The Coke campaign drove Pepsi’s advertising men crazy. ‘“Things Go Better’ was killing us,” one Pepsi veteran recalls. “No matter what we said, they’d say, ‘Yeah, but things go better with Coke.’” In addition, an important subtheme highlighted the product’s magical qualities. A Coca-Cola suddenly transformed an unhappy boy in one spot, for instance, while sharing a Coke guaranteed a couple’s mutual devotion in another. The McCann ads had indeed succeeded in putting the drink on a pedestal.
Pepsi countered with devastatingly effective advertisements that completely contrasted with their drab old Sociables commercials. In the new TV spots, created by John Bergin of BBDO, a brief, tranquil interlude was broken by the dramatic burst of a motorcycle coming around a bend or a roller coaster cresting a height. After a brass fanfare, Joanie Sommers’ insinuating voice beckoned consumers to “Come Alive! Come Alive! You’re in the Pepsi Generation.” Using innovative techniques—hand-held cameras, “real” California kids instead of actors, spontaneous use of a helicopter flying with a Pepsi vending machine—the new Pepsi commercials effectively identified the drink with the baby boomers and Kennedy’s inaugural invocation of a “new generation.”
With these two seminal campaigns, the future thrust of both Pepsi and Coke ads was set. Pepsi ads were brash, loud, overtly sexy, centering not on the product but on the consumer. If you drank Pepsi, you could become popular, a part of a new generation. Through lifestyle advertising, Pepsi sought to woo the seventy-five million baby boomers. Coca-Cola ads always focused on the product itself. True, they mixed lifestyle with product attribute themes, but at the heart of the commercial lay a bottle of Coca-Cola. It was the star, not the actors.
“Things Go Better” debuted through all of the traditional modes, including point-of-purchase signs, novelties, and radio, but by 1963, television dominated promotions, eating 80 percent of the $53 million ad budget. The nickel gallonage allowance of the bottlers’ old contract now amounted to an inadequate pittance. The Company had to persuade bottlers to match TV ad expenditures dollar for dollar, a task complicated by local TV station reception cutting across franchise borders. Cooperative television advertising agreements solved the problem, though they resulted in constant bickering and readjustments.
PAUL AUSTIN’S BEST AND BRIGHTEST
In 1962, Hughes Spalding once again wrote to Robert Woodruff, worried over the grooming of new management. Lee Talley was approaching the mandatory retirement age of sixty-five; the Company needed younger men—“intelligent, sophisticated, cautious, and slightly suspicious. They must know the score.” He had penned a perfect description of J. Paul Austin, who became the tenth president of The Coca-Cola Company in May of 1962.
Austin, though a native Georgian, formed part of the new breed of Ivy League managers. A graduate of Harvard Law School who spoke Spanish, French, and Japanese, he could easily have served as one of Kennedy’s “best and brightest” advisers. In fact, Austin shared several characteristics with the president. Like Kennedy, Austin, forty-seven, had commanded a PT boat during World War II. A tall man with a riveting presence, the new Coca-Cola president had a thick shock of reddish-brown hair that fell on his forehead like JFK’s. There the resemblance ended, however. While Kennedy specialized in charm and wit, flashing his ready smile for the cameras, Austin’s mouth was usually set in a determined thin line. At Harvard, Austin had rowed for the United States team in the 1936 Berlin Olympics. “If you wanted to beat Paul Austin,” his coach once observed, “you’d have to kill him.”
Austin’s austere managerial style led one journalist to comment on his “seemingly imperious demeanor.” Even though he was the youngest president since Woodruff, Austin terrified his employees. “A certain degree of anxiety and tension has to exist,” he insisted, “for people to function at the highest level of their potential,” likening this “nervous quickness” to a well-tuned violin string. Normally self-contained, Austin occasionally unleashed a ferocious, quick-flash temper that rendered him still more formidable. Even his metaphors proved alarming. “We really zero in on a problem,” he once told a journalist, “pull all the legs off the centipede and see what he’s like.”
