In the final event, two primary entities emerged from the mess. Coca-Cola GmbH would manufacture the syrup and own the trademark, while the Deutsch Vertriebs GmbH für Naturgetränke, commonly known as Deverna, would act as the parent bottler. Powers, running Deverna, was supposed to live off the royalties of the bottlers he found. Unfortunately, he couldn’t find anyone to risk bottling, which required too much cash. Instead, he sold through “concessionaires,” distributors who picked up cases of the soft drink and sold them in exclusive territories near Essen.
When Keith opened Powers’ desk drawer and found unpaid bills and unopened bank statements, the former bookkeeper recognized a satisfying challenge. He soon put Coca-Cola GmbH’s finances in order and turned his formidable organizational skills to promoting the business. While he lacked the American’s winning personality, he more than made up for it with a forceful style. Men laughed with Ray Powers, but they trembled before Max Keith.
Keith was an imposing man, over six feet, with high Teutonic cheekbones rarely dimpled by a smile and a little whisk-broom mustache that, like the Führer’s, quivered alarmingly when he was enraged. In several other ways, Keith’s mannerisms and leadership style resembled the dictator’s. His high-pitched voice proved hypnotic when raised in anger. “Max Keith could chew you out like you’ve never been chewed out before,” one of his aides recalled, “but he could also build you up again.” He could be charming, gentle, and conciliatory when it suited him. Once he decided something, Keith never changed his mind, and he brooked no opposition in public. It was suicidal to espouse a conflicting point of view in a staff meeting. “He was a born leader, a very charismatic figure,” according to Klaus Pütter, a longtime employee. “You liked to work for him although he was almost a slave driver. . . . Oh, yes, I was scared of him. We all were, even aides who were older.” Still, Pütter said, most of his followers “would have died for this man.”
Keith’s tactics could be brilliant. Against enormous odds, including near disaster at the hands of both the Nazis and the American conquerors, he built the Coca-Cola business into a thriving enterprise. Through cunning, bluff, intimidation, wheedling, influence, marketing, and sheer willpower, Max Keith survived along with his beloved drink. For Keith, as one aide put it, the ruling thought was not “Deutschland Über Alles,” but “Coca-Cola Über Alles.”
BOOM YEARS WITH MAX AND ADOLF
As Hitler had collected ragtag malcontents to form his Brown Shirts, Keith too looked for lost souls who would become true believers. “They were mostly people who had almost tried everything in their life and failed,” Keith remembered in an interview near the end of his life. “They thought that by taking Coca-Cola, what could they lose more?” The Coca-Cola manager had little choice in employees, since there was virtually no German soft drink business. Nonalcoholic beverages were considered syrupy concoctions for children, not for robust beer-drinking adults. It was also widely believed that cold beverages (with the exception of beer) caused stomachaches.
Determined to alter that attitude, Keith forced himself and his men to work twelve-hour days and more, sometimes collapsing at 2 a.m. before rising early to start all over again. On foot, bicycles, pushcarts, three-wheeled motor scooters, and one old Chevrolet truck, Keith’s concessionaires delivered the goods. In 1934, he added a bottling plant in Frankfurt, with warehouses in Cologne and Koblenz. He forged ahead despite the stingy Canadian supervision of Gene Kelly, who refused to buy a second truck until Keith had accrued over six hundred retail accounts.
At least Kelly provided as many small point-of-purchase signs as the Germans could nail up, and he allowed Keith to print millions of leaflets titled Was Ist Coca-Cola? (What Is Coca-Cola?), which his men would distribute at sporting events and restaurants. “We went to restaurants on weekends [and] put this prospectus on every table,” Keith remembered, and when distraught proprietors threw them out, the Coke men doggedly replaced them. Many who picked up the folder expected to find an analysis of the ingredients and were angered when it simply said that Coke was a refreshing drink, but the endless repetition of the product name had its intended effect.*
To encourage his distributors, Keith initially hired three field men to demonstrate proper sales technique and open new outlets. These overworked salesmen had to lug around a large briefcase dubbed the Seufzertasche, or the “case of sighs.” It contained a tin lining, ten Coca-Cola bottles, and ice. Entering a tavern, early field men such as Joe Knipp opened markets by persistent sampling, offering ice-cold (eiskalt) drinks. “Ja, Blah! I’ve had it before, I would not touch it,” the owners would say, but once they tasted a cold drink, they would often exclaim that it was an altogether different taste when properly chilled.
