App Masters · Mobile Game Ad Monetization
Acquired · Nov 23Coca-Cola: The Complete History & Strategy
Built on cheap syrup, franchised bottlers and lifestyle advertising, it keeps 27% of the system's $175 billion revenue with about 10% of employees. It grew from 600 gallons in 1887 to 35,360 gallons in 1892 and now grows only 3 to 4% a year. New Coke tested well in 200,000 taste tests but was pulled after 79 days. Goizueta put the Coke name on a diet drink in 1982 and marketed it on taste. It was the number one diet drink in America by the end of 1983, with 30% of drinkers men.
Tips
- Asa Candler gave away bottling rights for $1 and accidentally built a global system▶ 39:49Within 10 years about 400 bottlers existed, and by 1925 there were 1,200; today Coke gets 27% of system revenue with about 10% of system employees.
- Coca-Cola kept the high-margin syrup and pushed bottling's capital and labor onto local owners▶ 50:20Coke has higher gross margins and returns on invested capital than its bottlers; 200 bottling partners run 950 facilities.
- Robert Woodruff's motto was that everyone who touches Coca-Cola should make money▶ 4:23:53Billboard owners even put up free Coke ads during the Depression rather than leave blank boards.
- Frank Robinson and Candler mailed free-drink coupons to every Atlanta address to launch the category▶ 25:00Sales went from 600 gallons in 1887 to nearly 10,000 gallons in 1890, and the 1888 ticket is the oldest known coupon in America.
- Coca-Cola sued thousands of imitators and won a Supreme Court ruling that Coca-Cola is a single source▶ 55:00About 7,000 copycat brands were shut down by the mid-1920s.
- Coke forced its bottlers to adopt a contour bottle recognizable by feel in the dark▶ 59:01A 1949 study showed less than 1% of Americans could not identify a Coke bottle by shape alone.
- Woodruff and Archie Lee invented lifestyle advertising by selling feelings, not product features▶ 1:16:20Lee cut copy to lines like 'Always delightful' and 'Refresh yourself', and Woodruff wanted Coke to be the most American thing in America.
- Frank Robinson moved Coke from a brain tonic for the few to a refreshment for everyone▶ 38:20Pemberton's cocaine was stripped out by 1903, and Coke was sold in a soda fountain in every state and territory by 1895.
- Woodruff standardized formula, packaging and service so a Coke felt the same everywhere▶ 1:23:58The formula did not change from about 1920 to 1985, and coin-operated vending machines followed in 1937.
- Woodruff pledged every soldier a 5 cent Coke and turned World War II into a global sampling program▶ 1:41:11At least 5 billion bottles were served to troops, opening markets Coke estimated would have taken 25 years; by 1950 a third of profits were international.
- Coke kept its price at a nickel and used its scale to starve smaller rivals▶ 1:31:40The 5 cent retail price held for decades, so subscale competitors could not match its margins.
- Woodruff buried a blind taste test showing people preferred Pepsi, and it came back 20 years later▶ 1:57:00Pepsi's marketing under John Scully took the Pepsi Challenge national through local bottlers; Pepsi passed Coke in bottled share and outspent it in advertising in 1977.
- New Coke tested taste for 200,000 people but never asked how they would feel losing the original▶ 2:53:00New Coke fell to about 3% share and Classic surged past its pre-launch level within a year.
- Coke passed on Frito-Lay, Quaker Oats and Monster and Pepsi or others captured the upside▶ 2:08:30Monster is worth about $70 billion today, and Frito-Lay generates twice the profit of Pepsi's beverage business.
- Roberto Goizueta launched Diet Coke on the Coke name despite Tab's lead and the risk to the brand▶ 2:40:10It became the number one diet drink in America by the end of 1983 and the third best-selling soft drink by 1984; 30% of drinkers were men.