PROJECT ALAKEA
In October 1962, Austin directed insiders Ralph Hayes and Ben Oehlert to zero in on the perennial irritant of having to import Peruvian coca leaves and decocainize them. Hayes approached Henry Giordano, who had just replaced Harry Anslinger, the long-time head of the Bureau of Narcotics, about growing experimental coca in the U.S. Virgin Islands in order to develop plants that were “high in flavor elements and, hopefully, low in alkaloidal content.”
Giordano proved as friendly to Coca-Cola as his predecessor and greased the skids for the experiment, though Coke eventually settled on the island of Kauai in Hawaii as the growing site. “You may be assured that we will do what we can to let the appropriate Hawaiian authorities know that your proposed project has the Bureau’s approval,” Giordano wrote to Hayes. The Coke men called the top-secret effort Project Alakea (a Hawaiian word meaning “white path,” implying a righteous road). For twenty years, from 1964 to 1984, University of Hawaii researchers tried to grow coca plants, but they kept dying from a mysterious infection eventually identified as the fungus Fusarium oxysporum.* Coke never succeeded in developing a coca hybrid with minimal cocaine content.
THE COLD WAR TURNS FRIGID
Like Paul Austin, Jack Kennedy relished a sense of tension, and in 1961 the new President faced his first challenge just ninety miles off the coast of Florida. Clearly aligned with the Russians, Fidel Castro had begun nationalizing American companies, including Coca-Cola bottling plants worth over $2 million. A thriving market for Coca-Cola since 1899, the well-developed business disappeared overnight. Austin reacted to Castro with typical Coca-Cola restraint, but Kennedy jumped into the ill-planned Bay of Pigs fiasco, followed the next year by the terrifying Cuban missile crisis, when the world teetered on the brink of nuclear war.
Although Coca-Cola men were not engaged in such weighty decisions, they, too, suffered from a Cold War mentality at odds with their usual habit of supplying Coke to every human being on the planet. Stung by the Communist propaganda against the soft drink in the early fifties, Company policy righteously ignored the potentially huge market behind the Iron Curtain. Pepsi had no such compunctions, which accounted for Nixon’s 1959 public relations coup with Khrushchev in Moscow. After his 1962 defeat for the California governorship, Nixon joined Pepsi’s law firm at a comfortable $250,000 yearly salary. Don Kendall, who had recently assumed the Pepsi presidency, sent the former vice president globe-hopping as Pepsi’s ambassador abroad.* While opening doors for Pepsi, Nixon also gained international experience and stature. Kendall, a savvy executive who was to guide Pepsi for over twenty years, was consciously grooming Nixon for a political comeback.
In 1962, Billy Wilder directed One, Two, Three, a satire about Coca-Cola’s Communist phobia. James Cagney starred as C. R. MacNamara, a hard-driving, ambitious Coca-Cola executive in postwar Berlin, where his staff included several ex-Nazis who snapped their Prussian heels whenever the American executive spoke to them. After MacNamara opened negotiations with Soviet bureaucrats to sell Coke to Russia, he gloated over “all this virgin territory—300 million thirsty comrades, Volga boatmen and Cossacks, Ukrainians and Outer Mongolians, panting for the Pause That Refreshes.” He told his Atlanta superior that “Napoleon blew it, Hitler blew it, but Coca-Cola’s gonna pull it off.” MacNamara was baffled and frustrated when the Boss nixed the deal: “I wouldn’t touch the Russians with a ten-foot pole. And I don’t want anything to do with the Poles either.”
THE JAPANESE COMPRESS HISTORY
Austin probably agreed with the Cagney character’s expansionist attitude. Like many of Woodruff’s favorites, he had extensive overseas experience, primarily in South Africa, where he had built the business during the fifties before assuming the presidency of Coca-Cola Export in 1959. Austin’s international outlook meant continued gr
owth overseas, particularly in Japan. In 1957, Japanese strict import quotas had been eased, but Coke could still be sold in that country only at selected outlets serving American tourists. There were no such restrictions on Fanta, which sold extremely well, since it lacked carbonated fruit drink competition.
