The Real Thing: Truth and Power at the Coca-Cola Company

The Real Thing: Truth and Power at the Coca-Cola Company

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by Constance L. Hays
     
 

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A definitive history of Coca-Cola, the world’s best-known brand, by a New York Times reporter who has followed the company and who brings fresh insights to the world of Coke, telling a larger story about American business and culture

The Real Thing is a portrait of America’s most famous product and the men who transformed it…  See more details below

Overview

A definitive history of Coca-Cola, the world’s best-known brand, by a New York Times reporter who has followed the company and who brings fresh insights to the world of Coke, telling a larger story about American business and culture

The Real Thing is a portrait of America’s most famous product and the men who transformed it from mere soft drink to symbol of freedom. The story, starting with Coke’s creation after the Civil War and continuing with its domination of the domestic and worldwide soft-drink business, is a uniquely American tale of opportunity, hope, teamwork, and love, as well as salesmanship, hubris, ambition, and greed. By 1920, the Coca-Cola Company’s success depended on a unique partnership with a group of independent bottlers. Together, they had made Coke not just a soft drink but an element of our culture. But the company, intent on controlling everything about Coke, did all it could to dismantle that partnership. In its reach for power, it was more than willing to gamble the past.

Constance L. Hays examines a century of Coca-Cola history through the charismatic, driven men who used luck, spin, and the open door of enterprise to turn a beverage with no nutritional value into a remedy, a refreshment, and the world’s best-known brand. The story of Coke is also a catalog of carbonation, soda fountains, dynastic bottling businesses, global expansion, and outsize promotional campaigns, including New Coke, one of the greatest marketing debacles of all time. By examining relationships at all levels of the company, The Real Thing reveals the psyche of a great American corporation and how it shadows all business, for better or worse.

This is as much a story about America as it is the tale of a great American product, one recognized all over the world. Under the leadership of Roberto Goizueta and Doug Ivester, Coca-Cola reinvented itself for investors, spearheading trends such as lavish executive salaries and the wooing of Wall Street, but when Coke’s great global ambitions ran into trouble, it had difficulty getting back on track.

The Real Thing is a journey through the soft-drink industry, from the corner office to the vending machine. It is also a social history in which sugared water becomes an international object of consumer desire—and the messages poured upon an eager public gradually obscure the truth.

