The Coke Machine Part 2
Like c.o.ke, Pepsi had its origins in the patent medicine era, the creation of a North Carolina pharmacist named Caleb D. Bradham, who sold a brew of kola nut and the stomach enzyme pepsin as a cure for stomachache. It nipped successfully at c.o.ke's heels for a while, with some three hundred bottlers in twenty-four states by 1910, but foundered during World War I, when the spike in sugar prices all but put it out of business. The company probably would have died if not for the intervention of a temperamental New York City department store owner, Charles Guth, who bought it out of bankruptcy in 1931 after c.o.ke refused to cut him a discount for his soda fountains. Despite sweetening Pepsi's formula and reviving bottling, Guth failed spectacularly at first-even offering to sell the company to c.o.ke for $50,000 in 1933.
When c.o.ke refused, the company went for broke with a new strategy: bottling the drink in 12-ounce beer bottles and selling "Twice as Much for a Nickel." The tactic worked; Pepsi sales rocketed back during the value-conscious Depression, with profits topping $2 million in 1936, $3 million in 1937, and $4 million in 1938. The new medium of radio drilled the drink more firmly into the public's mind with an infectious jingle first introduced in 1940 that became the most successful radio spot in history: "Twice as Much for a Nickel, Too . . . Pepsi-Cola Is the Drink for You."
c.o.ke wasn't about to take such vibrant free-market compet.i.tion lying down. It went straight to the government to quash the young upstart, arguing in a series of court cases in the United States, Canada, and the United Kingdom that c.o.ke had exclusive rights to the word "cola." Pepsi countersued, charging c.o.ke with illegally trying to const.i.tute a monopoly. In the end, Pepsi's arguments carried the day, with a British court finally ruling in 1942 that "cola" was a generic term any company could use. c.o.ke sued for peace, with Woodruff personally agreeing with Pepsi's new president, Walter Mack, that the two companies would no longer compete in the court of law.
Instead, they competed in the arena of image-and here, for the first time, c.o.ke was losing. In 1950, Pepsi hired as its president Al Steele, a former D'Arcy executive and c.o.ke VP of marketing, who out-c.o.ked c.o.ke with a new lifestyle-oriented campaign. While c.o.ke still marketed itself as the product for everyone-workmen and businessmen, soldiers and socialites-Pepsi focused solely on young middle-cla.s.s families moving into suburban tract houses in droves.
"Stay young and fair, be debonair, be sociable, have a Pepsi!" the new radio jingles urged. Pepsi's USP had nothing to do with its product, but in the idea that it represented: youth, energy, upward mobility. And the campaign was wildly successful. After dipping as low as $1.25 million in 1950, Pepsi's net profit shot up to $14 million by 1955. For the first time, c.o.ke's market share began slipping, and sales slumped. "c.o.ke can hardly be said to be foundering," wrote The Wall Street Journal The Wall Street Journal. "But it is faltering." Pepsi, meanwhile, distilled its message to take advantage of the burgeoning "generation gap" with a new slogan: "For those who think young." Eventually, the campaign would become a direct appeal to the new generation of "baby boomers"-the Pepsi Generation-and establish the most important battleground for the Cola Wars: young people.
Despite Pepsi's upper hand in advertising, however, c.o.ke had something the upstart could never match: money. In 1956, c.o.ke poured $11 million into its advertising, one of the top ten ad budgets in the country. By 1963, it was number one, spending $53 million a year. Much of it was spent on increasingly targeted research, surveying customers in all of 1.6 million retail outlets. McCann-Erickson led the way in the newfangled approach of "motivational research," a doubling-down on the psychological advertising techniques of the 1930s that used "depth interviews" to plumb what consumers really wanted in their products. Maidenform, for example, exploited what it said was women's subconscious exhibitionist tendencies. GM put a convertible in the window to entice men with a "possible symbolic mistress," then once in the showroom pushed the security of the sedan. upper hand in advertising, however, c.o.ke had something the upstart could never match: money. In 1956, c.o.ke poured $11 million into its advertising, one of the top ten ad budgets in the country. By 1963, it was number one, spending $53 million a year. Much of it was spent on increasingly targeted research, surveying customers in all of 1.6 million retail outlets. McCann-Erickson led the way in the newfangled approach of "motivational research," a doubling-down on the psychological advertising techniques of the 1930s that used "depth interviews" to plumb what consumers really wanted in their products. Maidenform, for example, exploited what it said was women's subconscious exhibitionist tendencies. GM put a convertible in the window to entice men with a "possible symbolic mistress," then once in the showroom pushed the security of the sedan.
Eventually, the practice paved the way for a new "creative revolution" in the 1960s, a backlash against the overly utilitarian USP that would forever put the idea idea of the product above the product itself. "The greater the similarity between products, the less part reason really plays in brand selection," noted the revolution's chief architect, David Ogilvy. "There really isn't any significant difference between the various brands of whiskey or the various cigarettes or the various brands of beer." (He might have included soft drinks.) As a result, argued Ogilvy, it was the advertiser's job to create an emotional response that consumers would unconsciously a.s.sociate with a brand-the kind of advertising at which c.o.ke had excelled for nearly a century. of the product above the product itself. "The greater the similarity between products, the less part reason really plays in brand selection," noted the revolution's chief architect, David Ogilvy. "There really isn't any significant difference between the various brands of whiskey or the various cigarettes or the various brands of beer." (He might have included soft drinks.) As a result, argued Ogilvy, it was the advertiser's job to create an emotional response that consumers would unconsciously a.s.sociate with a brand-the kind of advertising at which c.o.ke had excelled for nearly a century.
In 1957, journalist Vance Packard exposed the "depth boys" in his best-selling book The Hidden Persuaders The Hidden Persuaders. The public outcry that followed, however, focused on a short section of the book about subliminal advertising-a part that directly implicated c.o.ke. At the time, a researcher named James Vicary flashed the words "Hungry? Eat Popcorn" and "Drink Coca-Cola" for up to a three-hundredth of a second every five seconds during a showing of the movie Picnic Picnic in a New Jersey movie theater. According to Vicary, popcorn sales increased 57 percent and c.o.ke sales 18 percent. Vicary later backtracked, all but admitting he made the whole thing up. Advertisers further denounced the practice, and the furor subsided. (Modern research has since debunked the technique.) in a New Jersey movie theater. According to Vicary, popcorn sales increased 57 percent and c.o.ke sales 18 percent. Vicary later backtracked, all but admitting he made the whole thing up. Advertisers further denounced the practice, and the furor subsided. (Modern research has since debunked the technique.) But the public missed the larger point of Packard's book: All advertising is on some level subliminal-utilizing only dimly conscious parts of our brains to get us to irrationally open up our wallets. As New York Times New York Times columnist Rob Walker points out, "You'd have to be an idiot not to recognize that you're being pitched to when watching a thirty-second commercial. But recognition is not the same as immunity." In fact, "it's precisely because we don't tend to think of regular advertising as something we have to be on guard against, or even take seriously, that it works on us in much the way we imagine subliminal advertising might." columnist Rob Walker points out, "You'd have to be an idiot not to recognize that you're being pitched to when watching a thirty-second commercial. But recognition is not the same as immunity." In fact, "it's precisely because we don't tend to think of regular advertising as something we have to be on guard against, or even take seriously, that it works on us in much the way we imagine subliminal advertising might."
