For God, Country, and Coca-Cola

by Mark Pendergrast

  Everywhere, people were moved by genuine emotion—including the Coke employees traveling with the torch. One disabled young man took more than an hour to carry the flame a half-mile. “He barely made it,” staffer Susan McWhorter remembered, “but the accomplishment on his face was phenomenal.” The torch runners themselves were transformed. “The whole thing was like a mountain-top experience,” one participant recalled. “I equate it to the birth of my children, graduation, or getting married.” Another runner was initially skeptical. “I was cynical because of all the Coke hype, but I was so moved by the reaction of everyday people, crying and waving flags. It was a real revelation. Though I never thought I would do it, I ended up buying the torch.”* Coca-Cola bused some forty million people to the relay, where they cheered, cried, and drank Coke. The memory of the event, as one Coke executive observed, was indelibly burned into their brains. On day eighty-four in Atlanta, riding one of the Harleys with a Coke sidecar, Dill Driscoll led the torch parade into the courtyard at Coke headquarters on North Avenue, where a literal red carpet was rolled out as Company employees cheered.

  Muhammad Ali, the former boxing great, shambled up to the great Olympic saucer in Atlanta on July 19, 1996, and finally lit the giant caldron for the seventeen-day Olympics. The rolling street party was at an end, but the Coca-Cola Games, as many journalists dubbed them, were just beginning. “Coke Here, There, Everywhere,” observed the Atlanta Journal-Constitution. “Within the Ring, the Coca-Cola trademark was so omnipresent it seemed an atmospheric condition.” Hawkers with Coke-bottle-shaped backpacks dispensed the drink. The red logo flashed on the floors and ceilings of Atlanta rapid transit stations. Collectors traded various Coke-embossed Olympic pins. Visitors crowded the World of Coca-Cola museum.

  The centerpiece, however, was Coca-Cola Olympic City, a twelve-acre theme park where Coca-Cola charged adults thirteen dollars for the privilege of gazing at a sixty-five-foot high Coke bottle and buying Company soft drinks from bottle-shaped vending machines that attracted children with a cool spray from underneath giant bottle caps. Ingenious interactive games allowed consumers to “compete” against Olympic athletes, simulating a sprint against Jackie Joyner-Kersey, batting against a video of pitcher John Smoltz, taking part in a wheelchair race, or mountain biking down a virtual reality trail. Meanwhile, for those who couldn’t make it to Atlanta, Coke developed Olympic Celebration Zone merchandising areas in supermarkets around the country as part of its Coca-Cola Red Hot Olympic Summer promotional campaign, with $1.6 billion in discounts and prizes.

  Coke’s designation as the official Atlanta soft drink prevented other brands from being served at city-sponsored events or on city property during the Olympics. “The odds of finding a cold (or a lukewarm, or a hot) Pepsi in Olympic Atlanta were akin to discovering the Holy Grail inside the Georgia Dome,” one reporter observed.

  During the games, the Company featured Coke as the star in one hundred commercials, each airing only once, in 135 countries, tailoring the approach so that Coke supported appropriate patriotic fervor. In Ukraine, for instance, Coke ads featured pole vaulter Sergey Bubka. Many of the ads were reruns from the previous few years, including the familiar polar bears, but, to lend an international flair, some were imported from other countries, such as a spot showing boys from India playing cricket, using a Coca-Cola crate as a wicket. These were augmented by “just-in-time” ads created from the previous day’s Olympic events.*

  Roberto Goizueta boasted, “We have gone from simply teaching the world to sing, to teaching the world to drink Coca-Cola.” Goizueta and Ivester greeted powerful customers and bottlers from all over the world, each executive shaking at least two thousand hands during the course of the Games. There seems little question that Coke’s Olympic efforts, which cost some $250 million, paid off, although the Games themselves were marred by disorganization, a bombing, and complaints about commercial tackiness. “Atlanta’s Olympic Games,” wrote French newspaper Le Monde, “touched on some classic themes of the American myth—immodest ambition, an obsession with gold, the powerful reign of the dollar.” Groused another reporter, “Atlanta was every bit as ready for the Olympics as America was for New Coke.”

