Coca-Cola

Coca-Cola's beginnings are steeped in the post-Civil War patent medicine industry with an attempt to cure [restricted term] addiction. From its potent original formula to the iconic branding that persists today, Coca-Cola's story encapsulates a unique slice of American history.

Coca-Cola's Origins Lie In the Post-Civil War Patent Medicine Industry, With John Pemberton Creating It to Cure [restricted term] Addiction

The podcast describes John Pemberton as a Confederate war veteran who was searching for a cure for his own [restricted term] addiction, a common affliction among Civil War veterans referred to as "army disease." In Atlanta, Pemberton found himself in the patent medicine market, where he experimented with different drugs, which eventually led to him including cocaine in his formula.

Original Coca-Cola Formula Contained Cocaine and Caffeine As Stimulants

Coca-Cola was initially introduced as a product that contained medicinal benefits from its two stimulants: cocaine and caffeine. Pemberton sought to create a version of the popular Vin Mariani, a cocaine-fortified wine but instead with caffeine derived from African kola nuts, which have a higher caffeine content than coffee beans. As a result, "Pemberton's French Wine Coca" was infused with coca leaves and kola nuts, creating a 'five cent high-margin pick-me-up' product that could be enjoyed anytime.

Coca-Cola originally contained a little bit of cola seed for natural caffeine; however, Pemberton used synthetic caffeine from Merck as the cola seed was too bitter. Early on, Coca-Cola had enough cocaine to make four or five glasses equivalent to a line of cocaine today, and it contained four times the caffeine found in today’s Coke.

Frank Robinson Coined "Coca-Cola" and Designed the Enduring Script Logo

Frank Robinson was instrumental in the branding and marketing of Coca-Cola. He not only coined the name "Coca-Cola," but also created the famed script logo still used today. Robinson also played a significant role in distribution. Alongside Asa Candler, who consolidated ownership claims of the ...

Coca-Cola has become a cultural icon by utilizing innovative branding and marketing strategies, including the creation of its contour bottle and the association with Santa Claus.

Coca-Cola Used Coupons, Merchandise, and Targeted Ads to Become a Cultural Icon

In the early days of its advertising and distribution, Coca-Cola employed a strategy of giving out tickets redeemable for free glasses of Coke. These were sent to every address in the Atlanta city directory and distributed by door-to-door salesmen. This initiative was the first instance of a manufacturer's coupon redeemable at a retailer and was a significant contributor to Coca-Cola's success. The strategy aligned incentives for multiple parties: consumers enjoyed free drinks, drugstores and soda fountains saw increased foot traffic and profits, and salesmen had a new benefit to offer. Coca-Cola ensured a high retail margin for soda fountains, incentivizing them to promote the product.

The company's aggressive legal strategy after the 1905 Federal Trademark Act protected their brand, earning it the reputation as "the real thing" and effectively eliminating competitors.

Contour Bottle Creation in 1915 Solidified Coca-Cola's Identity and Made the Brand Recognizable

A pivotal moment for Coca-Cola's branding was the creation of its proprietary bottle in 1915. The famous contour bottle was designed to be instantly recognizable—even in the dark or broken on the ground. This unique design resembled the proportions of actress Mae West and was mistakenly based on the cocoa plant instead of the coca plant. This error ultimately fulfilled the intended brief by providing a distinctive and recognizable product. By 1951, Coca-Cola argued that the bottle shape was so integral to the brand that it was granted trademark status, with studies showing that less than 1% of Americans couldn't identify a Coca-Cola bottle by its shape alone.

Despite the success of the contour bottle, Coca-Cola faced a challenge with its six-and-a-half-ounce size, which was smaller than a mini can today.

Coca-Cola's 1930s Christmas Tie With Santa Secured Its American Brand Status

Coca-Cola's association with Santa Claus began in 1931 and secured Coca-Cola's brand status in America. They standardized Santa's image, a version that remains the prevalent depiction today. Artist Haddon Sunblum was commissioned to create this modern imagery of Santa in Coca-Cola ads, which featured consistently in the brand's marketing for decades. Before this campaign, Santa's depiction varied, but Sunblum's design standardized Santa in Coca-Cola red. Despite competitors like Pepsi also using Santa illustrations, Coca-Cola became synonymous with the Christmas icon. ...

Coca-Cola transformed from an American icon to a global juggernaut post-World War II, with unique strategies that boosted its brand's global reach and helped it become the top soft drink brand internationally.

Coca-Cola's WWII Military Partnership Boosted Brand's Global Reach

During World War II, Coca-Cola was seen as a symbol of home and boosted troops' morale. It was regarded as a cultural ambassador representing American prosperity. The U.S. military and the U.S. realized that Coke could be one of America's best weapons, with Coca-Cola's involvement being called "the greatest sampling program in the history of the world." The company established 64 portable bottling plants in Asia, Europe, and North Africa, distributing over 5 billion bottles to troops, significantly accelerating its international expansion. This massive distribution was anticipated to have otherwise taken 25 years and a substantial investment.

Coca-Cola was granted the ability to supply the military with its product free of sugar rations. Notably, Pepsi did not receive this exemption. Under Eisenhower, Coca-Cola employees attained "technical observer" status, which enabled them to participate in supply and infrastructure buildouts alongside military expansions globally. Coca-Cola pledged to maintain the price at 5 cents per bottle for American soldiers, irrespective of the warzone location.

The marketing expansion achieved during the war greatly accelerated Coca-Cola's growth, enabling rapid international market penetration. This not only made Coca-Cola internationally known but also solidified its place as America's beverage.