After the challenge from Pepsi, c.o.ke redoubled its efforts to a.s.sociate c.o.ke subliminally with almost everything everything. Of all of the agencies on Madison Avenue, none embraced the new "depth" techniques more than c.o.ke's ad house McCann. According to the firm's research, when people thought of c.o.ke, they thought not so much of the beverage itself as of the social interactions it helped facilitate-from the hostess serving c.o.ke at dinner to the dads popping caps at Little League games. McCann copywriter Bill Backer used the insight to create the first successful c.o.ke slogan in years: "Things Go Better with c.o.ke." What What went better didn't matter so much-c.o.ke could just as well spark romance as childhood friendship. It was left to the consumer to fill in the blank. went better didn't matter so much-c.o.ke could just as well spark romance as childhood friendship. It was left to the consumer to fill in the blank.
That same year, Pepsi unveiled its "Pepsi Generation" ad campaign that challenged baby boomers to rebel against the conformity of their parents. Finally, both companies had an advertising style-and neither said a word about what the soda actually tasted like or contained. Despite the compet.i.tion, the real winner was the soft drink market. Between 1954 and 1964, per capita consumption rose nearly 25 percent, from 174 servings per capita in 1954 to 227 in 1964. Along with the advertising face-lift, c.o.ke also had a new face of the company. As the 1960s dawned, new president J. Paul Austin was the first in decades to emerge from the shadow of chairman Robert Woodruff to drag the company into a new corporate era. Even as Pepsi merged with Frito-Lay snack company to become PepsiCo, c.o.ke finally got over its single-product fetish to branch out with Minute Maid juices, diet soda Tab, lemon-lime Sprite, and fruit-flavored Fanta (a name it kept despite its n.a.z.i origins).
Austin also confronted the changing reality of America, as blacks, women, and other groups were finally demanding their civil rights. The civil rights debate began, in fact, when four students at a Woolworth's counter in Greensboro, North Carolina, demanded their right to a c.o.ke c.o.ke, by now the symbol of American prosperity. Caught between rumors it financed White Citizens' Councils on one side, and the National a.s.sociation for the Advancement of Colored People on the other, the company stayed on the sidelines. "I've heard the phrase 'Stand up and be counted' for so long from both sides that I'm sick of it," groused one vice president. "Sure, we want to stand up and be counted, but on both sides of the fence." Taking a moral stand, after all, could only lose the company customers. Even as Woodruff personally risked his reputation in Atlanta to support a n.o.bel Prize dinner for Martin Luther King, Jr., the company dragged its feet on producing racially integrated advertising.
Similarly, when the war in Vietnam broke out, the company virtually ignored the controversial conflict; there would be no soldier made of sugar in Danang, no "Have a c.o.ke" in Saigon. With nothing much to lose, Pepsi filled the gap, courting hippies and love children with the countercultural slogan "You've Got a Lot to Live, Pepsi's Got a Lot to Give." Not that c.o.ke slipped behind the times. When the "depth boys" at McCann told c.o.ke that youth of today didn't like phoniness in their leaders, lyricist Bill Backer reached into the World War II archive to pull out "The Real Thing," a slogan that could brilliantly appeal to disenfranchised youth searching for a more authentic world, as well as disaffected adults longing for a simpler time before all of the national discord.
The times were catching up with c.o.ke, however. As the socially conscious 1970s. .h.i.t, farm labor organizer Cesar Chavez followed up his successful grape boycott with a campaign protesting the deplorable conditions in Florida orange groves-focusing particularly on c.o.ke's Minute Maid subsidiary. An NBC doc.u.mentary revealed substandard housing and inadequate toilet facilities for workers making less than minimum wage. c.o.ke was livid at being singled out by the program but appeared publicly contrite. Testifying before the U.S. Senate, Austin sympathized with the "profound sense of futility" suffered by the workers, and promised to change. Eventually, c.o.ke signed a union contract with the United Farm Workers in 1972, leading to higher wages and benefits for Minute Maid workers compared with other fruit pickers. (The contract lasted only until 1994, however, when c.o.ke sold its Florida orange groves, which effectively ended union representation in the state.) On some level, Austin's rhetoric about changing the world was genuine. Under a principle he dubbed the "halo effect," the company launched new initiatives on recycling and acquired a company called Aqua-Chem to produce desalinization plants to provide clean water in the Middle East-even though the subsidiary never turned a profit. The company's new social thrust, however, wasn't completely uncalculated. Now that love beads and folk music were safe cultural touchstones, c.o.ke glommed on to the hippie movement for its biggest transformation in decades. The company had already gone from a medicinal cure-all to sign of good breeding, from refreshing pause to all-American icon. Now it would tackle world peace.
Bill Backer supposedly came up with the idea when his plane was fogged in in Ireland, and he saw his fellow pa.s.sengers sharing c.o.kes to pa.s.s the time. At that moment, he realized c.o.ke was "a tiny bit of commonality between all peoples." He set out to re-create the vision with a new commercial a.s.sembling two hundred international teenagers with stereotypical national clothing, to sing the earnest lyrics: "I'd like to teach the world to sing, in perfect harmony, / I'd like to buy the world a c.o.ke, and keep it company. . . ." In reality, the shoot was a nightmare, with the unruly kids constantly breaking formation to run down the hill to get more c.o.ke. But the ad worked, turning the act of buying a c.o.ke into a nod to international harmony, and sp.a.w.ning a radio hit that Newsweek Newsweek noted was a "sure-fire form of subliminal advertising." noted was a "sure-fire form of subliminal advertising."
As hope of the 1970s settled into economic malaise, however, c.o.ke showed how easy it was to appeal to the other side of the political spectrum. A new series of ads featured lighthouses, redwoods, and corn silos, set to a song called "Look Up, America!"-a nod to the new "moral majority" backing conservative president Ronald Reagan. Through it all, sales of soft drinks continued to soar, from 242 cans per person in 1970 to 363 cans per person in 1980. As Pepsi's new CEO Roger Enrico once said, "At Pepsi, we like like the Cola Wars. . . . The more fun we provide, the more people buy our products- the Cola Wars. . . . The more fun we provide, the more people buy our products-all our products." It was Pepsi, however, that changed the rules of engagement, leading to the Coca-Cola Company's biggest blunder, and the Coca-Cola brand's greatest triumph. our products." It was Pepsi, however, that changed the rules of engagement, leading to the Coca-Cola Company's biggest blunder, and the Coca-Cola brand's greatest triumph.