  1996: YEAR OF TRIUMPH

  Goizueta and Ivester were too busy celebrating to worry about such carping. Ten days after the Olympics ended, Goizueta greeted Oswaldo and Gustavo Cisneros to Coke headquarters in Atlanta, where they signed a contract to form a joint venture with the huge Venezuelan bottling family. For $500 million, Coke grabbed 50 percent ownership in the only country in the free world where Pepsi had always predominated. It was a remarkable coup, administering a stunning blow to Pepsi’s pride, particularly since new PepsiCo CEO Roger Enrico had been personal friends with Oswaldo Cisneros. “Ozzie took his 30 pieces of silver and ran,” Enrico observed bitterly. The purchase followed years in which Pepsi management had ignored the Venezuelan bottlers. Doug Ivester negotiated the top-secret deal, meeting the Cisneros team in hotels and airplane hangars. Once the bargain was made, a 727 jet carrying thousands of Coke bottles flew from Mexico to Caracas, and crews worked overtime repainting 2,500 delivery trucks with the Coca-Cola logo. Overnight, Pepsi virtually disappeared from Venezuela.*

  Less than two weeks later, Goizueta declared victory in Russia, another longtime Pepsi stronghold. In 1994, Pepsi still held 60 percent of the Russian market, but now Coke had pulled ahead. After the 1985 New Coke debacle, Roger Enrico had penned The Other Guy Blinked: How Pepsi Won the Cola Wars. “If he thinks we blinked,” Goizueta said testily a few years later, “we will respond by giving Pepsi two black eyes.” Now, he had done just that. Fortune crowned the Coke CEO the monarch of soft drinks. A March 1996 Fortune cover showed Goizueta, arms folded, sitting atop a giant Coke bottle, as Coca-Cola grabbed top ranking as America’s most admired company. “Pepsi’s Enrico: Bottled Up by Coke,” an October 1996 cover announced, featuring a somber Enrico trapped inside yet another oversized Coke bottle.

  By year’s end, Coca-Cola Company sales accounted for over half of non-U.S. soft drink consumption. The stock, which had split two-for-one in May, climbed to $53 for a 43 percent total return for the year.† “If you invested in our Company just two years ago,” Goizueta wrote in the annual report, “your investment has more than doubled.” Worldwide unit case volume for the year was up 8 percent, with 6 percent growth in the United States. Earnings per share grew 19 percent, boosted by company share repurchases and the sale of French, Belgian, and British bottlers to Coca-Cola Enterprises, the huge American anchor bottler that moved into Western Europe during the year.

  “It may sound incongruous from one of the world’s most valuable companies, about to celebrate its 111th birthday,” Goizueta said, “but, truly, we are just getting started.” Just turned sixty-five, Goizueta clearly felt that he himself was just getting started, too. “As long as I’m having fun and adding value,” he said, he planned to remain CEO. At the annual company meeting, one shareholder rushed up to Goizueta and gushed, “You should be like the Pope and never retire.” Delighted, Goizueta repeated the anecdote over the next few months. He intended to be another Robert Woodruff, the grand old man of Coca-Cola, pulling the company strings for years to come. And, like Woodruff, Goizueta was so obsessed with Coca-Cola that he regarded its sales record as the pinnacle of human progress. “A billion hours ago, human life appeared on Earth,” Goizueta intoned. “A billion minutes ago, Christianity appeared. A billion seconds ago, the Beatles changed music forever. A billion Coca-Colas ago was yesterday morning.” The overwhelmingly important question remained: “What must we do to make a billion Coca-Colas ago be this morning?” As Goizueta himself observed, “Working for The Coca-Cola Company is a calling. It’s not a way to make a living. It’s a religion.”

  DEATH AT THE PINNACLE

  The following year, the Coke juggernaut rolled on, with a January 1997 “Get Caught Red Handed” promotion offering two hundred thousand instant prizes, including T-shirts, cameras, coupons, and C
lub Med vacations, to Coca-Cola Classic drinkers “caught” imbibing by a roving Red Crew, deployed by Dill Driscoll’s experiential marketing outfit, that made flash visits to stores, movie theaters, and residential neighborhoods. The promotion signaled Coke’s intention to expand Coke Classic marketing year-round rather than focusing only on summertime. Come summer, the Company offered more than five hundred thousand MasterCard ATM money cards worth twenty to a hundred dollars inside selected twelve-packs and cases of Coke Classic and Cherry Coke.

