As the summer wore on, Howard Candler proved to be the best salesman of the lot. In August, his father wrote him a thoughtful letter of praise in which he pondered the future. Could things really go on like this indefinitely? The letter also revealed Candler’s inner doubts about the ultimate worthiness of his enterprise, despite the missionary zeal with which he sent out his salesmen:
August 10, 1899: I feel quite proud of your summer campaign. . . . I don’t know whether I can let you be a doctor or not. If I felt sure that this business would hold out perpetually, I believe I would resign to give you the place. But my boy I can’t take such risk on your future. I have no right to limit your usefulness to the narrow compass of a 5 cent Soda Fountain Beverage. You are capable of grander achievements. . . .
Candler needn’t have worried. Howard quit medical school of his own volition the following year.*
ON THE EVE OF THE TWENTIETH CENTURY
On December 28, 1899, about twenty people met at 10 a.m. in the Atlanta headquarters. For the first time, all of the salesmen, branch managers, and home office personnel assembled in one place. Other “intimate and helpful friends” were also invited to give advice. Probably half of those present were related to Asa Candler. They talked for four hours.
We do not have the minutes from that historic meeting, only days away from the new century, but we can reconstruct a scenario. First, Asa Candler outlined the firm’s financial position. “Few corporations can show a more satisfactory financial condition,”* he began, pointing out that sales had exceeded 280,000 gallons of syrup for the year. “That’s almost 36 million drinks of Coca-Cola that we sold this year, gentlemen. We have over $200,000 in cash, and we own real estate worth some $50,000. We have accomplished this while spending over $48,000 this past year on advertising, $38,000 in rebates, and $11,000 in extorted taxes for war revenue. I should add that we hope to get those unjustified taxes back and have gone to court to do so.”
Candler expressed particular satisfaction that February volume (over eleven thousand gallons) demonstrated the drink’s growing winter strength. He summarized the activity around the country, then announced that he had just hired a man in Havana, recently liberated from Spanish rule. This new Coca-Cola man would build the fountain business in Cuba and Puerto Rico. Already, over a thousand gallons had been sold on the islands. After a round of applause, Frank Robinson quietly displayed the new advertising for the year, explaining how the outside signs would be mounted, how many complimentary tickets would be disbursed, and why they were keeping Hilda Clark on the calendar for a second year.
The meeting was then thrown open to general comment. After an initial awkward silence, people began to talk about their daily concerns. The branch officers wanted more responsibility; the home office wanted the branches to be more profitable, particularly the New York and Los Angeles outlets, which were losing money. The traveling salesmen wanted better direction; Asa might tell them one thing, Frank Robinson another, and Sam Dobbs something else. Sometimes the home office was too busy, and no one told them anything. This matter was resolved when Asa declared that Sam Dobbs would be responsible for the sales force, allowing Frank Robinson to concentrate on advertising.
Then there was the cocaine issue. Everywhere they went, the salesmen were encountering more and more rumors about how Coca-Cola led to cocaine addiction. Even the temperance women, who should have been on Coca-Cola’s side, were turning against the drink. Finally, someone asked the heretical questions: “Couldn’t we just take out the cocaine? Does it really make that much difference?”
The room hushed as Asa Candler tapped his fingers on the desk. Finally, he spoke. “So you want me to change the formula of the country’s favorite beverage because of some hysterical women? Do you really want us to change Coca-Cola, the purest, most healthful drink the world has ever seen?” His voice rose higher and cracked as he began to shout, “Never! There is nothing wrong with Coca-Cola.” He took a deep breath and continued, more calmly. “If there was anything the matter with it, do you think we would have such a problem keeping everyone supplied with it? No, Coca-Cola has been good to me, and I will not change it. That’s the end of this discussion.”
When the meeting adjourned, the group enjoyed a catered dinner in the Coca-Cola building, with boxes of chocolate from Nunnally’s passed out to everyone. The employees were surprised at the sumptuous spread, because it was common knowledge that Asa Candler never spent a dime he didn’t have to. The company must have been doing very well, indeed.
AN OMISSION
There was one item of business that appeared too trivial to mention at this meeting. Back in July, two Tennessee lawyers had come to Atlanta to see Asa Candler about a business proposition. They wanted to bottle Coca-Cola.