Paul Austin’s optimistic 1959 survey of the ripe market was confirmed two years later by Murray Hillman, the McCann-Erickson man, who sensed an “almost fanatical desire to change every fiber of Japanese life.” In his 1961 memo to Austin, Hillman described “a set of economic growth forces second to none in the world.” Daring teenagers wore blue jeans and danced the twist. “Today,” Hillman wrote, “the Japanese are emulating everything American which they can possibly copy and improve upon. It would appear that they are trying to compress the American experience of the last twenty years into twenty months.”
By year’s end, thanks to heavy lobbying by Coke executives and Japanese bottler Nisaburo Takanashi, controls were finally lifted so that Coca-Cola could be sold directly to Japanese consumers. The American soft drink, widely visible in the hands of the occupying forces since World War II, was an immediate sensation. Pacific Export director Hal Roberts (known as “the Emperor” by Japanese bottlers) divided Japan into sixteen bottling territories, larger and more efficient than those in the United States. Coke wisely chose well-connected Japanese business partners as bottlers, including Mitsubishi, Kirin Brewery, Fuji, Sanyo, Kikkoman, and Mitsui. Coca-Cola’s direct distribution system, which avoided the traditional Japanese layers of wholesalers, threw the soft drink industry into an uproar, while Coke’s insistence on cash upon delivery appalled dealers. This was the American way, though, so it must be good. Soon, other businesses were emulating the revolutionary new methods.
Coke men introduced the Japanese to their first vending machines, placing them in schools, factories, and hospitals. The concept of leisure found its way into Japanese thought, and convenience foods achieved enormous popularity. Coca-Cola signs sprouted everywhere in lighted plastic and garish neon. The Japanese Coke jingle, even more insipid than the American version, was a hit record. “Let’s have some Coca-Cola, cold Coca-Cola, Coca-Cola, Coca-Cola, we are all friends, Coca-Cola, Skatto sawayaka Coca-Cola.” The phrase skatto sawayaka, translated roughly as “bubbly refreshment,” became a popular slogan as instantly identifiable as “the pause that refreshes.”
At the 1964 Tokyo Olympic Games, Coca-Cola flowed everywhere, while bottlers paid for Japanese TV coverage. The following year, Coke sponsored the Grand Sumo Championship, presenting a gigantic Coke bottle trophy commensurate with the size of the wrestlers. Sales boomed, nearly doubling every year—2.62 million cases in 1962, 6 million in 1963, almost 20 million in 1965. That surge of gallonage, together with some forty new bottling plants opening overseas annually, swelled foreign sales until they accounted for 45 percent of the Company’s volume by 1966. Under Austin, Coca-Cola’s overseas operations became increasingly standardized. In addition to English, German, French, and the like, Coke was now advertised in over sixty languages, including Ashante, Ewe, Ga, Ibo, Lingala, Sindebele, Swahili, Tagalog, Urdu, Xhosa, and Zulu. Regardless of the dialect, advertising was, as Austin commented in 1963, “a world language—the Esperanto of world business,” adding, “We used to be an American company with branches abroad. Today we’re a multi-national business.” To facilitate decision-making, Coke’s worldwide Export managers exercised increased autonomy in Austin’s decentralized management system.
At the same time, the new Coca-Cola president instituted management courses for his executives and bottlers. Using the “case study” method, Harvard professors taught the latest business concepts to sometimes unwilling Coca-Cola men. “There are an increasing number of management techniques,” Austin said, “that are spun off from new and different areas—like organizing to put a man on the moon.” A great believer in committees, Austin divided problems into component parts and assigned small teams to work on them.
KEEPING TAB ON BULGING WAISTLINES
One of the first tasks Austin oversaw as president in 1962 was the creation of a new diet drink. Until then, Coke had ignored the diet market, since it threatened its sweet, quick-energy drinks. American women had become more calorie conscious in the fifties, however, and now they frantically sought to emulate Jackie Kennedy’s slim elegance. “The bulging waistline and middle-age spread,” wrote one commentator, had taken on “the proportions of a national calamity.” In 1961, Royal Crown had taken its Diet Rite Cola out of the medicine section and promoted it nationally as a soft drink, impacting the traditional cola market. Coke and Pepsi scrambled to catch up, particularly after market research revealed that 28 percent of the population were watching their weight.