  At the Super Bowl, Coke introduced a Coca-Cola Red Zone where fans could play interactive simulated football games, while Harleys with Coke sidecars passed out drinks for tailgate parties. One lucky fan won Coke-sponsored Super Bowl tickets for life. Like Coca-Cola Olympic City, such interactive marketing was intended to involve fans, going beyond the mere presence of ubiquitous Coke signs. The Company allowed Pepsi to pay exorbitant amounts for exclusive pouring rights for teams such as the Seattle Mariners and Los Angeles Lakers (leaving Coke with twenty-four of twenty-eight major-league baseball teams and similar domination of other sports). Meanwhile, Coke opened Coca-Cola Sky Field, an entertainment park at Turner Field, the home of the Atlanta Braves, and Monster Refreshment, a similar effort featuring three 25-foot Coke bottles, at Fenway Park in Boston. “Five years ago, we were just there,” said Steve Koonin, in charge of sports marketing for Coke. “Now, we’re a friend of the fan, and we’re fun. And we’re winning.”

  In the same spirit, Coke opened a new Everything Coca-Cola store in Las Vegas, where cash registers sat inside giant bottle caps, T-shirts were stacked in huge six-packs, and the fitting rooms were shaped like old fountain glasses. An eight-foot fiberglass Coke polar bear loomed over customers. Coke hired Chris Lanning, a former Gap executive, to oversee its new retail division. “We’ll find out what shop concepts best connect with consumers,” he said, “with their special Coca-Cola memories.”

  Coke also forged ahead with new products. With no formal test marketing, Coke introduced Surge, its highly caffeinated citrus counter to Pepsi’s Mountain Dew. The first ads—launched during the Super Bowl—featured a teenager placing a can atop a pedestal and screaming “Surge!” A group of crazed adolescents then swarmed up a muddy hill to claim the green-tinted carbohydrate-loaded beverage. The slogan for the “fully loaded” drink was “Feed the Rush.” Coke clearly meant business, giving away millions of free drinks to high schoolers and slotting $50 million for marketing. The positioning for Surge aped Pepsi’s “Dew Dudes,” the hip, daredevil teens who engaged in sky surfing and street luging while fueled by Mountain Dew. Surge’s name and positioning were precisely the opposite of Mello Yello, Coke’s lackluster previous effort in the category. Soon afterward, Coke introduced Citra, a yellow noncaffeinated grapefruit drink targeted against Squirt, a similar product from Cadbury Schweppes.

  In the meantime, Sprite, with its “Obey Your Thirst” campaign and interactive “Sprite Playgrounds” at state and county fairs, pushed past Mountain Dew, Dr Pepper, and Diet Pepsi to claim the number-four U.S. soft drink spot behind Coke Classic, Pepsi, and Diet Coke. And Coke pushed its Cool Nestea brand past Snapple (sold by Quaker Oats for a loss) to claim second place in the iced tea category behind Pepsi’s Lipton. Overseas, Coke sales bounced back in Latin America and Europe after a slow period. In Russia, Coke now outsold Pepsi two to one, and the Company revealed that it would sink another $100 million there by the end of 1997. The Company announced a $360 million capital investment program in South Africa, Zimbabwe, and Tanzania. Big Coke continued to buy and sell bottlers at a furious pace—$7 billion worth announced or completed in the first six months of 1997—building a more powerful anchor bottler system over which the Company exerted ever-growing control.

  For the second year in a row, Fortune named The Coca-Cola Company the most admired American company. When Coke stock surged to $60 in March, a few financial analysts irritated Roberto Goizueta by declaring the price hyperinflated, with a high price-to-earnings ratio of 37. “Nowhere is it written,” sniped Alan Abelson in Barron’s, “that Coke will continue to grow even at 18 percent a year appreciably into the future,” and famed analyst John Bogle agreed. Nonetheless, the stock continued to climb, nudging over $72 in June.

  At the pinnacle of success, Goizueta began to sound even more philosophical than usual. “What’s it like to be you?” one young admirer asked. “Sometimes I wish I was like you,” Goizueta answered. “It isn’t easy. You work 24 hours a day. You don’t take much vacation.” Then he brightened. “But I’m having a great deal of fun, and I’m blessed to be in a position to be paid handsomely to have a lot of fun.” Though still absorbed in the Company, he began to reach out more into the community and the world. Fretting over Atlanta’s downtown area, he warned that the city should not lapse into a “giant, collective nap” in the wake of the Olympics. “A great city cannot have a hollow center.” He seeded a newly formed Goizueta Foundation with $38 million, preparing to become a philanthropist in the Woodruff tradition. He expressed admiration for the late Cardinal Bernardin, a strong voice for social justice.