Once a retailer was convinced that Coca-Cola might make money for him, he often had to hide the bottles under beer in the ice, since over half the pubs and restaurants were owned by local breweries that forbade the sale of another drink. At times, Keith’s personal presence alone solved the problem; ten minutes of Keith was enough to cow most brewers. Other times, Keith brought in Walter Oppenhoff, the attorney who had incorporated the Company in 1930 and who took an almost daily part in the business. The lawyer usually procured a satisfactory out-of-court settlement. With Keith’s guidance and Powers’ continued sales efforts, Coca-Cola sales grew quickly throughout the decade. In 1934, they doubled to 243,000 cases and, two years later, broached 1,000,000 cases for the first time. By the time war broke out in 1939, the Coca-Cola men were selling almost 4.5 million cases inside Germany.
While Keith deserves much of the credit for this phenomenal growth, he himself recognized that “the time marched with us.” As in America, refrigeration invaded the home during the 1930s, while automobile travel was facilitated by the Autobahn system, dotted with its Coke-supplied filling stations. Even as the first concentration camps were opened by the Nazis in 1933, Germany was experiencing the onset of relative prosperity. By 1937, the German national income had doubled. “Germany in the mid-Thirties,” wrote William L. Shirer in The Rise and Fall of the Third Reich, “seemed like one vast beehive.” The busy workers needed the pause that refreshed. “The requirements of the people were much higher than in the past,” Keith said. “They had to work harder, had to work faster, the technical equipment they had to handle required soberness.”
Of course, the “technical equipment” was part of the vast military machine that created new jobs. And while unemployment shrank to almost nothing, workers were little more than serfs, forbidden not only to strike but to change jobs. The employer became a kind of mini-dictator, a Geschäftsführer, or “leader of the enterprise.” Wages were deliberately set quite low, but most workers were happy just to have jobs and to believe Hitler’s propaganda that the Teutonic “Volk” would overcome all obstacles. Far from being resentful of a brutal dictatorship, most workers, Shirer noted, were imbued with “a new hope and a new confidence and an astonishing faith in the future of their country.” No wonder Max Keith’s faithful workers labored so diligently. By 1939, forty-three German plants bottled Coca-Cola, with nine more under construction. Over six hundred concessionaires, independent franchisees making considerably more money than most German workers, distributed the drinks. Each was his own mini-Führer, though bowing ultimately to Max Keith, who had made it all possible for them.
COKE AT THE BERLIN OLYMPICS
The 1936 Summer Olympics in Berlin marked a moment of triumph for Max Keith, who provided enormous quantities of Coca-Cola for athletes and visitors. That August in Berlin was equally satisfactory for Hitler, proud host to the nations of the world, showing off his blond Aryan athletes and his revitalized Germany. Just before the Olympics, Max Schmeling had proved that a white German could beat a supposedly inferior black American when he knocked out Joe Louis in the twelfth round at Madison Square Garden. Arriving in Germany, Schmeling was welcomed by a huge crowd as he stepped off the zeppelin Hindenburg, then whisked to lunch with Hitler, who slapped his thigh in appreciation ever
y time he saw Schmeling hit Louis in the film of the fight. A prominent Nazi publication gloated that “Schmeling’s victory was not only sport. It was a question of prestige for our race. With his hard fists he has won the respect of the world for the German nation.”*
German athletes dominated the Olympics, winning thirty-six gold medals while America took home only twenty-five first-place finishes. Although Hitler seethed over black superstar Jesse Owens’ four gold medals, on the whole he was smug about his Berlin charade. Signs such as Juden Unerwünscht (Jews Unwelcome) had been quietly removed for the duration while the country put on its best behavior. Max Schmeling, viewing the games with Hitler in his private box, summarized the feelings of most Germans when he told a U.S. reporter, “We have no strikes in Germany. Most everybody has a job. Times are good. We have only one union. We have only one party. Everyone agreeable. Everybody happy.”
