“If you gave me $100 billion and said take away the soft drink leadership of Coca-Cola in the world, I’d give it back to you and say it can’t be done”
- Warren Buffett
It has always enthused us how a product containing carbonated sugary syrup could become the best brand in the world. Even if this was a fad, we would have kept our anxiety at peace, but this brand has been the consumer’s favourite choice over a century. This makes us more curious to delve deeper into the brand’s history. How did the product evolve, what value it brings to the consumers, what were the critical strategic decisions, what were the factors behind the rise of this heritage brand and how fast it rose to popularity?
Let’s take a ride in to the story of Coca-Cola to unearth the truth.
Coca-Cola was concocted like an existing product in the market known as ‘Vin Marian’, a drink made with combination of coca (from coca-leaves) and wine. This drink was praised and consumed in huge quantities by the consumers at the time. So, Dr John Pemberton created a version of his own and marketed it as a panacea and an energy stimulant. It is very easy to miss that the product was created on a market tested formula which led to initial consumer trials of ‘French Wine Cola’, the then name of Coca-Cola. When prohibition laws prevented the use of alcohol, the wine in the product was replaced by sugar syrup. The product debuted in 1886 by the name of “Coca-Cola – The temperance drink”. Its ingredients contained caffeine (from Kola nuts) and sugar, both of which are addictive in nature to the human body. In the first year, the sales averaged to a modest 9 drinks/day. Over the 19th century, one more controversy hit the product and cocaine had to be removed from Coca-Cola recipe due to widespread rumoured crimes and existing racism in segregated soda fountains for the white.
Despite the controversies and regulatory changes taking place, Coca-Cola was always adept at marketing through word of mouth and retailer schemes. They used mass coupon distribution schemes for distributing a complimentary drink of Coca-Cola. The company was also very smart in associating with unrelated products like posters, fans, festoons and countless souvenirs.
By 1892, the product sales had boosted ten-fold. This was a time when hundreds of competitors emerged, and the company dreaded imitation. To maintain exclusivity in a booming market, Coca-Cola created a national competition to create an exclusive bottle shape to be easily recognised by the consumers. Apart from promoting the logo and the product, promotion of the bottle shape was also carried out at a large scale. By 1895, Coca-Cola was drunk in every state and territory of the US. These were few major factors leading to an early rise of the brand popularity.
Coca-Cola creatively carried out operations like insisting salesmen to guide retailers to follow a strict temperature guideline and to not keep the drink above 40 degree C developed a perception of the product as a premium one among the retailers as well. The national competitions added to the premium feel of the product in a competitive market. The company was the first sponsor of the Olympic Games and gave its cola free to U.S. soldiers during World War II. Coca-Cola was already seen as an American way of life before going to war. The company was visionary to establish manufacturing plants in other countries which still stay as non-military factories post war. This increased Coca-Cola’s clout with elites (not to forget the extra sugar rations) and maintained its positioning in international markets too. In 1939, they had only 5 overseas plants. By 1945, they had 64. Nearly 5 million bottles were sold during the hostilities
The growing sales clearly boosted the expansion of the company. But, the inherent model of bottling operations proved to be a boon for Coca-Cola. Since time and large, Coca-Cola has only transported concentrated syrup. The 80% of the product volume has been water which was mixed by soda fountain operators saving humongous transportation costs. Also, the water used to be sourced from municipal corporations. The same manufacturing is done by more than 275 bottling operators worldwide. The adept marketing and high demand led bottlers to provide fronted capital to buy machinery, equipment, packaging material and municipal water as well as hiring transportation vehicles. Coca-Cola as a company has always been averse to vertical integration. It is an aggregation of small companies doing Coca-Cola’s major part of the job from supply and distribution side.
Being a lean brand since the beginning, Coca-Cola has been wary enough to not alter its font over the years to maintain identification in international markets. Even the price of Coca-Cola was constant at 5 cents a bottle for nearly 70 years. On top of that, the consistent positioning which been communicated through its advertising is laudable. Their ads are never informative. They are mostly sentimental bringing in emotions and nostalgia. Coca-Cola was part of a fun, carefree American lifestyle, and the imagery of its advertising – happy couples at the drive-in, carefree mums driving big, yellow convertibles – always reflected the spirit of the times. Till now, the ads focus on the happy times, sharing and having fun. It’s often critiqued that it is the Coca-Cola capitalism which helped the company become a billion-dollar giant, but it is also the right marketing efforts, ability to change and a positioning which can never be adrift from the consumers who still do “Taste the Feeling”.