing campaigns that built this image, most significantly during World War II, when Coca-Cola was made available to U.S. soldiers everywhere in the world, often at the government’s expense. When sales slumped, the answer was never changing the flagship product; it was a new ad campaign. Remind consumers that Coke = fun (or simpler times, or hope, or whatever feeling they crave) and they will drink more of it.
Because constant, never-ending growth is seen as essential, the other necessity is finding new channels to facilitate more Coke-drinking than ever before. Today, you can be 50 miles from nowhere in any country except Cuba and North Korea and if you crave an ice-cold Coca-Cola, you can get one. Even in places where few have clean drinking water or electricity, both needed to produce ice-cold Coke, some enterprising entrepreneur will have electricity and a cooler and plenty of Coke. The same cannot be said of nearly any other product.
The New Coke failure punctuates this strange phenomenon – that the world loves and guzzles an unhealthy beverage, but not for its good taste. Pepsi showed that in blind taste tests, more people prefer Pepsi over Coke. New Coke was tastier than both Coke and Pepsi in blind taste tests. Surely consumers would love it. Except, they didn’t. They wanted fun, hope, patriotism, and everything else they associated with good, old-fashioned Coca-Cola, not some new, better-tasting concoction.
Readers seeking the dirt on Coca-Cola’s sordid past with Columbian paramilitaries and Guatemalan death squads will find these episodes covered briefly in this book. But the completeness of the company’s history in this book paints a bigger picture, and Coca-Cola’s tangles with death squads fit in as just one piece.
This is a company devoted to, above all else, making as much money as possible and selling as much Coca-Cola as possible. Period. Nazis get thirsty, too, you know. In almost every case, the company tried to please everyone and sell to everyone, without taking sides, unless it had no choice.
It’s no good that Coca-Cola did business with a Guatemalan bottler who allegedly hired death squads to murder employees trying to unionize. But that is all part of a larger pattern, a larger scandal – although there’s no conspiracy at all. The drive to increase profits and sales and market share at all cost is the company’s story, plain and simple. It took us from a 6.5-ounce drink only available at soda fountains to one available everywhere in sizes as large as 64 ounces.
Coca-Cola told us it wanted to teach the world to sing, but it’s far more likely it is giving the world diabetes. Today, a small Coke at McDonalds is 16 ounces. Pendergast, ever the balanced journalist presenting both sides, fails to definitely state that Coca-Cola is unhealthy. He generously points out that Coca-Cola creates jobs and donates to charity, even though he notes the company’s policy of “strategic philanthropy” – i.e. using “charitable” donations to gain access to valuable markets, particularly children.
The book is a long and somewhat exhausting read, but it’s also a captivating history of the development of America’s consumer culture (and terrible dietary habits) and it contains fascinating profiles of the men (yes, mostly men) behind the company, making readers wonder what a psychologist might have to say about these often tyrannical, driven workaholics.
Here are some answers Pendergast gave about his book and the company he wrote about.
Jill Richardson: Why did you choose the title For God, Country, and Coca-Cola?
Mark Pendergast: Coca-Cola has been a kind of religion to many people, including the inventor, John Pemberton, who died two years after he came up with it, and Asa Candler, who took it over and used to lead the singing of "Onward Christian Soldiers" at his sales meetings.
These were days when the drink was under attack for having cocaine in it and even afterwards for its caffeine content. So they felt like early Christian martyrs in a way, fighting for a just cause. Candler called Coca-Cola "a boon to mankind." Coke employees have always joked that they have Coca-Cola syrup flowing in their veins.
The drink has also become a kind of religion for consumers, a symbol of the American way of life as well. During World War II the drink was deemed an "essential morale booster" for the troops, and it was served in lieu of communion wine during the Battle of the Bulge. When New Coke was introduced in 1985, people wrote anguished letters as if they had killed God. Here is an actual letter I quoted in the book: "There are only two things in my life: God and Coca-Cola. Now you have taken one of those things away from me." I could go on....
JR: Can you explain Coca-Cola's relationship with the two ingredients in its name, coca and kola nuts? How much cocaine was initially in the product and when was it removed?
MP: Coca-Cola was named for its two principal drug ingredients. Coca leaf from Peru contained cocaine. Kola nut from Ghana contained caffeine. Original Coca-Cola had a very small amount of cocaine in a six-ounce drink, about 4.3 milligrams. The company took out all but a minuscule amount of cocaine in 1903 and the final amount in 1928.
JR: You imply in the book that it's attempted to sugarcoat (no pun intended) this part of its past, saying at some points that the product never contained cocaine. Is that true? Can you elaborate?
MP: Every time I go to the World of Coca-Cola museum in Atlanta, I ask the guides if Coca-Cola ever contained cocaine. They assure me that it did not. The official company line seems to be that Coca-Cola never contained added cocaine -- i.e., they didn't add white powdered cocaine, which is true. But it did contain fluid extract of coca leaf, which contains cocaine. For years, the company line has also been that the name "Coca-Cola" is just a "euphonious combination of words" -- i.e., it sounds nice. True, but the drink was also named for its two principal drug sources.
JR: How did Coca-Cola use World War II to establish its dominance abroad? And what impact did its role in the war have for their market at home?