Postwar, Coca-Cola Became the Top Global Soft Drink Brand Through Its International Bottling Network

Coca-Cola's Local Bottlers Strategy Fueled Rapid International Expansion

Following the war, Coca-Cola's success in blanketing America and then the world quickly was partly due to the bottlers, allowing the company to scale rapidly. In 1899, Coca-Cola owner Candler made a significant decision by effectively outsourcing the bottling component, giving the rights to bottle and sell Coca-Cola to entrepreneurs Benjamin Thomas and Joseph Whitehead of Chattanooga, Tennessee. These entrepreneurs believed that bottling technology had advanced enough to maintain the drink's quality.

The partners then assigned rights to small local bottling operations across America, resulting in first dozens, then hundreds of local bottlers, driving the company's expansion. These local bottlers became entrepreneurs trained in setting up operations and managing the process, with parent bottlers Thomas and Whitehead doing little to no work themselves.

This massive expansion made Coca-Cola known to virtually every person in the United States. By the 1920s, Coca-Cola's ubiquity as an international product was the result of a local bottlers system rather than handling all the bottling in-house. Coca-Cola refers to this as the "Coca-Cola system," a combination of the Coca-Cola company and all the worldwide bottlers.

By focusing on syrup production and marketing, Coca-Cola maintained high gross margins, better returns on invest ...

Despite facing tremendous pressure from Pepsi's rising popularity in the market, Coca-Cola's controversial introduction of "New Coke" ultimately strengthened its brand identity and customer loyalty through an unexpected turn of events.

Pepsi's 1970s Market Gain: Larger Bottles and Price Challenge to Coca-Cola

Pepsi landed a punch on Coca-Cola in the 1930s by offering 12-ounce bottles for a nickel—the same price Coca-Cola charged for their 6.5-ounce bottles—making Pepsi an economically attractive option during the Great Depression. This move presented a value proposition that Coca-Cola found difficult to counter due to their commitment to the iconic contour bottle, deeply embedding in consumers' minds that Pepsi provided more for the same price.

During a trademark infringement lawsuit, Coca-Cola was forced to allow Pepsi to use the word "Cola," which established Pepsi as Coca-Cola's first legitimate competitor. By 1941, colas not Coca-Cola commanded 14% of the U.S. soft drink market share, largely thanks to Pepsi.

Innovations like Pepsi's introduction of the large 64-ounce bottle tapped into the at-home market and exploited a gap for large-format soft drink packaging, giving Pepsi a significant advantage over Coca-Cola.

Pepsi's "Pepsi Challenge" Campaign Eroded Coca-Cola's Dominance

The infamous "Pepsi Challenge" campaign started as a local experiment in Dallas and expanded into a nationwide grassroots campaign, significantly impacting Coca-Cola's market dominance. When Pepsi found that consumers preferred their product in blind taste tests, they leveraged this finding in advertising, causing a 14% jump in their market share in Dallas and similar successes elsewhere.

This campaign was authentic, widening its appeal by utilizing footage of real people rather than actors, making it one of the most successful marketing campaigns in history. John Sculley, the marketing executive behind the premise, gained significant acclaim, and Pepsi’s investment in marketing was a clear indication that they were positioning to rival Coca-Cola's market dominance.

Coca-Cola's "New Coke" Formula Change in 1985 Was a Public Relations Disaster

In response to the "Pepsi Challenge" campaign and the resulting continuous market share erosion, Coca-Cola launched "New Coke" in 1985 after keeping the formula unchanged for 99 years. The decision to introduce New Coke was rooted in taste tests where it outperformed not just Pepsi but also the original Coke formula.

However, the executives at Coca-Cola underestimated the strong emotional connection consumers had to the original Coke. The backlash against New Coke wasn't solely based on flavor but a perceived betra ...

Coca-Cola faces challenges in diversifying its product range and adapting to new market trends amid a fragmented beverage landscape.

Coca-Cola Struggles to Replicate Flagship Cola's Success in Fragmented Market

Mixed Results for Non-cola Products Like Diet Coke and Powerade

Over the last 20 years, Coca-Cola has aimed to transform from a soda company into a "total beverage company." However, its traditional products, including Coca-Cola, Diet Coke, and Coke Zero, remain its bestsellers. Diet Coke, launched in 1982 as a response to the Pepsi challenge, is particularly notable as the most successful diet drink in history and the personal choice of host David Rosenthal.

Despite this, Coca-Cola's overall business still heavily relies on sodas, with 69% of its revenue coming from sparkling soft drinks. Within this, 40% of all volume is from the trademark Coca-Cola series, which is 47% of the volume when including the Coke family.

Coca-Cola Aims to Be a "Total Beverage Company" Beyond Sodas Through Its Acquisition Strategy

Coca-Cola’s response to changing market trends has been cautious, often observing before entering, which has led to delayed entry into markets like sports drinks or energy drinks.

Coca-Cola Slow to Adapt To Trends in Energy Drinks and Premium Water

Coca-Cola did not initially show interest in the energy drink market, passing on earlier opportunities to acquire Monster Energy. Only after Monster approached potential buyers in 2012, and after Coca-Cola's initial passed due to high costs, did they recognize the missed opportunity. Coca-Cola eventually struck a partnership with Monster where they traded away their energy drink brands (NOS, Full Throttle, Burn, Mother, Relentless) to Monster and took over Monster's non-energy business. In 2015, Coca-Cola invested over $2 billion in Monster for a 20% stake.

Moreover, Coca-Cola ventured into new categories such as water and coffee. The company acquired Glacéau, maker of Vitaminwater and Smartwater, for about $4 billion, and operates Costa Coffee in the UK, which extends their reach into physical retail and coffee. In the ...