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Editorial Reviews

The Washington Post
Hays's book tells the 130-year history of Coca-Cola with flair and gusto. She explains how Coke used advertising to make itself into a chameleon, a product that "could embrace Santa Claus and Ramadan without missing a beat." She profiles the company's legendary leaders, including Robert Woodruff, Don Keough and Roberto Goizueta, and tells how each of them pushed the company to grow faster and become ever more global. — Robert Bryce
The New York Times
As soft-drink lovers know, Cokes go flat and cannot keep their flavor forever. The same is true of the Coca-Cola Company, according to Constance L. Hays's gripping account of how a great company with the world's best-known American brand lost sparkle … Ms. Hays was granted extensive insider access. She has a novelist's flair for conveying her characters' thoughts and evoking the sights and sounds of her settings — whether the old Havana of Goizueta's boyhood or social Atlanta and hunting weekends at a country estate that echo Tom Wolfe's fictional Atlanta in A Man in Full.Rosabeth Moss Kanter
Publishers Weekly
Hays, who spent three years covering the food and beverage industry for the New York Times, focuses on the recent efforts by Coca-Cola not just to win the cola wars but to become the most dominant beverage of all. Early chapters effectively segue back and forth between Coke's modern global strategy and the company's first century of increasing dominance. Founder Asa Candler envisioned Coke as a fountain drink, and thought so little of other sales methods he gave two men bottling rights to nearly all of America in 1899, resulting in a patchwork of plants where the sodas was made and distributed. Hays deftly shows how these local bottlers were crucial in establishing Coke's public image, yet often possessed an independent streak that rankled the company's corporate leaders, who eventually sought to regain control over much of the operations, with mixed results. She clearly admires the ambition and dedication of executives like Roberto Goizeuta and Doug Ivester, allowing much of the story to unfold from their perspective, but doesn't flinch from chronicling missteps like the attempt to beat the Pepsi Challenge with New Coke. And even though the final chapters depict the shattering of the Coke myth and the onset of financial woes, it's sometimes difficult to tell whether Hays is simply reporting on the new management's belief in its ability to bounce back or buying into their vision. Readers won't uncover the secrets of Coca-Cola the drink, but they'll learn a lot about what lies behind Coca-Cola the world's most powerful brand. (Feb.) Copyright 2003 Reed Business Information.
Library Journal
We don't need another history of the Coca-Cola Company, but this book is something different. A New York Times reporter who has covered the food and beverage industry for several years, Hays examines the relationships at all levels of the company and reveals how Coke's corporate psyche affected its business in the past and present. Moving beyond a traditional company history, she describes the teamwork, love, salesmanship, ambition, and greed of the men who turned Coke into a global power, an internationally recognized object of consumer desire, and the trademark of American capitalism. As Hays points out, marketing and their bottlers have always been key at Coke and still are today. Times have been rough for Coke-the corporation had to slash 6000 jobs and was hit with a race discrimination suit that cost $193 million-but in 2002 Vanilla Coke was introduced and Steven J. Heyer made president and chief operating officer. A new team has taken over, and Coke marches on, of course. This social history brings fresh insights into the corporate world and a worldwide company that will weather the storms and scandals. Stay tuned as the plot thickens. Recommended for business collections of public libraries.-Susan C. Awe, Univ. of New Mexico Lib., Albuquerque Copyright 2003 Reed Business Information.
Kirkus Reviews
How Coca-Cola won the world with a century of hard work, then almost lost everything in a few years. New York Times reporter Hays, who covered the company for five years, ably makes the point that there’s no comparison for the emotional connection that people in America and around the world have with a Coke. Aiming in her booklength debut for a social history of the beverage and those who built a corporation around it, Hays initially seems to be taking a rather haphazard approach, jumping from the 1990s, when the Coca-Cola Company was at the pinnacle of its power, back to the late-19th century, when Coke was just another of the syrups that could be mixed at a soda fountain counter. Early on, the author hits home two key points: (1) there was always conflict between the Coca-Cola Company, which simply sold the concentrate, and the bottlers, who actually made and sold the drink, and (2) company executives were by and large an obsessed bunch. The earlier point is less ably handled; Hays seems to be setting up a moment of confrontation between the bottlers and Coke headquarters, but it never quite materializes. She does better at establishing the personalities of the main corporate players from the 1970s through the ’90s, especially Dan Keough, a fierce but paternalistic figure nicknamed "The Irish Wind" for his temper, and Roberto Goizueta, an aristocratic Cuban émigré so beloved by employees that tears were copiously shed upon his unexpected death in 1997. She also recounts with a proper sense of tragedy the sad blunders of the last few years that have practically unmade the company—the discrimination lawsuit, the bottling plant scares in Europe, and the layoffs that hit Atlanta like ahurricane—showing a once-unbeatable monolith knocked down to size. Can it be that Coke is now just another soft-drink manufacturer? Gripping material, dramatically told. Agent: Amanda Urban/ICM
From the Publisher
“Tells the 130-year history of Coca-Cola with flair and gusto.... The Real Thing is also a primer on the perils that come with decades of seemingly limitless growth.”
–The Washington Post Book World

“[A] gripping account . . . [Hays] has a novelist’s flair for conveying her characters’ thoughts. . . . She recounts Coca-Cola history and lore in fascinating detail.”
–The New York Times

“Fascinating and revealing . . . This extremely well researched, surprisingly entertaining saga is told almost like a novel with a broad panorama and [a] memorable cast.”
The Miami Herald

“Totally engaging . . . highly enjoyable . . . a compelling, well-documented history of the drink that has refreshed the world for 118 years.”
–The Philadelphia Inquirer

“Before the Golden Arches, red-and-white Coca-Cola signs were the most ubiquitous symbols of American consumerism on the planet. Constance Hays tells the story of how Coke got its ?zz—and then almost lost it—in sparkling prose that’s both sweet and tart, just like the pop.”
—Sylvia Nasar, author of A Beautiful Mind

The Real Thing brings the story of one of America’s oldest commercial and cultural icons up to date—a tale of power, ego, and money inside one of the world’s largest companies. With a journalist’s investigative skills and a strong narrative voice, Constance Hays puts the reader inside the minds of Coca-Cola’s top executives and fanatic consumers, showing how the modern, ever-changing global business world works through the simplest of products. Thoroughly researched and compellingly written, taking you through incredible triumphs and massive blunders, The Real Thing is a fascinating read.”
—Joël Glenn Brenner, author of The Emperors of Chocolate: Inside the Secret World of Hershey & Mars