What's amazing , in retrospect, about the Pepsi Challenge isn't that Pepsi had the audacity to compete with c.o.ke on the basis of taste. It's that it hadn't done so before. Here, the two soda giants had been fighting it out for decades on which soda refreshed or relaxed you better, on which one made you feel younger or more nostalgic-as if to distract consumers from the simple idea that they could just drink the one they thought tasted better. in retrospect, about the Pepsi Challenge isn't that Pepsi had the audacity to compete with c.o.ke on the basis of taste. It's that it hadn't done so before. Here, the two soda giants had been fighting it out for decades on which soda refreshed or relaxed you better, on which one made you feel younger or more nostalgic-as if to distract consumers from the simple idea that they could just drink the one they thought tasted better.
It took a state of near desperation to try it. c.o.ke had trounced Pepsi on market share for years in Texas before a new regional manager decided on a fresh approach. He found it in television commercials inviting shoppers to try two sodas head-to-head, filming their surprised expressions when it turned out they liked Pepsi better. The campaign doubled market share in just a few months, and Pepsi eventually rolled it out nationally, reaching 90 percent of the market by 1983.
The campaign rocked c.o.ke to the core, leading to its own tests revealing that Pepsi did actually outperform c.o.ke on taste by a small margin. Nonetheless, both companies fired off competing ads, each claiming they actually tasted better, at the same time slashing prices and offering discounts at supermarkets to win back customers. After a year or two, however, they realized the scorched-earth tactics only hurt both of them.
"The Pepsi Challenge, if managed differently, might have resulted in a real Cola War, one that was price-based," says historian Richard Tedlow. "This, however, is precisely the kind of compet.i.tion both companies want to avoid." Pepsi's incoming president, Roger Enrico, called off the campaign almost as soon as it began, and both companies soon returned to more traditional forms of advertising-with Coca-Cola releasing the new slogan, "c.o.ke Is It!" which, like "Things Go Better," was ambiguous enough to open itself to any interpretation.
Inside c.o.ke, however, executives continued to fret. Every year, Pepsi chipped away at the company's market share a little bit more. From a high of 60 percent after World War II, c.o.ke's share had fallen to just 22 percent by 1984-compared with Pepsi's 18. What was worse, when c.o.ke applied a pseudo-scientific measure called the Advertising Pressure Index (API), it found "advertising alone couldn't account for Pepsi's aggressive advance, or c.o.ke's devastating decline"-as if the thought that a company could grow or falter due to something other than its advertising image had never occurred to them. That realization set them up for a drastic mistake under the leadership of c.o.ke's new president, a Cuban chemist named Roberto Goizueta.
A member of Cuba's financial elite who fled the island before Castro's takeover in 1960, Goizueta got a job with c.o.ke first in Miami, then Atlanta, where he gained the trust of the senior executives and even learned the secret formula. His eventual rise to the top came the old-fashioned way: sucking up to the boss. Robert Woodruff was now in his eighties, but he was still chairman, and when Paul Austin flared out in a very public bout with early-onset Alzheimer's, Woodruff was back in charge. As the aging Boss suffered illness and depression, Goizueta visited him every day, and in one of the old man's last acts, he tapped Goizueta for the hotly contested top slot in 1981.
Perhaps because of his unusual ascent, Goizueta immediately declared the company would no longer be afraid to take risks. "There are no sacred cows," he announced, up to and including c.o.ke's secret formula. "Reformulation of any or all of our products will not stand in the way of giving any of our compet.i.tors a real or perceived product advantage." Case in point, he oversaw the introduction in 1982 of Diet c.o.ke, violating the sacred dictum that c.o.ke was a "single thing coming from a single source"; within two years, it had become not only the best-selling diet drink, but also the number three soft drink overall. That success led to the act of ultimate hubris: changing the sacred formula of c.o.ke.
The company should have known better. While developing Diet c.o.ke, marketers discovered that the word "c.o.ke" alone was enough to drive sales: When they tested Tab against Pepsi, it lost by a 4 percent margin; when they poured the same drink into a Diet c.o.ke can, however, it caused customer preference to jump 12 points. Despite these findings, marketing chief Sergio Zyman led a two-year search for a new sugar-sweetened formula that would beat Pepsi in blind blind taste tests, finally hitting upon a sweeter version that consistently outranked Pepsi by 6 to 8 points. The project was so secret the company didn't even tell its advertising agency McCann until January 1985, just three months before its introduction. taste tests, finally hitting upon a sweeter version that consistently outranked Pepsi by 6 to 8 points. The project was so secret the company didn't even tell its advertising agency McCann until January 1985, just three months before its introduction.
Company executives stood up before a packed press conference on April 23, 1985, forever after known as "Black Tuesday" among the c.o.ke faithful. Unfortunately for c.o.ke, word of the change had already leaked. The day before, Pepsi had taken out a full-page ad in The New York Times The New York Times declaring victory in the Cola Wars with the statement "The Other Guy Just Blinked." declaring victory in the Cola Wars with the statement "The Other Guy Just Blinked."
As Goizueta followed a montage of cowboys, the Grand Canyon, and the Statue of Liberty onto the stage, the press corps leaped: "To what extent are you introducing this product to meet the Pepsi Challenge?" "Have you simply added more sweetness to make it more compet.i.tive with Pepsi?" In the face of such direct questions, Goizueta temporized. New c.o.ke wasn't any sweeter than old c.o.ke, he said, rather it had a "rounder . . . bolder . . . more harmonious flavor." Pepsi had nothing to do with it.
The press didn't buy it, and neither did the public. Anguished calls and letters came pouring into c.o.ke headquarters-more than 400,000 by the end of the ordeal. "You've taken away my childhood," read one. "Changing c.o.ke is like G.o.d making the gra.s.s purple," sputtered another. Finally, c.o.ke capitulated. "We have heard you," Goizueta a.s.sured consumers at a press conference in July announcing old c.o.ke would return. Pepsi continued to bask, with CEO Roger Enrico rushing out a book, The Other Guy Blinked The Other Guy Blinked, in which he sneered: "I think, by the end of their nightmare, they figured out who they really were . . . caretakers. . . . All they can do is defend the heritage they nearly abandoned."
History, however, hasn't exactly seen it that way. Within a year after its release, New c.o.ke faded into oblivion, while "c.o.ke Cla.s.sic" again topped Pepsi in market share. It was the ultimate triumph of image over reality. Consumers rejected the two sodas they actually liked better in blind taste tests, in exchange for the one whose brand image made them feel feel better. better.
Marketing exec Zyman, who was responsible for the debacle more than anyone, later claimed the disaster was all but intentional. "A lot of people said it was a big fat mistake. It wasn't," he wrote. "New c.o.ke was incredibly successful in reattaching consumers to c.o.ke." Zyman left the company in 1987, the apparent fall guy for the disastrous reformulation, but was hired back as chief marketing officer in 1993. Neither he nor the rest of the executive suite at the Coca-Cola Company ever forgot the lesson: Taste aside, image was the most valuable a.s.set the company had. If the company was to succeed, it must be protected at all costs.
THREE.
