Coca-Cola Beverages

views updated

COCA-COLA BEVERAGES

Coca-Cola Beverages is the world's largest soft drink producer and distributor, holding 47 percent of the global market. The company produces several beverages other than Coke and owns a line of food products. About 90 percent of the company's revenues come from beverage sales, while the balance comes from food sales. Despite its popularity and presence in the United States, 68 percent of Coca-Cola's soft drink products are sold outside North America.

Coca-Cola Beverages is regarded as one of the best managed companies in the world. In Fortune Magazine 's 1997 Annual Survey of corporate reputations the Coca-Cola company ranked first based on its strong marketing skills, financial soundness, corporate and environmental responsibility, quality products and services, and overall business performance. In the same survey corporate executives rated Coca-Cola as America's most admired corporation.

The company traces its origins to May 8, 1886, when the Coca-Cola soft drink (Coke) was invented by pharmacist Dr. John Styth Pemberton in Atlanta, Georgia. Experimenting with a three-legged brass kettle in his backyard, Pemberton mixed caramel colored, cane sugar syrup with carbonated water, caffeine, and extracts from kola nuts and coca leaves. Pemberton's bookkeeper, Frank M. Robinson, suggested the name Coca-Cola. Robinson also created the product's distinctive handwritten logo.

Coke generated profits of only $50 in its first year of sales. Pemberton had to sell two-thirds of his pharmacy business in 1888 to cover his losses. In 1891 Asa Candler, an Atlanta druggist, acquired total control of Coca-Cola for $2300. In 1892 Candler and his partners formed the Coca-Cola Company. That same year Candler spent $11,000 on an advertising campaign that placed the Coke logo on common, everyday household items like calendars and drinking glasses. Candler was among the first businessmen in the United States who used coupons to entice customers to try his product. In 1893 Candler registered Coca-Cola as a patented trademark.

Coke was initially sold as a soda fountain drink. In 1899 Candler sold the rights to bottle his product to two Tennessee lawyers who established an extensive bottling franchise system that still exists today. In 1915 the Root Glass Company designed a contoured glass bottle for the soft drink that was shaped in the form of a coca bean. This bottle design quickly became nationally associated with Coke. During World War I (1914–1918) sugar rationing measures temporarily slowed the company's growth; however, a revolutionary process was invented whereby fuel could be saved by mixing sugar and water without heat.

In 1919 the Candler family sold the Coca-Cola Company to Georgia businessman Ernest Woodruff for $25 million. The Woodruff family presided over the company until 1955 and made a lasting impression on the product's marketing. Under the Woodruffs the familiar slogan "Coke is the real thing" and the six-pack carton of Coke were developed. During World War II (1939–1945) Coca-Cola boosted its image by promising to provide a free Coke to every U.S. soldier. The company also took risks with its image by continuing to distribute Coke from its plant inside Nazi Germany. In the 1950s Coca-Cola took another risk by featuring African Americans in advertisements before the Civil Rights Movement had taken hold.

During the next decade Coca-Cola began to diversify, merging with the Minute Maid Corporation in 1960 and Duncan Foods in 1964. In 1969 Coca-Cola acquired Belmont Springs Water Company. The 1960s also marked the debut of canned Coke and the introduction of four new soft drinks in the United States: Fanta, an orange soda, Sprite, a lemon-lime soda, Fresca, a grapefruit-flavored soda, and Tab, a diet cola. From the 1970s Coke has been packaged in two-liter plastic bottles. In 1982 Coca-Cola introduced Diet Coke, which has outsold all other soda products almost since its inception.

Two years later, in 1984, Coca-Cola began experimenting with its recipe. Concerned by indications that its main competitor Pepsi-Cola had drawn even in market share, Coca-Cola introduced New Coke, a sweeter cola that tasted much like its competition. But the American public rejected the modified recipe, and Coca-Cola returned to producing Coke with its original flavor under the name Coca-Cola Classic. Every year since the change in recipes Coca-Cola has increased its share of the soft drink market. Nonetheless, Coca-Cola still sells New Coke, renamed Coke II, in a number of states.

In the 1990s Coca-Cola continued to challenge itself and the competition. Attempting to reduce Gatorade's dominance of the sport drink market, Coca-Cola rolled out a fruit punch flavored beverage called PowerAde. In 1994 it introduced Fruitopa, a line of fruit juices and teas. The next year Coca-Cola bought Barq's root beer. At the 1996 Olympics in Atlanta, Georgia, Coca-Cola launched a successful $250 million advertising campaign, which spurred sales at double the competition's rate. In 1997 the company began selling Surge, a soft drink marketed as containing higher levels of caffeine and sugar than ordinary soda.

Still headquartered in Atlanta, Georgia, the Coca-Cola Company shows no signs of slowing. Its stock is traded on the New York Stock Exchange and the company is listed on the prestigious Dow Jones Industrial Average Index of blue chip companies. As the century approached its conclusion, Coca-Cola announced that Coke was sold in more than 200 countries at a pace of nearly one billion eight-ounce servings per day.

See also: Charles Hires, Trademark