Göring and Goebbels hosted elaborate parties for foreign guests, most of whom were suitably impressed by what they saw. One of those guests was Robert Woodruff, who had brought over an entire Coca-Cola entourage. Woodruff, however, was not taken in by Hitler’s facade. His finely tuned antennae felt the rumbles that could destroy a business. True, Woodruff approved of the modern Berlin bottling plant with its forty-spout filler. But while pleased to see Coca-Cola prominently on sale at the Olympics, he was most unhappy with the wrapper around the neck of every bottle, which read Kaffeinhaltung (Caffeine-Containing). The Nazi Health Ministry, perhaps prodded by the Führer’s food faddism, insisted that the caveat be placed on the bottles. For many German consumers, however, the wrapper served more as an advertisement than a deterrent, since coffee was a rare commodity.
Nonetheless, the label violated one of Woodruff’s sacred tenets, and he ordered his high-powered chemists and lawyers to write affidavits in an attempt to undo the damage. Referring to this incident, John Sibley wrote to Woodruff in November of 1936, “That country is feeding itself on prejudice and this is just another evidence of this fact. I hope that we get through without getting scarred up.” In his meeting with Max Keith and Walter Oppenhoff, Woodruff refused to allow them to combat the rumors about caffeine. When Keith pressed the issue, Woodruff dramatically banished the visiting Americans from the room so that he could be alone with the Germans. “I am not accustomed to giving my American people explanations,” he said, “but I will break the rule for you. You must never engage in defensive advertising. It simply gives dignity to your opponents and prolongs the issue.”
For once, Keith had met his match. Without ever raising his voice or displaying irritation, Woodruff had exercised steely command. “When Max Keith met Robert Woodruff,” one of his aides remembered, “he was overwhelmed. That was the man he worked for, the only man in the world he really deeply respected.” For his part, Woodruff recognized in Keith a potent personality who could build the German business. The two men remained lifelong friends.
While in Berlin, Woodruff also dealt with the Ray Powers situation. Deverna as a parent bottling company hadn’t worked out, and Powers had failed to make any money from his contract arrangement. After a lengthy meeting, company lawyers agreed to dissolve Deverna, to make Keith the official Geschäftsführer of Coca-Cola GmbH, and to give Powers a flat royalty fee for all the drinks sold in Germany until 1950.
In September of 1936, a month after the Olympics, Hermann Göring, Hitler’s designated successor and head of the Luftwaffe, took charge of a new Four-Year Plan that stressed German self-sufficiency in preparation for war. The Nazi leader cut imports to a bare minimum and discouraged foreign businesses. In a letter to the German Revenue Office, Oppenhoff had taken pains to present Coca-Cola GmbH as a German business, despite the fact that The Coca-Cola Company owned most of it. (Oppenhoff called the foreign capital a “loan.”) Under Göring’s iron rule, such prevarication was useless, and the supply of U.S. concentrate appeared doomed until Woodruff pulled his magic strings.
Woodruff belonged to a network of corporate executives, many of whom were worried about their German subsidiaries and interests. With war clouds darkening, these titans of American industry quietly maneuvered to protect themselves against all contingencies. Some, like Henry Ford, were in fact Nazi sympathizers, while others, such as Walter Teagle of Standard Oil, avoided taking sides but saw nothing wrong with doing business with the Nazis. Like his friend and hunting companion Teagle, Woodruff practiced expediency. His politics were Coca-Cola, pure and simple.
Through his New York banking connections, Woodruff moved behind the scenes to influence Göring. In 1936, he enlisted the aid of Henry Mann, a German agent for several American banks, who convinced Göring to permit the importation of Coca-Cola concentrate. “He accepts gifts,” one acquaintance had murmured helpfully to a favor seeker early in Göring’s career. In order to reduce the imports to a minimum, Keith began making his own concentrate so that he needed only Merchandise No. 5 and 7X from America. Woodruff toyed with the idea of producing even these ingredients inside Nazi Germany if war broke out. “Some consideration should probably be given to the . . . possibility of having Number 5 manufactured in Germany in case developments should make that desirable,” he wrote to Sibley, but he finally abandoned the plan as impractical.