Biggering and Biggering By the end of the 1980s, it seemed like the Coca-Cola Company could do no wrong. For nearly a hundred years, it had been growing larger and larger, selling more and more of its sugary sweet pleasure. Now, after the New c.o.ke experience, it had survived its biggest stumble ever, and somehow come out stronger for it. After decades of advertising, Coca-Cola's brand had been cemented into the American consciousness as something good and patriotic that brought people together not only in the United States but around the world as well. And now, it represented something more: a part of every American they suddenly realized they'd be heartbroken to lose. For its hundredth-anniversary celebration in 1986, c.o.ke pulled out all of the stops, turning Atlanta's convention center into a huge indoor party for 14,000 people, complete with floats, marching bands, and food including 66,000 pieces of shrimp, 9,000 barbecue ribs, and a fourteen-foot-high c.o.ke bottle popping out of a 7.5-ton cake.
When the hubbub died down, the company's executives turned to the future-where they saw nothing but blue skies on the horizon. Growth had always been a priority at the Coca-Cola Company. Asa Candler had made expansion part of Coca-Cola's very business model; Robert Woodruff had pushed c.o.ke's expansion "within an arm's reach of desire" around the world. But growth would become an obsession for the next generation of c.o.ke executives, spurred by an unprecedented level of wealth in the stock market.
For the first time, average Americans began putting their money into the market in significant numbers-either on their own or through the vehicles of mutual funds or pension funds. These inst.i.tutional investors began to push for higher and higher returns, and companies obliged them, focusing everything on their quarterly earnings statements in a new emphasis that became known as the "shareholder value movement." The idea dates back to an obscure 1975 book by economist Alfred Rappaport. But the philosophy was articulated most famously by Jack Welch, the CEO of General Electric, who declared in 1981 that plodding growth of "blue chip" companies was no longer good enough for him. Instead, he pushed GE's earnings into high gear by cutting waste and inefficiency wherever he found it-including downsizing through ma.s.sive layoffs. He set the tone for other companies, who rushed to please Wall Street by any means necessary-including accounting tricks, stock buybacks, and rampant acquisitions of other companies. Flush with stock options, CEOs profited handsomely, even as they sometimes hurt the long-term success of their companies through an emphasis on short-term growth.
Outside of Jack Welch, no CEO was a.s.sociated with the "shareholder value movement" more than Roberto Goizueta, who became a darling of Wall Street in the 1980s. "I wrestle over how to build shareholder value from the time I get up in the morning to the time I go to bed," he once said. "I even think about it when I am shaving." In the days before the Internet, he had a computer screen installed in a conference room on the twenty-fifth floor of Coca-Cola headquarters with a live feed from the New York Stock Exchange that continually monitored Coca-Cola's stock price; he put another screen at the main entrance to c.o.ke headquarters, so it would be the first thing employees would see as they walked in the door and the last thing they'd see as they left. The company sloughed off divisions acquired by Austin to create his "halo effect" that never turned a profit-such as his desalinization plants in the Middle East-and acquired lucrative new companies with nothing to do with soft drinks, such as Columbia Pictures, fresh off the success of Ghostbusters Ghostbusters and and The Karate Kid The Karate Kid.
But more than anything, growth meant returning to the core business of the company: selling more soft drinks. After the New c.o.ke fiasco, Goizueta changed his tune about "sacred cows," realizing he had acquired "a most unique company with a most unique product." He abandoned any attempt to change the formula, concentrating instead on increasing per capita consumption, or "per-caps," around the world. "If we take full advantage of our opportunities . . . eventually, the number one beverage on Earth will be soft drinks-our soft drinks," he crowed in 1986. Ultimately, he told Fortune Fortune magazine, he envisioned a world where the C on the kitchen faucet stood not for "cold," but for "c.o.ke." So comical do those comments sound today that they call to mind the Once-ler, from magazine, he envisioned a world where the C on the kitchen faucet stood not for "cold," but for "c.o.ke." So comical do those comments sound today that they call to mind the Once-ler, from The Lorax The Lorax, Dr. Seuss's cautionary children's book about corporate excess, who crowed about "biggering and biggering and biggering and biggering," at least until the last Truffala tree was chopped down.
In c.o.ke's case, growth was never an end in itself-it was always a means to constantly raise the share price. The more bottles or fountain drinks, the more earnings from syrup sales. The more earnings, the more investors would put into the company. As the 1990s dawned, Goizueta was promising annual volume growth of 7 to 8 percent a year-translating into some 20 billion additional drinks sold around the world. That, in turn, meant 15 to 20 percent annual growth in earnings. Goizueta personally called the Wall Street a.n.a.lysts who covered c.o.ke to discuss the company's earnings, detailing the new markets where the company was constantly treading.
Not surprisingly, a.n.a.lysts rushed to jump on board the c.o.ke gravy train, followed by inst.i.tutional investors. "If you weren't owning c.o.ke, you were losing," said one about the time. Another called c.o.ke "the closest thing we know of to a perpetual motion machine." Upon learning that Goizueta had been declared CEO of the year in a trade magazine, he said, "h.e.l.l, considering all he's done for shareholders, you should make him CEO of the century." Stock prices rose with each of their predictions; if an a.n.a.lyst predicted lower earnings, they were frozen out. Goizueta profited handsomely-eventually earning more than $1 billion in stock, his reward for raising the value of the company by more than $100 billion throughout the late 1980s and early 1990s. In 1991 alone, he received a bonus of $80 million when he exercised his stock options-at the time, the largest single payout ever given to an American CEO.
Much of c.o.ke's growth in those years came in the form of new markets overseas, as the company gradually expanded into countries it hadn't already colonized. At the same time, executives knew that to raise share value they would have to keep selling more soda in the country where it was created-and that increasingly meant selling not only in more places, but also in larger sizes. In all of the rush to expand volume, however, it never occurred to company executives to ask: Does the world really need need that much c.o.ke? that much c.o.ke?
In the age of Big Gulps and supersizing, it's almost inconceivable that until the 1950s c.o.ke was sold only in 6-ounce bottles. Even as the company was selling in more and more venues around the country, it was still seen as an occasional treat for after meals or on Sunday afternoons. The arms race with Pepsi changed that. After the upstart company's "twice as much for a nickel" campaign, c.o.ke was under constant pressure to offer bigger sizes, too. Finally, in 1955, it relented, rolling out 12-ounce "King Size" bottles. Almost at the same time, it released 26-ounce "Family Size" bottles, intended for home consumption with meals. of Big Gulps and supersizing, it's almost inconceivable that until the 1950s c.o.ke was sold only in 6-ounce bottles. Even as the company was selling in more and more venues around the country, it was still seen as an occasional treat for after meals or on Sunday afternoons. The arms race with Pepsi changed that. After the upstart company's "twice as much for a nickel" campaign, c.o.ke was under constant pressure to offer bigger sizes, too. Finally, in 1955, it relented, rolling out 12-ounce "King Size" bottles. Almost at the same time, it released 26-ounce "Family Size" bottles, intended for home consumption with meals.