__________________
* Candler told the reporter that “Coca-Cola was introduced to the public a little over a year ago in a modest way. Its inventor was unable to devote to it the means necessary to its general introduction to the public. . . .” It is interesting that Pemberton’s name is carefully avoided here, though he had been dead less than a year and was well known in Atlanta. Candler was already minimizing the inventor’s contribution. Note, too, that he moved the introduction of Coca-Cola to “a little over a year ago” (1888) rather than 1886.
* The actual amount of cocaine in original Coca-Cola has been the subject of much speculation. To make fluid extract of coca leaf, Pemberton’s formula for French Wine Coca (given to me by Frank Robinson’s great-granddaughter) called for 10 pounds of coca leaf soaked in three gallons (twelve quarts) of water. Robinson’s Coca-Cola formula, which made thirty-six gallons of syrup, called for fifteen quarts of coca extract that, if made the same way, would require 12.5 pounds of coca leaf. According to an 1887 article by E. R. Squibb (forebear of the pharmaceutical company Bristol-Meyers Squibb), coca leaf contained about 0.35 percent cocaine. One beverage used an ounce of Coca-Cola syrup, which translates to about 4.3 milligrams per drink, a small amount of the drug. Some studies, however, suggest a symbiotic relationship between cocaine and caffeine. Consequently, even the negligible amount of cocaine in original Coca-Cola could have had an effect when combined with the 80 milligrams of caffeine. A typical snorted “dose” of cocaine contains about 35 milligrams. The gentleman who drank five straight glasses of Coca-Cola at Foster Howell’s soda fountain received approximately 22 milligrams of cocaine.
* Drug experts, beginning with Angelo Mariani and John Pemberton, have drawn a legitimate distinction between coca and cocaine. The Peruvian Indians valued the milder forms of the leaf, disdaining the bitter variety with a higher cocaine content. As cocaine got a bad name, Mariani, Pemberton, and then Asa Candler fought to maintain a distinction between the “natural” use of coca leaves, which produced mild stimulation from a mixture of fourteen alkaloids, and the more drastic effects of the pure alkaloid, cocaine.
† For a detailed description of the formula and the ingredients in 7X, see appendix 1, “The Sacred Formula.”
‡ Those with access to the formula were Willis Venable, George Lowndes, Woolfolk Walker, Charley Pemberton, Cliff Pemberton, Joe Jacobs, J. C. Mayfield, Diva Mayfield, A. O. Murphey, and E. H. Bloodworth.
* Indeed, in 1885, Sigmund Freud playfully inscribed one of his papers to Carl Koller, “To my good friend, Coca Koller.”
* Not everyone was impressed with Candler’s religious devotion. Pemberton’s niece, Mary Newman Sherman, called Candler a “sanctimonious pipsqueak.” She and other members of his Sunday school class ridiculed him behind his back, imitating his high-pitched voice. Another Sunday school student made national headlines by sending Candler a series of fake blackmail threats dubbed the Black Hand Letters.
* Though Howard Candler joined the Company full-time, he would never be a charismatic public figure. “I really enjoy the office part of the work,” he wrote his father, “but I don’t like to distribute tickets and sell goods. More, I don’t like to have to be sociable with the trade.”
* This is actually a quote from the 1899 annual report, issued on January 11, 1900. The following scene is based primarily on this annual report.
~ 5 ~
Bottle It: The World’s Stupidest, Smartest Contract
Yes, these early bottlers of Coca-Cola have been a hardy, a rugged, and a determined lot. . . . They had the faith, and the courage, and the dedication, and the determination to lay the road, build the bridges and weather the storms, and solve the problems that have brought this business to the position of eminence which it enjoys today.
—Lee Talley, president, The Coca-Cola Company, 1959
“Ben,” he said, “I wonder how they happened to get together all the dumb sonsuvbitches in the world and put ’em in this goddam bottling business.”