Austin code-named Coke’s diet drink research Project Alpha, lavishing on it the same manpower and attention more appropriately devoted to a moon shot. Fred Dickson, head of Coke’s new marketing division, spearheaded the effort, while Dr. Cliff Shillinglaw tinkered with the traditional Coca-Cola formula, trying to discover a saccharin and cyclamate-flavored cola that would have the proper “mouth feel” and wouldn’t leave a kerosene aftertaste. Even more effort was spent on finding the proper package and name. Tom Law, head of the subsidiary Fanta Beverage Company that would sell the drink, argued that it should be called Diet Coke. Even for a progressive leader like Paul Austin, however, such a suggestion was heresy. As a flip McCann man put it, “If God had wanted Coca-Cola to have saccharin in it, he would have made it that way in the first place.” Instead, Austin sought a suitable name through his huge mainframe computer, which generated over 250,000 random three-and four-letter words, ranging from ABZU, ACHU, and ACK to ZAP, ZORG, and ZUFF. Company personnel also made suggestions. This elephantine labor finally produced TAB. Short, easy to remember, and completely different from Coke, it could also suggest keeping tab on weight problems.
Coca-Cola introduced TaB (perhaps the small “a” stood for the waistline) in magazine ads asking “How can just one calorie taste so good?” Almost apologetically, the Company explained to bottlers that it had no desire “to injure its existing Coca-Cola bottle business,” but it was forced to offer a diet drink to prevent competitors from appropriating “this important segment of the market by default.” In addition, the memo asserted that since TaB was not Coca-Cola, it wasn’t subject to the restrictive bottlers’ contract.* Because of the Company’s ambiguous attitude toward the new diet drink, TaB failed to command a large part of the diet market—which comprised over a tenth of total U.S. soft drink consumption. By 1964, TaB held only a 10 percent share of the weight-watcher market. When Pepsi, less tradition-bound than Coke, debuted Diet Pepsi that year, it grabbed even more of the segment.
BLACK WAS N’T BEAUTIFUL
John Kennedy and Paul Austin both faced more ominous problems than a newly weight-conscious America, however. Kennedy had wooed African Americans during the presidential campaign, but, for most of his term, he ignored the pleas of civil rights leaders for federal support, as the aggressive movement, encountering staunch Southern racism, led to confrontation and bloodshed inevitably involving Coca-Cola. The passive bus boycotts of the fifties gave way to a more alarming activism when, on February 1, 1960, four black college freshmen sat down at the Woolworth’s lunch counter in Greensboro, North Carolina, where they were refused hamburgers and Cokes. Stoically, they simply sat there, and the next day they returned with twenty-three classmates. The sit-in had been born, and the violence and furor that followed in the next three years jarred America’s complacency. By demanding equal rights to Coca-Cola, the civil rights activists were striking at the heart of Southern and American culture. They were also announcing a desire to join, not to destroy, middle-class Americans. Coca-Cola men like Delony Sledge who could see through the smoke must have realized that, were it not for the emotionally entrenched racism, the South would have embraced blacks as equal consumers. In fact, the Greensboro sit-in eventually succeeded because of economics. The Woolwo
rth’s owner, seeing his business slowly erode, finally capitulated.
The next year, as Freedom Riders were clubbed in Alabama and Mississippi, the atmosphere at the traditional Ichauway Fourth of July barbecue seemed tranquil. Woodruff always threw a huge free party for his black tenants and their families. That year, three thousand guests enjoyed the Boss’s largess, while the Coca-Cola and beer flowed, but racial tensions were lurking there as well. For years, Guy Touchtone, the white Ichauway manager/overseer, had bullied, robbed, and threatened his African American workers, sleeping with any black woman he fancied. Woodruff aide Joe Jones, aware that this behavior was demoralizing Ichauway—and angry that Touchtone was stealing timber and beef from the farm—had repeatedly attempted to persuade the Boss to fire him, but to no avail.
For God, Country, and Coca-Cola Page 43