For decades, the price of sugar still kept a lid on how big c.o.ke was able to go. That changed in the 1980s when j.a.panese scientists invented high-fructose corn syrup. Unlike sucrose-subject to the whims of international sugar markets-the new sweetener could be made here at home, where corn subsidies keep the prices at rock-bottom levels. "Cheap corn, transformed into high-fructose corn syrup," wrote Michael Pollan in 2003, "is what allowed Coca-Cola to move from the svelte 8-ounce bottle of soda ubiquitous in the '70s to the chubby 20-ounce bottle of today." c.o.ke rolled out a 50 percent high-fructose corn syrup (HFCS) version of its trademark beverage in 1980, delighted to discover that consumers couldn't tell the difference. In 1985, it switched to a 100 percent HFCS version.
The rock-bottom price of syrup now allowed c.o.ke to grow exponentially-especially in fountain sales. Fast-food execs had long known that the way to drive profits was not to offer bigger hamburgers but to offer bigger sizes of the high-margin items such as french fries and soft drinks that went with them. It wasn't until the late 1980s, however, that the concept of "supersizing" really caught on. By then, fast-food companies realized that they could make more money by bundling a burger, fries, and a c.o.ke into a "value meal" and selling it at a discount. They offered further discounts on larger and larger sizes of fries and sodas-both of which could be more easily increased in size, and with a greater profit margin, than could a hamburger or fish sandwich.
As Eric Schlosser describes in Fast Food Nation Fast Food Nation, in the 1990s a 21-ounce medium soda at McDonald's sold for $1.29, while a 32-ounce large soda sold for only 20 cents more. But the cost for ingredients was only 3 cents more-for 17 cents of pure profit. Everyone won-the customer got exponentially more soda, the restaurant got more profit, and the company sold more syrup. And if that wasn't enough, customers could request to "supersize" their drinks-a stomach-busting 64 ounces and 610 calories a pop. By 1996, supersizing accounted for a quarter of soft drink sales. (It was the same story at the 7-Eleven chain of convenience stores, which introduced the 32-ounce Big Gulp, the 44-ounce Super Gulp, the 52-ounce X-Treme Gulp, and finally the 64-ounce Double Gulp. The true champion, however, was "The Beast," an 85-ounce refillable cup released by Arco service stations in 1998.) With two-thirds of the fountain sales market, Coca-Cola was the clear beneficiary of the new drive to push volume. And as consumers became more and more accustomed to larger sizes of soft drinks at fast-food restaurants and convenience stores, the company quietly retooled vending machines and supermarket displays to increase package sizes as well. In some ways, it was the consumers' fault. In the skittish days after New c.o.ke, the company engaged in more and more consumer testing, all of which pointed in one direction: "Bigger is better," according to Hank Cardello, c.o.ke's director of marketing in the early 1980s, who has since broken with his industry roots to become a health advocate. "The mantra was bigger packages, bigger servings, and more of everything per container," he writes in his 2009 book Stuffed Stuffed.
In 1994, c.o.ke began introducing a new 20-ounce bottle, fashioned from polyethylene terephthalate (PET) plastic in c.o.ke's trademark "contour" shape-a variation on the old green-gla.s.s hobbleskirt bottle. It quickly replaced the 12-ounce can to become the standard serving size for c.o.ke. The new container was a boon to the company-reversing years of discounts on multipack boxes of cans and allowing it to charge a premium price on the new, larger bottle. Along with the bigger sizes, c.o.ke doubled down on Woodruff's "arm's reach of desire" strategy to put c.o.ke anywhere and everywhere it could. "Our goal was to make Coca-Cola ubiquitous. At all times, at all places. . . . c.o.ke Was It," writes former brand manager Cardello. "My job was to keep the logo in your face, and present it in the most positive light. And I had access to a huge war chest with which to accomplish this."
In 1997, c.o.ke's annual report laid bare its strategy with striking candor, stating, "We're putting ice-cold Coca-Cola Cla.s.sic and our other brands within reach, wherever you look: at the supermarket, the video store, the soccer field, the gas station-everywhere." A c.o.ke marketing newsletter later distributed to fast-food restaurants encouraged them to push soft drinks for breakfast, recommending they put c.o.ke on the breakfast board and introduce special Coca-Cola cups for "the most important meal of the day."
The big push to sell more volume worked. Annual soda consumption soared to 56.1 gallons-more than 600 cans-per person in 1998, up 30 percent from 1985, and two and a half times what it had been in 1970. And more and more soda drinkers were drinking c.o.ke, which had reclaimed 45 percent of the market in the United States compared with Pepsi's 30 percent. Naturally all of those soda sales sweetened c.o.ke's bottom line, leading to more than $4 billion in net income, and a whopping 3,500 percent increase in c.o.ke's stock price over Goizueta's tenure-to a high point of $88 a share by 1998.
Even as consumption grew, c.o.ke knew that it couldn't count on customers to drink that much c.o.ke without a little nudge. Goizueta, more than anyone, realized how important advertising was to selling product. "We don't know how to sell products based on performance," he once said, shrugging. "Everything we sell, we sell on image." When Goizueta took over in 1981, c.o.ke's annual spending on advertising in the United States was up to $200 million. Goizueta doubled it, to $400 million, by 1984. There it hovered throughout the next decade, until Sergio Zyman came back on board in 1993.
After the debacle with New c.o.ke, everyone had a.s.sumed Zyman would be the fall guy. c.o.ke's marketing chief not only was one of the prime movers behind the fateful change to c.o.ke's formula, but was also abrasive and authoritarian, alienating many in c.o.ke headquarters. His insistence on numbers with no excuses had earned him the t.i.tle of "Aya-Cola" back in the 1980s, when he had famously killed the "Mean" Joe Greene ad, one of the most endearing and popular ads in c.o.ke's history, when it didn't "move the needle" to sell more product. "The sole purpose of marketing is to get more people to buy more of your product, more often, for more money," he would write later, in his 1999 book The End of Marketing As We Know It The End of Marketing As We Know It.
Whatever Zyman's past mistakes, that philosophy made perfect sense to Goizueta, who hired Zyman back as chief marketing officer in 1993. Once back, Zyman pushed the concept of "spending to sell"; every marketing campaign, he announced, would be weighed against how much it increased sales of soft drinks-if it didn't, then it would be cut. If it did, "we poured on more." The domestic ad budget rose to $500 million in 1994, $600 million in 1996, and $700 million in 1997 (with $1.6 billion spent on advertising worldwide).
And it wasn't enough to get more people to drink c.o.ke products-it was also important for those already drinking c.o.ke to drink more of them. Company statistics showed that of the 64 ounces the average person drank in a day, c.o.ke products accounted for just a miserable two of them. It was Zyman's job to think of ways to get people to increase that number; after all, in his native Mexico, it was common for people to drink three or four cans a day. "These are the consumers you want," he said. "And you want to make sure that you capture all of them."