—Big Beverage, by William T. Campbell
Benjamin Franklin Thomas, a lawyer and businessman, came to Chattanooga, Tennessee, in 1887, attracted by the little town where the “drive to make money . . . almost permeated the . . . air,” as one historian put it. Not content with a simple practice, Thomas had already operated a stone quarry, hosiery mill, and paving brick company, and had marketed Sofas, a patent medicine whose key ingredient was baking soda. Still, he wasn’t satisfied. Sam Erwin, a friend at his boardinghouse, recalled how Thomas “used to come in every few days with a new scheme to make a million dollars.”
When the U.S. went to war with Spain in 1898, Thomas became a clerk in a Cuban commissary, where he was impressed by the popularity of a carbonated pineapple drink called Piña Frio. Upon his return to Chattanooga the following year, he decided that perhaps his fortune lay in bottling the popular soda fountain drink, Coca-Cola. When Thomas told his fellow boarders his latest plan, Sam Erwin laughed at him as usual, but said that he actually might help with this one, because it happened that Asa Candler was Erwin’s first cousin. He soon arranged an introduction for the eager lawyer.
Although Candler didn’t appear interested, Thomas repeatedly took the short train trip to Atlanta to talk with the Coca-Cola magnate, all to no avail. Thomas decided he needed a partner to convince Candler that he was serious. Sam Erwin, his first choice, wasn’t interested in his friend’s cockeyed idea. Finally, after much discussion, Thomas persuaded another boardinghouse friend and fellow lawyer, Joseph Brown Whitehead, to join him in the tentative venture. Both men enjoyed baseball, and Thomas painted a glowing picture of the potential bottled soft drink sales at double-headers. He also noted that the soda fountain drinks they brought back to their offices went flat while they talked to clients. “Wouldn’t it be great if a fellow could put this stuff in a bottle and stop it up so the gas wouldn’t get away, and he could drink it whenever he wanted?”
Armed with a few samples of bottled Coca-Cola, the two men met with a harried Asa Candler in mid-July 1899. He was annoyed to find Thomas pestering him again. In addition, he wasn’t particularly impressed with anyone from Chattanooga, which he considered a hick town. “I went up there once to bring back a fugitive nigger,” Candler later said, “and I didn’t think there was anything up there.” His initial impression of Thomas and Whitehead must not have been favorable either. Thomas, thirty-eight, was a heavyset man with a florid, sweaty face. Whitehead, though a few years younger, walked with a pronounced waddle, carrying nearly two hundred pounds on his 5'4" frame.
Besides, Candler was wary of the bottling business; he remembered that Woolfolk Walker had already bottled Coca-Cola briefly back in 1888 and the product had been, to use nephew Sam Dobbs’ term, “putrid.” At that time, Candler had vehemently forbidden Dobbs to sell Coca-Cola in bottles. He already had enough problems defending his drink without allowing the promotion of an inferior product. Mostly, though, he was simply too busy to think about bottling Coca-Cola. As he recounted the conversation years later, Candler told them, “Gentlemen, I don’t think we want to have it bottled; we can’t handle it ourselves; there’s too much detail about the bottling business.” In summary, Candler said he had “neither the money, nor time, nor brains, to embark in the bottling business, and there are too many folks, who are not responsible, who care nothing about the reputation of what they put up, and I am afraid the name will be injured.”
Although Thomas and Whitehead may not have been impressive at first, they were born salesmen, friendly and jovial. They listened to everything Candler said, nodding with understanding. Then, speaking easily and well, they described their plans, assuring Candler that they would maintain the purity and integrity of Coca-Cola, no doubt making it the best-known bottled drink in the United States, the same way that he, Candler, had so brilliantly made it the most famous soda fountain drink. Warming to their subject, the men concluded with a sincere burst worthy of their best courtroom oratory: “We promise and guarantee to you, Mr. Candler, that in all the business we do in the bottling of Coca-Cola, we will make the name better every day we conduct this business.” They weren’t trying to rush him, though; he should take the matter under advisement, sample their bottled product and think it over. They would be in town a few days.
Candler, his ego flattered and interest piqued, visibly softened. He had to admit that Thomas was persistent, a good trait for a Coca-Cola man. “That’s a big contract you have taken on your hands; I have already spent all the money I have trying to make it respectable.” He told them he would have to look into their backgrounds and would let them know his decision in a few days. In the meantime, they should prepare a suitable contract.
