The Coke Machine - Michael Blanding [10]
Before the Civil War, in fact, there were few “national” products. Groceries were mostly made locally and sold generically out of the proverbial cracker barrel. The need to keep 4 million soldiers fed and clean while they shot at each other up and down the East Coast changed that, leading to innovations in shipping and packaging that allowed products to travel great distances. At the same time, the Industrial Revolution lowered the cost of manufacturing goods, and urbanization led to new markets in city department stores. Finally, the power of corporations was made complete when states starting with Delaware and New Jersey enabled them for the first time to merge, acquire, and buy stock in other corporations. In the four years between 1898 and 1902, there was a massive bloodletting, with the number of American companies falling from 2,653 to 269.
The companies that succeeded in the great winnowing, says Harvard business historian Richard Tedlow, were those that shifted from producing a small amount of high-quality goods to producing a large amount of goods at a low profit margin. With its nickel-a-glass price tag, Coke was the quintessential example. Candler incorporated the Coca-Cola Company in Georgia in 1892, creating one thousand shares of stock (five hundred of which he kept for himself) in order to raise the necessary funds for expansion. In first promoting the drink, he shrewdly limited the company’s take of the profits, selling syrup wholesale at $1.50 a gallon, which retailers could then sell by the glass for $6.40 a gallon—ensuring them more than 400 percent profit.
Setting his margin low, however, meant that Candler had to rely on growth as a source of increasing profits. Coke employed legions of salesmen, usually off-season cotton farmers hired on a contract basis for the summer, who literally rode the rails to drum up business for Coke around the country. Known as “Coca-Cola Men,” they epitomized the cult of the traveling salesmen in the era before Willy Loman died. Despite the fact they made only $12.50 a week—a low wage even at the time—they relished their freedom and expense accounts, proudly proselytizing for the beverage with a near-religious devotion. By 1895—less than ten years after it was created—Coca-Cola was sold in all forty-four states in the Union, with Hawaii, Canada, Mexico, and Cuba soon to follow.
After Candler, no “Coca-Cola Man” was as passionate as his nephew Sam Dobbs. Starting out sleeping on a cot in the back of the factory, he went on to drum up clients all over Georgia and the Carolinas in the first two years of the Candler era. Called back to headquarters, he was put in charge of all salesmen in 1900, freeing Robinson to concentrate solely on advertising. Strict where Robinson was lenient, he exhorted his troops like a one-man pep squad as they expanded the drink around the country. By the turn of the century, Coke was metastasizing. In 1899, the company sold more than 250,000 gallons of syrup annually; by 1902, it surpassed 500,000 gallons; and by 1904, it was selling over a million, earning $1.5 million in sales. By this time, those sales were helped by one more factor that more than any other would lead to the dominance of Coca-Cola in the beverage industry: bottling.
Coke’s relationship with its bottlers has been fraught with mutual conflict and benefit from the moment it began. In 1899, a Chattanooga lawyer named Benjamin Thomas saw a bottled pineapple drink in Cuba during the Spanish-American War; when he got home, he thought he’d try the same with Coke, which until then had been sold exclusively at fountains. He headed to Atlanta with some home-sealed bottles and a friend, Joseph