“[Hays] ably makes the point that there’s no comparison for the emotional connection that people in America and around the world have with a Coke....She also recounts with a proper sense of tragedy the sad blunders of the last few years that have practically unmade the company....Gripping material, dramatically told.”
Kirkus Reviews

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Product Details

ISBN-13:
9781588363596
Publisher:
Random House Publishing Group
Publication date:
02/03/2004
Sold by:
Random House
Format:
NOOK Book
Pages:
416
File size:
471 KB

Read an Excerpt

Chapter One

The Road to Rome On a bright fall morning in 1994, Doug Ivester, the recently anointed president of the Coca-Cola Company, was driving himself to Rome, Georgia, spinning north along the interstate, the steel-and-glass towers of Atlanta receding behind him as the landscape became an uneven blanket of pines.

Ivester had his day all planned out. Like plenty of Coke executives before him, he had a certain fixation with Hollywood—the glitter, the lights, the adjustable distance between image and reality. And now he was going to star in his own short film, which he had already named The Road to Rome.

He had borrowed a sport-utility vehicle and hired a camera crew. Husky and hawk-nosed, he had dressed down for the occasion in a V-neck sweater and left his usual silk necktie at home. He aimed the boxy car toward Rome, pulling over every so often at all kinds of places to ask whether they served Coca-Cola.

It became an exercise in frustration, if you happened to be the second-highest-ranking executive at the company that owned the Coca-Cola brand. The cameras trailed Ivester at every stop, recording the scene at a karate studio where the flustered owner apologetically explained before the inquiring lens that he didn’t sell Coke, and at the Kennesaw Mountain tourist attraction, where there was no Coke, either. In his reedy North Georgia twang, Ivester kept asking everyone in his path the same apparently simple question: What if people coming to these places wanted a Coke? What if they finished training for their black belt, looked around for a way to quench their thirst, and realized there was no place nearby to get their hands on a Coke?

There was only one right answer in the script that he had dictated: They’d be disappointed. So would hundreds, no, millions of other people across the globe, in all of the other places where Coke still wasn’t for sale in every possible nook that it could be sold. The message of the film—that even right in its own backyard, a place presumably already saturated with Coke, the Coca-Cola Company still had plenty of room to grow—was an ongoing theme inside the company. And Ivester was going to make sure Coke got every last bit of that growth.

There would be no Oscars for The Road to Rome, which was completed on a modest budget that year and screened before limited audiences—Wall Street analysts mostly, and here and there a Coke bottler. But it was remarkable nevertheless, articulating something beyond the typical corporate statement of purpose. It was a graphic guide to the mentality of the Coca-Cola Company and the mind of the man who now occupied its second-highest position: a man who believed fervently and unremittingly in the supremacy of Coca-Cola.

That the drink was more than a century old and was still not being sold absolutely everywhere hounded Ivester. People close to him claimed that he could not sleep at night if he knew that a store somewhere in the depths of the nation, any nation, was not selling Coca-Cola. Maybe it was the pizza parlor in Omaha that Warren Buffett, the legendary investor and Coke director, visited one day with his grandson, only to report back that it served nothing but Pepsi. Ivester made it his personal project to get the Pepsi out and the Coca-Cola in; within weeks, he had made the change. Maybe it was a country like Vietnam, where for years American business had been prohibited. Awaiting the day the embargo might end, Ivester had a plane loaded with Cokes and signs and other equipment intended to capture the new market. In 1994, a few hours after the State Department gave American companies the green light to invest again in Vietnam, the Coke plane took off. It was on a mission to restore the business that politics had inconveniently halted almost twenty years earlier.

Like many of the people at his company, Ivester had a relentless faith in the drink’s appeal for people of all ages, races, cultures, and economic profiles. To him, if Coke was on the shelf, or in the vending machine, or in the dispenser down at the 7-Eleven, then that’s what people would buy. But still, even in tried-and-true Coke country, like the hills of Georgia—the part of America where Ivester himself grew up—there were plenty of places that didn’t stock it. And the key to filling in all those holes, to completing the program put forth by legions of Coke men culminating with Ivester, was to seal the gaps between the Coca-Cola Company and its historically feisty and independent bottling system.

