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