How Coke grew from its humble beginnings in 1886 as a patent medicine in John Pemberton’s Atlanta lab, to the largest beverage company in the world is the subject of “For God, Country & Coca-Cola,” by Mark Pendergrast. Recently, the book was released in its third edition with several chapters added to bring it up-to-date and Beverage World had a chance to speak with Pendergrast about the expanded edition.
Beverage World: Why did you feel this was a good time to update the book?
Mark Pendergrast: The second edition was published in 2000, just after Doug Ivester left as CEO. A lot has happened since then, to say the least, to require a new, updated edition—the turmoil under Doug Daft, the controversy over Coke’s role in the obesity epidemic and its presence in schools, investigations by the SEC/FBI, the class action discrimination lawsuit, allegations of human rights abuses in Colombia and water issues in India, thousands being laid off, and morale in the pits. Oh, and ineffective advertising and failure to diversify quickly enough into low-cal and no-cal drinks. And then the almost miraculous turn-around under Neville Isdell and Muhtar Kent. Of course a new edition was necessary!
BW: The period under Daft/Hyer seemed particularly torturous for Coke. What lessons can be learned?
Pendergrast: One is how important the man at the top is, even for (or especially for) a major multinational corporation like The Coca-Cola Company. Doug Daft simply was ill-prepared to lead the company, and Steve Heyer may have been smart and aggressive, but he was not the quintessential Coca-Cola man/woman. I think that the company should do a much better job of grooming a stable of strong possible CEOs from within, who have Coke syrup flowing in their veins.
BW: Why do you think it’s been so hard for Coke to innovate?
Pendergrast: If you look back at its history, Coca-Cola has never been very good at creating innovative new drinks. From 1886 until 1955, the company sold only one beverage in one size bottle. It was the first mover in an astonishingly lucrative category, but it was slow to move into many areas until another more nimble company did so. Coke has tended to wait to spot a new trend, such as diet, energy or health drinks, and then try to create its own entry or buy out a leader of the trend. They have been most successful at buy-outs, such as the $4.1 billion purchase of Glaceau, creator of vitaminwater. The problem may be the inevitable bureaucracy and stodginess of a big corporation. Coke recognizes this and now has its Venturing and Emerging Brands group trying to “identify the next big thing.”
BW: How do you think Coke has handled the whole obesity controversy?
Pendergrast: In many ways, they’ve handled it very well recently, with their “Coming Together” spots trying to establish Coca-Cola as part of the obesity solution rather than the problem. I fault them, however, for continuing to pour millions of dollars into the campaign to kill any special tax on sugary drinks. That kind of tax is what really reduced cigarette use, and if Coca-Cola is truly concerned about the obesity epidemic, then the company could shock the industry and garner enormous good publicity by supporting such a tax. I think the obesity problem is all too real and needs to be addressed.
BW: Your overall conclusion about Coke is positive. Was that an easy conclusion for you to reach or did you go back and forth?
Pendergrast: I regard Coca-Cola as a kind of ultimate symbol of capitalism and the free market economy, and I continue to go back and forth, as you put it, about its virtues and defects. It’s not a black-and-white matter, nor will it ever be.
BW: Do you think the almost religious nature of the loyalty Coke’s employees have to the company is unique to it?
Pendergrast: I think that companies like Apple or Google—or IBM in the past—may have similarly loyal employees. Coke employees are no longer like that nearly as much as in the past, but there still appears to be more of the feeling there than for many other companies.