The Coca-Cola Company was 108 years old on the morning that Ivester set off for Rome, and it was already the biggest soft-drink company in the world. Nineteen ninety-four was its greatest year yet. People drank Coca-Cola morning, noon, and night in the United States, where Coke had gotten started. In many places Coca-Cola stood in for coffee as the way people began their day. It had replaced milk and fruit juice in many lunchboxes, even in baby bottles in some places, if everything you heard was true. Ivester liked to predict that one day, along with red wine and water goblets, a formal table setting would have to include a broad-shouldered Coca-Cola glass.

That was just one of Ivester’s goals. And he usually got what he wanted. Over the previous decade, he had transformed Coke from a nodding institu- tion into a sleek and ultra-competitive global champion, envied and imitated by dozens of other American companies. Along with two colleagues, Roberto Goizueta and Donald Keough, he had created a monolith that tapped skillfully into emerging markets and pumped unexpected growth out of old ones. They had turned a well-known brand-name soda into a money machine, an ice-veined fountain jingling with cash. As Ivester drove along the road to Rome, Coca-Cola was the best-known product in the world. The company was selling Coke at the rate of 850 million eight-ounce bottles a day, or 310 billion bottles a year. Stacked one on top of another, a year’s worth of global Coke sales would create a tower reaching nearly all the way to Mars. Fourteen months of sales would get you all the way there.

But that was not enough for Ivester.

Like Goizueta, he wanted the consumption of Coke to keep on growing. Now that Keough had retired, it was just the two of them, and they aggressively promoted the company’s prospects, touting the opportunities to sell ever more Coca-Cola worldwide before an impressed Wall Street. The Coca-Cola Company was all about growth, the men of Coke insisted. With close to a billion servings sold every day, they believed that the company had only just begun to make its mark in the world. Two billion servings were just around the corner.

They made these kinds of promises publicly, and they programmed their company to fulfill them. They had kept those promises again and again over the previous thirteen years, posting spectacular gains in sales and in earnings, beating not just the competition but most of the rest of industrial America, as well. Ivester’s movie was really just another reminder, in case anyone needed reminding, not to underestimate Coke.

So complete was their obsession that these men were tormented by the way Coca-Cola remained a distant also-ran to other beverages in many parts of the globe. It was not just a matter of vanquishing Pepsi-Cola; it was also about beating back drinks like coffee, tea, milk, and water. In fly-blown, malnourished parts of Asia and Africa, people still—inexplicably, if you asked Ivester—preferred tea or juice to Coca-Cola. In France, people might buy three kinds of bottled water in their supermarkets—and, incredibly, pass up the red cans of Coca-Cola. If Coke could capture those markets, persuading consumers to drink cola instead, then the brand would grow even more. That was what Ivester and Goizueta wanted. That was what their planning was all about.

They wanted Coca-Cola everywhere. In refrigerated cases in convenience stores, out on the street in barrels packed with ice, in vending machines in school hallways, in the basements and pantries of people’s houses, and on tap at restaurants, ball parks, movie theaters, hotels, cruise ships, and all the other places where people spend their time. When a person drove into a gas station, they wanted him to think Coke first. When somebody stood in a movie line and had to choose something to drink during the 7:15 show, they wanted it to be Coke. They wanted Coke to be available every time somebody felt a stab of thirst. And, whenever possible, they wanted it to be the only beverage on the shelf.

To the two men who held the top jobs at Coke in 1994, this was not some eccentric, highly personal approach to commerce. It was the cornerstone of their business plan. They told people like Warren Buffett about it, and he applauded them, despite the risks. “In given countries at given times there will be hiccups,” Buffett would say. “But that doesn’t take your eye off where you want to be ten or fifteen years from now, which is to have everybody drink nothing but Coke.” They had made their promises to people like him. They were going to make them come true.

Year by year, Ivester and Goizueta invested a lot in the outcome. For the more Coke people consumed, the more money would flow into the Coca-Cola Company, which produced the concentrate—a dark, sticky, undrinkable ooze—that became the soda. More money meant greater profits, which would lift the stock price, making all the people who had invested in it—the grannies in Atlanta; the great capitalists in New York, Los Angeles, and Omaha; and, not least, the grand executives of Coke, their accounts bulging with stock options, restricted stock, and ordinary stock—wealthier with every day that went by.