Zyman came up with a new concept he called "dimensionalizing," which he defined as giving people more reasons to drink beyond c.o.ke's "original selling proposition." If a person had eight drinks a week because he was thirsty, then telling him to be sociable might drive that up to ten. "Then you have to create a new reason after 10," said Zyman. In order to get a better handle on the various reasons to drink c.o.ke, the company had 3,600 super-consumers-whom they called, without irony, "heavy users"-to keep diaries of all of the occasions when they drank, which the marketers called "need states."
The research was enormously successful, revealing 40,000 separate occasions when the test subjects might pop open a can. Zyman distilled them down to thirty-five different reasons to drink c.o.ke, or "dimensions," including: "c.o.ke is part of my life. It understands me. Cool people drink it. People of all ages drink it. It has a bite and a distinctive taste. It comes in a contour bottle. It is modern, funny, emotional, simple, large, friendly, consistent, and everywhere." Of course, such an approach to advertising raises the question: At what point are you antic.i.p.ating customers' needs and at what point are you creating them? c.o.ke didn't dwell on the question long. For each attribute, the marketers designed a different ad, rolling them all together in a new campaign under the slogan "Always Coca-Cola" (which had the delicious double entendre of harkening back to c.o.ke's heritage while encouraging consumers to drink it at every occasion).
At the same time, Zyman shook up Madison Avenue by spreading work among different agencies, having them compete for c.o.ke's vast advertising war chest. Along with Apple and Nike, c.o.ke even began to contract out to Hollywood powerhouse Creative Artists Agency, which created one of c.o.ke's most compelling symbols. During the 1993 Academy Awards presentation, TV viewers were introduced to a computer-generated family of polar bears watching the northern lights in a vast expanse of ice with nothing to break up the monotony but the familiar logo of Coca-Cola. The bear clan returned for the following holiday season, c.o.ke's most successful branding of Christmas since it introduced its Santa Claus ads in the 1930s.
The polar bears were the perfect new branding agent in an era when branding was king. A few years after New c.o.ke taught the Coca-Cola Company the value of its brand name, the rest of Wall Street learned the same lesson when Philip Morris cut the price of its Marlboro cigarettes by 20 percent to compete with generics flooding the market. Immediately Philip Morris's stock dropped, along with Coca-Cola and many other brands, as the financial press rang a death knell for the brand.
A few weeks after the incident, Goizueta called Wall Street a.n.a.lysts down to an emergency meeting in Atlanta. "We are getting a b.u.m rap," he whined. "It's one thing when your stock drops 10 percent because of a mistake your company has made . . . but it's something else . . . when it drops because of a business with totally different financial and social dynamics." For the next four hours, he patiently explained why people might not pay for a Marlboro but they would pay for a c.o.ke. And he was right. c.o.ke's stock righted itself in a few weeks.
As Naomi Klein recounts in her book No Logo No Logo, the real lesson of "Marlboro Friday" was that companies needed to invest more money in branding, not less. The companies that succeeded after the recession of the early 1990s were those that wrapped consumers in their products, creating not just an a.s.sociation with their product but a complete lifestyle-think Starbucks, Disney, Apple, Calvin Klein, and Nike. "And then there were companies that had always understood that they were selling brands before product," writes Klein, citing c.o.ke at the top of her list. As Disney opened Disney Stores in malls across America, c.o.ke followed suit on a smaller scale with Coca-Cola stores in New York and Las Vegas and the original World of Coca-Cola in Atlanta.
The man responsible for of c.o.ke's new success, however, didn't live to see it for very long. In 1997, Goizueta was one of the wealthiest people in America-personally worth more than a billion dollars-and because most of his wealth was tied up in stock, he was able to avoid paying virtually any personal income tax. But just at his moment of greatest triumph, he discovered he had lung cancer. Within a year, he was dead.
Goizueta's sudden departure was a blow to the company's image on Wall Street, as well as a threat to its ties to the all-important beverage a.n.a.lysts that could keep pushing c.o.ke's stock price into the stratosphere. Though no one knew it, Goizueta's death would coincide with a dramatic turnaround in the fortunes of the company. At the time, however, it seemed like the executive he left in charge would pick up his mantle without missing a beat. was a blow to the company's image on Wall Street, as well as a threat to its ties to the all-important beverage a.n.a.lysts that could keep pushing c.o.ke's stock price into the stratosphere. Though no one knew it, Goizueta's death would coincide with a dramatic turnaround in the fortunes of the company. At the time, however, it seemed like the executive he left in charge would pick up his mantle without missing a beat.
Douglas Ivester was, if anything, more relentless about c.o.ke's need to grow. Joining c.o.ke as an accountant in 1979, he constantly had an eye on the bottom line. "From his earliest moments at the company, he saw c.o.ke's business as a numbers game-one he could win," writes New York Times New York Times business reporter Constance Hays in her book business reporter Constance Hays in her book The Real Thing: Truth and Power at the Coca-Cola Company The Real Thing: Truth and Power at the Coca-Cola Company. As Hays describes, it was Ivester who pushed through the greatest revolution in c.o.ke's structure, ensuring unlimited growth in its stock, at the same time finally getting the bottlers under control.
Starting in the early 1980s, the company began buying up any bottlers that were for sale, spinning them off into a new company called Coca-Cola Enterprises. The Coca-Cola Company made sure to own 49 percent of outstanding shares of the new company, giving it control without any of the risk or liability. No longer bound by Thomas and Whitehead's original contract, Ivester and company forced the new bottling company to accept a new contract that allowed the price of syrup to fluctuate at whim.
Over the next decade, the Coca-Cola Company replicated the Coca-Cola Enterprises model with bottlers in other countries as well-creating less than a dozen "anchor bottlers" all over the world, including the San Miguel Group in the Philippines, T.C.C. Beverages Ltd. in Canada, Panamerican Beverages (later Coca-Cola FEMSA) in Latin America, and Coca-Cola Amatil in Australia. Meanwhile, the tremendous debt acc.u.mulated from buying these bottlers was rolled right off c.o.ke's books, onto the balance sheets of the bottlers.
The new arrangement, called by Ivester "the 49 percent solution," was enthusiastically embraced by Goizueta, who called it "a new era in American capitalism." When the dust had cleared, however, it looked more like a scheme from the parent company to cook its books. By owning a controlling interest in its bottlers, c.o.ke could ensure that it hit its earning targets throughout the '80s and early '90s. Whenever the company didn't grow in sales, it could still force bottlers to buy syrup, ensuring profits for the parent company; how they sold that syrup was the bottlers' problem.
Not that parent c.o.ke was about to let its bottlers go under, of course. If it appeared that a bottler wasn't going to make ends meet, the company would give rebates at the end of the year in the form of "marketing support" so they made just enough profit. Even as the anchor bottlers were under constant pressure to sell as many soft drinks as they could to eke out a minimum profit, they were also free to take on enormous amounts of debt-at one point, Coca-Cola Enterprises' debt was half its annual revenues-since lenders rightly a.s.sumed that the parent company would never let its franchises fail.