Candler must have been pleased that both men were lawyers; he was increasingly coming to rely on men of their profession. Thomas also had a varied entrepreneurial background, including experience with patent medicines. With satisfaction, Candler noted that Whitehead’s father was a Baptist minister; hopefully, Whitehead would bring a religious fervor to the Coca-Cola business. In addition, it didn’t hurt that he specialized in tax law, in light of the pending litigation over the war tax. Finally, Whitehead, too, was already involved in patent medicines as the vice president of the New Spencer Medicine Company.
GIVING AWAY THE BOTTLING RIGHTS
On July 21, 1899, Asa Candler called the men back into his office to approve their plan. Casually, the partners handed him the six hundred-word contract they had prepared and signed. After carefully reading it over, Candler also signed the document. Clearly relieved, Thomas and Whitehead assured Candler that he would not regret it and turned to go before he changed his mind. Candler called after them: “If you boys fail in this undertaking, don’t come back to cry on my shoulder, because I have very little confidence in this bottling business.”
Candler must have believed he had everything to gain and nothing to lose under the contract’s terms. It bound the bottlers to use only Coca-Cola syrup, banning any substitutes, and it expressly excluded the soda fountain business, which would remain the sole province of The Coca-Cola Company. In addition, the contract specified that if the bottlers failed to “supply the demand in all territory embraced in this agreement,” the contract would be forfeited. It is little wonder that Candler had told them they had a “big contract” on their hands. The territory included almost the entire United States, excluding only New England (held by Seth Fowle & Sons, though they never bottled there) and Texas and Mississippi, where noncontract businessmen were already putting the drink in bottles.
If Thomas and Whitehead succeeded, Candler stood to sell more syrup. If they failed, he would not have put up any capital or had to spend time on the fruitless venture. Why not let them have a go at it? He agreed to sell them syrup at a dollar a gallon and to provide their advertising needs. Candler was correct that the contract would result in his selling more syrup, though he obviously didn’t realize the enormous implications. This simple contract was to revolutionize the Coca-Cola business, giving birth to one of the most innovative, dynamic franchising systems in the world.
At the same time, however, it virtually assured conflict within the Coca-Cola family of the future. Candler set no term on his contract.
As long as Thomas and Whitehead fulfilled their end of the deal, it was permanent, and they could pass it along to the bottling companies they created.* In addition, the agreement did not include a provision for modifying the price of syrup, should the cost of ingredients increase. These two jokers in the contract would haunt The Coca-Cola Company in the next century, resulting in numerous lawsuits.
Coca-Cola folklore relates that an anonymous tipster offered to give Candler invaluable advice in return for an unspecified sum. After Candler paid, the informant leaned over and whispered two words in his ear: “Bottle it.” The story is, of course, pure fiction. In fact, no money changed hands when the contract was signed. Candler literally gave away the bottling rights. Subsequent histories say that a token dollar was exchanged, but there is no mention of it in the contract. In the years to come, The Coca-Cola Company would pay millions of dollars to buy back piecemeal what Candler so casually signed away for nothing. At the time, however, Candler did not regard the contract as worthy of note. On the same day he signed it, he wrote a letter to his son Howard, talking mostly about how to sell special fountain glasses for Coca-Cola.* He did not mention the two Chattanoogans or their bottling deal.
BOTTLING AT THE TURN OF THE CENTURY
Coca-Cola historians have treated the subsequent success of the Thomas/Whitehead venture as if it were the real genesis of bottled soft drinks. On the contrary, the bottling business was booming even as Pemberton first experimented with Coca-Cola in 1885. In that year, one bottler was interviewed at his factory, a “wilderness of bottles and machinery,” revealing a snapshot of the contemporary industry. “Ten years ago I did a large business,” said the bottler, “but my customers were exclusively saloons. Now my trade is five times larger, but nine-tenths of it are groceries and private families.” He produced root beer, sarsaparilla, ginger ale, raspberry, pop, mead, and plain beer—in descending order of popularity. Sometimes the extracts underwent “some funny change and taste horrible,” the bottler complained. “Raspberry and pop are affected by sunlight, and their flavor changes to that of turpentine.”
For God, Country, and Coca-Cola Page 11