  Yet Goizueta insisted on a fundamental, bottom-line credo: “The mission of any business is to create value for its owners.” Churches could minister to spiritual needs, governments to civic needs, and charities to social needs. “While performing its role, business distributes the lifeblood that flows through our economic system, not only in the form of goods and services, but also in the form of taxes, salaries, philanthropy.” He said that he got his “psychic income” from the impact he had not only on his company but on society as a whole. “When I was in Eastern Europe,” Goizueta explained, “I saw people who for the first time had a real job and were getting paid real money. They thanked me for that, but they really were thanking The Coca-Cola Company.” He espoused a strict laissez faire philosophy. “It puzzles me that many Americans want our government to ‘fix’ our economy or even protect our jobs when much of the rest of the world is thrilled to have government finally playing its appropriate role.” He explained that he knew the perils of a socialist system firsthand. “It’s the reason I came to this country from Cuba.”

  Goizueta argued that by boosting the share price, he had done more good than any number of charities, in just one year creating nearly $3 billion dollars in additional wealth for nonprofit organizations holding Coke stock. He emphasized, however, that such gains should not come at the expense of employees. He lamented the downsizing trend in which corporations laid off thousands of loyal employees. “I am against a scorched earth adherence to profits at all costs.” Such shortsighted policies would inevitably harm the consuming public upon which businesses relied. “We cannot for the long term exist as a healthy company in a sick society,” Goizueta stressed. He praised a recent book by theologian Michael Novak entitled Business as a Calling.

  As part of that calling, Goizueta was unrepentant about forming alliances with nonprofit organizations that helped promote Company products. In a 1997 speech to the annual meeting of the Boys & Girls Clubs of America, the CEO laid out his vision of “strategic philanthropy,” a program through which bottlers would place vending machines and help with retail programs and special events at Boys & Girls Clubs throughout the country. Coke would help the organization raise $60 million over the next decade, he promised. “It’s a new world of giving,” he said. Of course, while Coke gave nonprofit organizations a piece of the profits, the Company made money, too, while gaining exclusive access to young consumers. In the coming years, Coke would extend such “strategic philanthropy” to financially strapped high schools, installing vending machines in educational institutions that took a percentage of the proceeds.

  Goizueta’s enthusiasm and dedication to his job were clearly undiminished by time or age. By 1997, he had been CEO for sixteen years, compiling an incredible record. “Hell, considering what he’s done for the shareholders,” one analyst said, “you should make him CEO of the Century.” Yet Goizueta wasn’t satisfied. “
Success is a journey, not a destination,” he said, translating one of his grandfather’s aphorisms. Obviously, he wasn’t ready for that journey to end, as he jetted around the world on Coca-Cola business. When asked about his successor, Goizueta made a point of not naming Doug Ivester. “He or she must have energy, intellectual character, integrity, an inquisitive, innovative mind, determination, a sense of purpose, and an engaging personality,” he answered, naming his own qualities—other than the last, a trait he always envied in Don Keough. Over after-dinner drinks in the spring of 1997, Bernard Marcus, chairman of Atlanta-based Home Depot, confided to Goizueta that the two of them were the soul of their companies, and that souls lived on forever. The comment pleased Goizueta, who nonetheless pointed out later that evening that he was two years younger than Marcus.

  In August 1997, Goizueta flew to Monte Carlo for a meeting with fifty of Coke’s biggest international bottlers, adding a day trip to Spain, his ancestral home. When he returned to Atlanta, he never quite recovered from the jet lag. Lunching with Morgan Stanley analyst Andrew Conway on September 2, Goizueta assured him that case volume growth worldwide would continue at around 7 percent for the next few years. Then, chatting about his recent travels, the CEO admitted, “Andrew, I’m a little fatigued. I haven’t quite recouped from the trip.” Four days later, Goizueta checked himself into Emory University Hospital, where doctors detected a growth on his lungs. Goizueta, a heavy smoker since his teenage years in Cuba, had lung cancer.