The correspondence between Robert Woodruff and John Sibley during this crucial 1936 European trip reveals that Woodruff, while outwardly calm in the face of any adversity, was actually high-strung and restless. Writing from London before his German visit, Woodruff said that he was “nervous and lonesome” but that he was at least sleeping well for a change.* Despite the problems facing him in Germany, he wrote that his five-day visit would “pass fairly quickly (I hope).” Recognizing Woodruff’s tension, Sibley expressed the hope that his friend would get a “complete rest” while playing golf in Scotland.
FIGHTING THE “JEWISH SLANDER”
Woodruff may have helped Max Keith by interceding with Göring, but he was unable to control other looming problems. The caffeine rumors were only the beginning of controversy. As Coca-Cola became a big seller in Germany, the mineral water interests, breweries, and cola imitators used every smear tactic available. Phosphoric acid, they claimed, ate the lining of the stomach, demonstrating that a piece of veal left overnight in Coke was leached white. Some competitors complained that Coca-Cola was misnamed because it had no cocaine; others spread the rumor that it did contain the “poison,” which had a “stimulating effect on the brain.” As an “artificial coloring,” even the caramel coloring caused problems. The sacred hobbleskirt bottle itself was maligned because it held 0.192 liters rather than the German standard of 0.2.
But the most devastating threat to Coca-Cola’s future in Germany came from one Herr Flach, who manufactured an imitation drink called Afri-Cola. Flach belonged to the so-called Labor Front, the Nazi organization that had replaced unions in 1934. In 1936, Flach and other Labor Front representatives visited the United States on a goodwill tour of American industries. Ray Powers arranged for a visit to a New York Coca-Cola bottling plant, where Flach scooped up a handful of bottle caps with Hebrew inscriptions indicating that Coca-Cola was kosher—not a big surprise, since the huge New York Jewish population comprised a ready market.† Back in Germany, Flach distributed thousands of flyers featuring photographs of the bottle cap. Coca-Cola, he claimed, was a Jewish American company, run by Harold Hirsch, a prominent Atlanta Jew.
Sales plummeted. Nazi Party headquarters hastily canceled their orders. The entire business was in jeopardy, and Keith, forbidden to print defensive literature, could do little about it. Walter Oppenhoff fought for a preliminary injunction in Cologne against the “Jewish slander,” but F. A. S. Gwatkin, Coke’s London counsel, and Sibley prevented further court proceedings, fearing the consequent publicity. The independent bottlers and concessionaires felt betrayed and instituted their own lawsuits, sometimes defiantly naming Coca-Cola GmbH as coplaintiff. Oppenhoff wrote to Gwatkin, explaining that no one living outside Germany “could have any conception�
�� of the scope of the problem. Desperate for relief, Keith begged Woodruff to remove Harold Hirsch from the Coca-Cola board or at least to clarify that he did not own the company. Woodruff stood by Hirsch, but he did ask the legal department to draft a notice verifying the large number of shareholders, proving that no one person “owned” the Company. In the face of Flach’s jubilant defamations, however, the list of shareholders was a blunt weapon.
INTO THE HEART OF NAZISM
Ultimately, Coca-Cola weathered even this fiasco, though pictures of the kosher bottle cap kept surfacing for years. As Woodruff had done in America, Keith zeroed in on “special events,” such as patriotic mass meetings, realizing that sampling was the best way to build the business. Coca-Cola appeared at bicycle races, emphasizing its wholesome refreshment for athletes. As young men goose-stepped in formation at Hitler Youth rallies, Coca-Cola trucks accompanied the marchers, hoping to capture the next generation.
In 1937, the year after Flach’s initial accusations, Keith placed Coca-Cola at the heart of the Nazi industrial renaissance. That year, the Reich Schaffendes Volk (Working People) exhibit opened in Düsseldorf, displaying the accomplishments of the German worker during the first five years of Hitler’s rule. A functioning bottling plant, with a miniature train carting Kinder beneath it, bottled Coca-Cola at the very center of the fair, adjacent to the Propaganda Office. Touring the Düsseldorf fair, Hermann Göring paused for a Coke, and an alert Company photographer snapped a picture. Though no such picture documented the Führer’s tastes, Hitler reputedly enjoyed Coca-Cola, too, sipping the Atlanta drink as he watched Gone with the Wind in his private theater.
For God, Country, and Coca-Cola Page 34