To Ivester, careful planning was critical to making sure that happened. He saw potential in microscopic terms. He started with his employees, all 29,000 of them around the world. It was the duty and the obligation of every person associated with Coca-Cola, he asserted, to remember the Coca-Cola Company’s mission and to do everything within his or her power to turn possibility into fact. He stocked the public areas in Coke’s headquarters with monitors that displayed the stock price from the moment the market opened. He became notorious for walking around foreign markets, demanding to know why some tiny Chinese grocery store didn’t have Coke on the shelves, or peering into the trash cans on the banks of the Nile to find out what people were drinking—how much Coke, and how much of everything else. He could be standing under a cloudless sky in the middle of a shantytown in South Africa, where desperately poor people nestled beside garbage heaps crawling with flies and vermin, and he would see, in addition to the problems, another great place to sell Coca-Cola. Reaching into the trunk of his limousine, he would produce a case of Coke and press it upon a local merchant, insisting that if the man could make a living selling ice cream or peanuts or dried squid or whatever he already had in his cart, he could do better with Coke.

By the time Ivester became Coke’s president, the company was producing the concentrate for many other kinds of beverages—grape drink, orange juice, canned coffee, green tea—but to Ivester and Goizueta, center stage belonged to Coca-Cola. Part of the attitude was historic; this was, after all, the soft drink that had given rise to the company in the first place. Much of it was financial: The margins on Coca-Cola concentrate, which cost pennies a gallon to make, were the most enormous of all. For people who thought strictly in terms of numbers, Coke was it.

Robert Woodruff, the most legendary Coca-Cola executive of all, had preached putting Coke “within an arm’s reach of desire”; Ivester took that further, endorsing concepts like “a 360-degree landscape of Coke,” where Coke ads, products, and vending machines would assert themselves everywhere a person looked, making you buy a Coke even if you hadn’t known that’s what you wanted. He exhorted everyone in the company to remember that they were personally responsible for “increasing shareholder value,” which meant always selling more and more Coca-Cola. His directive included the basic administrative level, like secretaries and security guards. It fanned upward through the great superstructure of jobs and responsibilities, tapering to the corner office where he, Ivester, expected one day to sit. In case people forgot, there were reminders everywhere: the stock price beaming from the elevator lobby, and the admonitions, mild and severe, delivered to people who dared drink a beverage made by some other company or take their jobs less than totally seriously. It was supposed to be not one drink among many, but only Coca-Cola.

Ivester epitomized the strict focus on Coke that he wanted to see across the ranks. He could cite the company’s stock price at any given moment (he checked it constantly) and remembered when Coke first sold a million cases a year in Shanghai (1926). He leaned on Coke’s customers—restaurants, vending-machine owners, airlines, supermarkets, hotels—to do more to sell Coke. He urged bottlers to take on more equipment and more accounts and to invest heavily in their businesses, again to sell more Coke. And he didn’t like to take no for an answer.

He had made bottlers a critical element in his campaign, as they had been for most of Coca-Cola’s history. The company made only soft-drink concentrate, sold as a dry powder or as a syrup. Both had to be transformed, with bubble-filled water and user-friendly packaging, into something that would fit into a consumer’s hand and taste good going down. That was the bottlers’ job. For generations, the bottlers had defined how they would get that done, and they prospered according to how well they performed.

But Ivester had come up with a better idea. He relaxed a little thinking about it, resting his left arm along the edge of the car door as northern Georgia unfolded past the window.

Sitting beside him in the passenger seat was a man named Jimmy Wardlaw. Wardlaw had once worked for an independent bottler, but now he was part of Coca-Cola Enterprises in Atlanta, a giant substitute for the independent bottlers that had been conceived, created, and spun off at the suggestion of Ivester. Wardlaw was the kind of bottler Ivester liked. Too many of the other bottlers out there were the kind Coke executives thought the Coca-Cola Company would be better off without.

From the Hardcover edition.

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Meet the Author

Constance L. Hays has worked as a reporter for The News and Observer in Raleigh, North Carolina, and, since 1986, for The New York Times, where she covered the food and beverage industry for three years. She lives in New York City with her husband, John A. Hays, and their three children.


From the Hardcover edition.

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