The system worked beautifully through the late '80s and early '90s to drive stock price and soft drinks sales. When Goizueta suddenly died, it was only natural that Ivester should take control. Where Goizueta was charming inside and outside the company, however, Ivester had a reputation for being a cold numbers-cruncher-an "iceman" in the eyes of fellow employees. Employees were all but forbidden to talk about their work outside of c.o.ke headquarters, and some even suspected their phones were tapped.
But Ivester was ambitious. Where Woodruff saw putting c.o.ke "within an arm's reach of desire," Ivester waxed on about a "360-degree landscape of c.o.ke," the red-and-white swoosh in every direction a customer looked. "What I always wonder is, Why not?" he said in a speech to the National Soft Drink a.s.sociation. "Why can't we keep this up? Just look around! The world has more people, in more countries, with more access to communication and more desire for a higher standard of living and quality products than ever before." In his mind, Ivester lumped a higher "standard of living" with consuming more sweet sugary c.o.ke, the ultimate international status symbol-shades of Candler putting c.o.ke bottles into the hands of the fashionable set in turn-of-the-century ads.
In one notorious speech to employees, Ivester cued the background noise of howling wolves, comparing the c.o.ke company to a wolf among sheep and all but howling along. In truth, though, Pepsi was on the ropes by the mid-1990s, its market share stagnating. c.o.ke showed no quarter, forcing food distributors to refuse to carry Pepsi if they wanted to keep their accounts for c.o.ke. Convenience stores, meanwhile, had to agree to increasingly restrictive advertising agreements if they wanted to stock c.o.ke in their store-agreeing not to hang signs for other products, or committing 70, 80, or even 100 percent of the available shelf s.p.a.ce for soft drinks to c.o.ke. (Eventually, Royal Crown Cola sued in Texas for violations of ant.i.trust laws, earning a $15.6 million verdict.) Even as it was dominating the field, however, c.o.ke was having difficulty meeting its high earnings expectations year after year, especially as the market for soft drinks became increasingly saturated. Pepsi solved its problem, in part, by diversifying, buying up first Frito-Lay and then Gatorade and becoming as much a snack food vendor as a soda company. (Soft drink sales now account for less than 20 percent of Pepsi's business.) But c.o.ke saw its future in liquid, specifically in carbonated soft drinks, which still make up more than 80 percent of its sales. It would need new markets to swim in, and so it redoubled its efforts to put its red-and-white dynamic ribbon within all 360 degrees of customers' sight lines.
In all of the pressure to continue expanding, Ivester and company never asked: Did the world really need need all of that c.o.ke? The answer to that question took them completely by surprise. After years of drinking more and more gallons of sugar-laced beverages, people finally couldn't ignore the consequences of all of that consumption in one area: their health. As it turned out, increasing evidence showed that c.o.ke was not only "biggering" its own beverage sizes, sales, and profits-but also "biggering" American waistlines. The ensuing controversy over soda's role in a burgeoning crisis of obesity and diabetes presented the company's biggest challenge in more than a century, finally putting the brakes on its engine for growth. all of that c.o.ke? The answer to that question took them completely by surprise. After years of drinking more and more gallons of sugar-laced beverages, people finally couldn't ignore the consequences of all of that consumption in one area: their health. As it turned out, increasing evidence showed that c.o.ke was not only "biggering" its own beverage sizes, sales, and profits-but also "biggering" American waistlines. The ensuing controversy over soda's role in a burgeoning crisis of obesity and diabetes presented the company's biggest challenge in more than a century, finally putting the brakes on its engine for growth.
In actuality c.o.ke had been here before. When Coca-Cola first gushed from Gilded Age soda fountains, it was touted as a panacea for anything that ailed you. Within just a few decades, however, the tide turned on c.o.ke, with the public increasingly questioning whether that bottle full of fizz could really be all that good. The drink hadn't quite lived down its a.s.sociations with cocaine, for starters. In the early years of c.o.ke, the press stirred up sensational visions of "c.o.ke fiends," hopped up on Coca-Cola terrorizing good southern women. (The overtly racist coverage said more about the anxieties of the South after slavery, since the fiends were invariably black and the women invariably white.) c.o.ke had been here before. When Coca-Cola first gushed from Gilded Age soda fountains, it was touted as a panacea for anything that ailed you. Within just a few decades, however, the tide turned on c.o.ke, with the public increasingly questioning whether that bottle full of fizz could really be all that good. The drink hadn't quite lived down its a.s.sociations with cocaine, for starters. In the early years of c.o.ke, the press stirred up sensational visions of "c.o.ke fiends," hopped up on Coca-Cola terrorizing good southern women. (The overtly racist coverage said more about the anxieties of the South after slavery, since the fiends were invariably black and the women invariably white.) By the turn of the century, however, there was a wide backlash against patent medicines in general, as muckraking newspaper and magazine stories, starting with a series by Samuel Hopkins Adams in Collier's Collier's in 1905, exposed what was really in those elixirs-including chloroform, turpentine, and an awful lot of alcohol. At the same time, the publication of Upton Sinclair's in 1905, exposed what was really in those elixirs-including chloroform, turpentine, and an awful lot of alcohol. At the same time, the publication of Upton Sinclair's The Jungle The Jungle, which blew the lid off the dangers and lack of sanitation in the meatpacking business, led to increasing strictures on what food manufacturers could put in the products that Americans ate. It was the dawn of the Progressive Era, a reaction to the excesses of Gilded Age capitalism, in which government increasingly clamped down with increased regulations.
In this general climate, one man emerged as the flawed hero of the consumer movement-Dr. Harvey Washington Wiley, the head of the government's Bureau of Chemistry. Wiley nearly single-handedly railroaded a new law, the Pure Food and Drug Act (commonly called the Pure Food Law), through Congress in 1906. It proceeded on a simple if suspect proposition-that adding artificial preservatives and colorings to food or patent medicines made them less wholesome. Due to the "increased amounts of poisonous and toxic matters in the system," Wiley testified before Congress, "the general vitality of the body is gradually reduced. . . . Even old age, which is regarded as a natural death, is a result of these toxic activities." Wiley proved his theories with his celebrated "poison squad," a group of young men to whom he and his colleagues fed all manner of suspect food additives, including large quant.i.ties of boric, sulfuric, and benzoic acid to see if it made them sick. The experiments weren't exactly scientifically rigorous-lacking, for example, a control group or measures to account for preexisting medical conditions of the unfortunate crew, but the publicity they engendered gave public support to the idea of a new law. Congress pa.s.sed it on June 30, 1906.
Over the next few years, Wiley went on the attack against blended-whiskey producers and catsup makers (for adding benzoate of soda as a preservative), earning a reputation as a crusading health advocate, if a bit of an arrogant self-promoter. His nemesis, however, would be Coca-Cola. From reports early on that c.o.ke contained cocaine and alcohol, he demanded that a sample be tested. When it came back negative, it hardly dampened his ardor against bringing c.o.ke down. At the same, the Woman's Christian Temperance Union, hot against the scourges of alcohol, published pamphlets that-despite Wiley's tests-railed against c.o.ke as hazardous to children because of its content of cocaine, alcohol, and caffeine.
