From an Atlanta drugstore to a giant multinational

From an Atlanta drugstore to a giant multinational

Secret Formula: How Brilliant Marketing and Relentless
Salesmanship Made Coca-Cola the Best Known Product in the World;
Frederick Allen; 500 pages; Published by HarperBusiness, New York

JAKARTA (JP): Question: Name one person who built Coca-Cola
into the world's largest multinational company. Answer: None.
Coca-Cola's success is too big to be attributed to a single
individual.

Reading Frederick Allen's biography of Coca-Cola, you learn
that the company, which had its origins as a drug store on an
Atlanta high street in 1886, became what it is now through the
farsightedness, vision, entrepreneurship, ambition and
opportunism, of several individuals.

Robert Woodruff reigned over the company for over 50 years
after he became president in 1923, but Allen's highly probing and
well-researched Secret Formula shows that during that half
decade, several enterprising executives helped build the company
with Woodruff.

Coca-Cola is a success because its product has gone beyond
simply being a carbonated water, or a syrup soda, or water and
sugar -- which is what it actually is. Coca-Cola is an idea, the
author states.

And as the subtitle of the book suggests, brilliant marketing
and relentless salesmanship have turned that idea, Coca-Cola,
into the best known product in the world.

Allen destroys the long held myth that attributed Coca-Cola to
Doc Pemberton, the pharmacist who invented a formula for a syrup
that was sold at Atlanta's soda fountains. Instead, the person
the author attributes as the father of Coca-Cola is Frank Mason
Robinson, Pemberton's partner.

Not only did Robinson christen the syrup Coca-Cola (after the
coca leaf and the kola nut of the original chief ingredients of
the syrup), he wrote the longhand Spencerian script label that
has remained unchanged to this day. Robinson kept the business
going after it nearly died because of a conflict between the two
partners.

Then there was Asa Candler who bought the right to the formula
and established the Coca Cola company. Having built the company,
Asa Candler passed it to his children, only to lose it in 1919 to
an uncanny financier named Ernest Woodruff. Ernest then passed
the reins in 1923 to his son Robert, who remained at the helm for
the next 50 years. But underneath these financiers, there were
the enterprising lieutenants and advertising and legal
consultants who contributed to Coca-Cola's success: Samuel Dobbs
(Candler's nephew), William D'Arcy, Harold Hirsch, Archie Lee,
Haddon Sundblom, Harrison Jones, Ralph Hayes and John Sibley.

The company and its product underwent what any normal new
company goes through, including financial difficulties, boardroom
battles and management successions. As the company got bigger and
its product more popular in America, its challenges became even
larger. Endless prosecutions at state and federal courts,
disputes with soda fountain owners and bottlers, a brief threat
to its sugar supply during World War I, and competition from
companies seeking to emulate Coca-Cola's success. As it began to
go international, it faced hostile governments and foreign
competitors.

Allen's book gives an insight into Coca-Cola's struggle from
its early years to the present day. The author depicts the
character of individuals involved in the success of Coca-Cola,
including those who acted purely out of self interests even to
the point of threatening to bring down the company.

Reading through Secret Formula, one is surprised to find that
the company became the size it is today because of conservative
management. This conservatism appears to be one of the main
factors that helped ensure its survival.

For example, it resisted pressure to sell the product in
bottles, which would have boosted sales, until it was sure
technology guaranteed hygiene and the freshness of the product.
It resisted for a long time to diversify into other business,
including the lucrative beer market at the end of the Prohibition
period. Only very much later did it begin to produce other soft
drink lines like Sprite, Fanta, Tab and Diet Coke. Its first
venture to diversify outside the soft drink industry ended in a
financial failure. Its venture to change the formula in the mid
1980s and call it New Coke was disastrous and brought about an
unexpected consumer backlash that forced the company to scrap the
idea and restore the old Coca-Cola.

And for a very very long time, Coca-Cola stuck rigidly to the
policy of selling its products in six-ounce bottles for a nickel,
the key to its successful sales in the early years, but obviously
one that it could not maintain forever.

The history of Coca-Cola is also rich in public relations and
corporate lobbying lessons because its success virtually hinged
on its ability to create an image for its product.

Image has been most crucial for Coca-Cola. Its name suggests
that it uses coka leaf and cola nut, which produces caffeine, and
this has been a liability for a very long time. The federal
prosecutors for over two decades tried to destroy the company in
court, first over the allegation that the product contained the
addictive substance of coca. When it failed, it prosecuted the
company for misrepresenting its product.

The prosecutors lost both battles, because the company
launched massive ad and sales campaigns designed to enhance its
image as America's most popular soft drink, winning over the
sympathy and support of not only consumers, but also politicians.
And as it got bigger, the company acquired both financial and
political clout which it effectively used to further the interest
of the company, and even keep potential competitors at bay,
except Pepsi Cola.

The Cola War between Coke and Pepsi, which recently expanded
into Indonesia, began in 1930. Initially, the battle was
originally confined to a courtroom, but as Coca-Cola appeared to
be losing the fight, it decided to wage the war in the market
place. But to its dismay, not only did Pepsi steal the idea, it
also poached Coca-Cola's talented executives to lead the war
against their previous employers. Over the years the battle took
on partisan lines in the United States when Coca Cola became
identified with Democrats and Pepsi Cola with Republicans.

Secret Formula is written more like a biography of a
successful American corporation, rather than a book on
management, but for some reason I came across it in a Jakarta
bookstore tucked amidst the tons of management books. A former
journalist and political commentator for CNN, Allen recounts the
secret formula behind America's most successful company without
having to explain it in terms of complex management concepts. The
book, however, is rich in management lessons.

-- Endy Bayuni