Robert Woodruff, the head of Coca-Cola, declared shortly after the attack on Pearl Harbor that, "We will see that every man in uniform gets a bottle of Coca-Cola for five cents, wherever he is and whatever it costs our company." Coke was subsequently declared an essential product and Coke men called Technical Observers were sent overseas in army uniforms at government expense to establish 64 bottling plants behind the lines. As a result, Coca-Cola was put in position for global expansion in the postwar world.
American soldiers came home with an overwhelming preference for Coca-Cola. In a 1948 poll of veterans, conducted by American Legion Magazine, 63.67 percent specified Coca-Cola as their preferred soft drink, with Pepsi receiving a lame 7.78 percent of the vote. In the same year, Coke’s gross profit on sales reached a whopping $126 million, as opposed to Pepsi’s $25 million; the contrast in net after-tax income was even more telling, with Coke’s $35.6 million towering over Pepsi’s pathetic $3.2 million.
Soon after the war, when the Army quizzed 650 recruits, 21 had never drunk milk, but only one soldier had never sampled a Coke. As the company’s unpublished history stated, the wartime program “made friends and customers for home consumption of 11,000,000 GIs [and] did [a] sampling and expansion job abroad which would [otherwise] have taken 25 years and millions of dollars.” The war was over, and it appeared, at least for the moment, that Coca-Cola had won it.
JR: The impact when Coca-Cola entered new markets was increased sales for all beverages, not just Coca-Cola -- and less consumption of water and milk. Can you explain that?
Yes. As Coca-Cola and subsequently other competing soda companies increased marketing and other campaigns to out-do one another, that's what expanded the total soda market. When the market for soft drinks expanded, it helped competitors such as Pepsi, and when people are paying attention to the cola wars, they are less focused on water or milk.
JR: Coca-Cola's history practically reads like a marketing textbook. Can you tell us about its revelation of the little girl's Pooh bear? Why do Coke-drinkers love Coke so much?
Archie Lee, who was the ad man behind "The Pause That Refreshes" slogan during the Depression, noticed during a beach vacation, that his four-year-old daughter lavished such attention on her Pooh bear that other children fought over it, though other toys appeared more attractive. Lee took the incident as a parable. “It isn’t what a product is,” he wrote to Robert Woodruff, “but what it does that interests us”—and set out to plant the proper thoughts about Coca-Cola, which he wanted to make as popular and well-loved as the Pooh bear.
Coke lovers care so much about the drink for many reasons -- not least the ubiquitous, effective advertising that associates the drink with youth, energy, happiness. But many people also really do associate the drink with some of the best times in their lives.
JR: How has soda consumption changed in the U.S. from the drink's introduction over a century ago, back when a serving was 6.5 ounces? Was there ever a "turning point" when Americans switched from more modest per capita soda consumption to the amount they drink today, or has it been a gradual change over time?
MP: Amazingly, Coca-Cola was served in 6.5 ounce bottles for a nickel until 1955, when King-Size Coke was finally introduced. (“King-Size” drinks were 10 and 12 ounces, smaller than a McDonald’s small today.) Since then, the sizes grew steadily larger, and PET bottles meant they wouldn't break and weren't too heavy. Super-size me, indeed. But over the last decade, concern over the obesity epidemic has made Coca-Cola back off a bit, and now the company has introduced smaller mini-cans, along with the huge containers.
JR: Over the years, Coca-Cola has dealt with Nazis, dictators, South Africa's apartheid government, and even allegedly Guatemalan death squads. Should consumers hold Coke accountable for this dark part of its history, or is it all water under the bridge? Do you agree with Coke's position that it doesn't play politics, it just sells soda?
MP: Of course, the company, like any other business, should be held accountable for its actions, although as you suggest, many of these episodes are safely in the past. The Guatemalan death squads were in the late 1970s. Paramilitaries in Colombia killed union employees in similar fashion in Coke bottling plants in the 1990s.
Quite recently, human rights violations have once again occurred against Guatemalan bottling employees. The Coca-Cola Company has usually attempted to distance itself from such violence, saying that it doesn't control its bottlers, but that seems disingenuous, since the bottlers rely on Coca-Cola syrup from Big Coke.
On the other hand, let me point out that while Coke did business inside South Africa during the apartheid regime, it left the country for a while and then was very instrumental in helping to ease a peaceful transition to black rule under Nelson Mandela.
JR: The past decade has ushered in an enormous change in Coca-Cola's product portfolio. How has it changed and why? Do you think the day will come when Coca-Cola's flagship product is no longer its top seller?
MP: Coca-Cola has diversified in the face of increased competition from other types of beverages and in response to concern over the obesity epidemic. It purchased Glaceau, maker of Vitaminwater, for $4.1 billion, for instance, in 2007. Today the Coca-Cola Company sells 3,500 beverages worldwide, and about a quarter of them are low- or no-calorie.
The future is hard to predict, but I don't think that Coca-Cola will lose its place as the flagship product in the foreseeable future -- but I do predict that the combined sales of Diet Coke and Coca-Cola Zero will eventually surpass sales of regular sugary Coca-Cola.