It was this last ingredient that Wiley would eventually make into the crook that dragged c.o.ke into court. In keeping with his theories of adulterated foods, Wiley argued that "free caffeine" added to products such as c.o.ke was much more harmful and addictive than the caffeine that occurred naturally in coffee and tea, comparing the added substance to opium and cannabis. On this basis, he tried several times to seize c.o.ke shipments to put the company on trial but was constantly overruled by the secretary of agriculture, James Wilson, whom he later blamed for protecting c.o.ke. Finally, when an Atlanta newspaper editor caught wind of the interference, Wilson relented, if only Wiley would try the company in Chattanooga, headquarters of c.o.ke's largest bottler and, after Atlanta, the territory friendliest to the beverage company. (Other accounts have it that it was Wiley who chose the venue for the trial, in an effort to get it in front of an Eastern Tennessee judge who was known to look kindly on progressive regulation.) The case went to trial in Chattanooga in March 1911, coinciding with Wiley's honeymoon with his new bride, feminist Anna Kelton. Officially called The United States v. Forty Barrels and Twenty Kegs of Coca-Cola The United States v. Forty Barrels and Twenty Kegs of Coca-Cola, the trial turned on two counts-the unhealthy addition of "free caffeine," as well as the fact that it was "misbranded" as Coca-Cola, since it contained neither coca leaves nor kola nut. In fact, however, the trial brought out all c.o.ke's dirty laundry-from government inspectors who testified about the unsanitary conditions of c.o.ke's factory and the discovery of bug parts in the drink, to medical experts testifying that c.o.ke drove people insane. The evidence presented by the government about the harmful effect of caffeine on humans was equally dubious, relying on flawed experiments of frogs and rabbits; no one from the poison squad made an appearance. In the end, none of it mattered. The entire case hinged upon a technicality when the judge ordered a directed verdict, at c.o.ke's urging, that Coca-Cola's formula had always had caffeine, so it couldn't be considered an additive.
Wiley wasn't there to see it, having left town a week earlier, perhaps seeing the way the wind was blowing. A year after the trial, he resigned rather than risk having Secretary Wilson force him out. The case wasn't done, however. Years later, the government appealed it all the way up to the Supreme Court, which ruled it had been wrongly decided and sent it back to the district level. c.o.ke maneuvered to spare itself the indignity of appearing again in court, striking a deal with the government whereby it reduced the level of caffeine in the drink by half and adding more coca leaf (from which the cocaine had been removed) and kola nut to address the issue of misbranding. The government would keep the forty barrels and twenty kegs it had initially seized but refrained from bringing the case anew against c.o.ke's new formula.
Coca-Cola had emerged victorious, and essentially intact, from the attack. Eventually the Pure Food Law itself was repealed, as prevailing scientific opinion decided there was nothing wrong with food additives, which became rampant throughout the twentieth century. Ironically, it's only now that the purity of foods has become an issue in health-fueled by the writings of Michael Pollan and the "slow food" movement, which has railed against the "nutritionism" that has dominated the last few decades of food science, and urged a return to unadulterated foods.
For c.o.ke, it would take another ninety years for the next major attack on the grounds of health, and when it came, it focused not on any detrimental additives but on the core ingredient that made up most of the drink's contents-sugar. And unlike the prior skirmish, this fight wouldn't occur in a court of law-but in the court of public opinion.
Every day , it seems, there's new evidence of America's expanding waistline-from a policy on Southwest Airlines requiring customers to buy two seats if they are going to spill over from the eighteen inches allotted in one, to the motorized carts Wal-Mart now offers for people too large to amble around the store by themselves. In medical terms, a person is obese when his or her body ma.s.s index (BMI) tops 30. , it seems, there's new evidence of America's expanding waistline-from a policy on Southwest Airlines requiring customers to buy two seats if they are going to spill over from the eighteen inches allotted in one, to the motorized carts Wal-Mart now offers for people too large to amble around the store by themselves. In medical terms, a person is obese when his or her body ma.s.s index (BMI) tops 30.2 And after holding steady for much of the last century, the percentage of American adults checking that box has more than doubled, from 14 percent in the 1970s to 34 percent today, translating into some 75 million people. And after holding steady for much of the last century, the percentage of American adults checking that box has more than doubled, from 14 percent in the 1970s to 34 percent today, translating into some 75 million people.
Another 34 percent of adults with a BMI over 25 are cla.s.sified as "overweight," placing more than two-thirds of the adult U.S. population into one of those two categories. And along with those statistics come increased risks for diseases such as high blood pressure and heart disease. The prognosis for the next generation is just as bad, with the percentage of obese teenagers more than tripling, from 5 percent to 18 percent over the past thirty years, and the number of obese children climbing to 20 percent.
On the face of it, the reason people get fat is simple: They eat more than they burn off in exercise. Beyond that, however, it's enormously difficult to pinpoint exactly what has led to the explosion in America's waistline. "Obesity is not rocket science, it's more complicated," warned Frank Hu, a researcher at Harvard Medical School, at a 2006 conference in Boston looking at responses to childhood obesity. Nearly all scientists now agree that at least part of the equation is genetic; some people are just programmed with so-called thrifty genes that cause the body to retain fat more than others.
For the rest, recent papers have blamed the obesity epidemic on everything from an increased prevalence of air-conditioning to decreased rates of smoking. But by far the most likely culprit is diet-and on that score, an increasingly convincing stack of evidence lays at least part of the blame at the syrupy feet of the soda companies. The math is simple: At the same time that America's obesity rates doubled, so has Americans' soda consumption; between 1970 and 1998, it accounted for nearly half the increase in calories in the average diet. It now represents the largest single single source of calories for the average person, at 7 percent for adults and up to 10 percent for children. source of calories for the average person, at 7 percent for adults and up to 10 percent for children.
Several years ago, Hu led a team a.n.a.lyzing some thirty studies linking soda consumption to weight gain, concluding that they "show a positive a.s.sociation between greater intake of sugar-sweetened beverages and weight gain and obesity in both children and adults." The report recommended that "sufficient evidence exists for public health strategies to discourage consumption of sugary drinks." In scientific language that's not quite "Drop the soda can, fatty!" but it is enough to point the finger for obesity squarely c.o.keward.
One of the most compelling studies Hu looked at was done by nutritionist David Ludwig and published in the British journal The Lancet The Lancet in 2001. Ludwig followed five hundred eleven-year-olds for more than two years, and concluded that each soda added daily to their diets increased their chances for becoming obese by 60 percent. (A later study by Ludwig showed that removing a daily can of soda led to a weight loss of about a pound a month for already overweight teens.) The implications of that were literally enormous. "It's not the exceptional child who drinks a liter, two liters, or even three liters a day," says Ludwig, who runs an