The Coke Machine - Michael Blanding [14]
Company executives directed their particular animosity against the “parent bottlers,” umbrella companies set up by Whitehead and Thomas, who had subcontracted out territories to smaller bottlers. They were now little more than paper entities, buying syrup at 92 cents a gallon and selling it to bottlers at up to $1.20 a gallon. Thus, they pocketed a quarter a gallon without even handling the syrup, which was shipped directly from the Coca-Cola Company. Hirsch called the current presidents of the parent bottlers, Veazey Rainwater and George Hunter, into his office, and informed them their contracts were now “contracts at will.” The bottlers protested that the contracts had been signed by Asa Candler in perpetuity. Even so, not wanting to appear unreasonable, the bottlers countered with a sliding scale for syrup with a more modest profit of a dime per gallon. Woodruff saw no need to strike a deal; he simply fired the bastards—declaring that from now on, Coke would be sold directly to individual bottlers.
The bottlers sued, hauling Coke into court in April 1920 for a two-year trial that quickly became a bloodbath. Hirsch essentially called the bottlers leeches who had built a profit of $2.5 million but “who served no useful purpose.” That’s a funny thing to say, shot back Veazey Rainwater, by a syndicate that pocketed $5 million in profit in just one day during the sale of the company. Even while the bottler case hung in the balance, the company’s—and Sam Dobbs’s—fortune took a turn for the worse. In the summer of 1920, Coke chairman Howard Candler committed to buying two tons of sugar from Indonesia at 20 cents a pound, just before the worldwide price of sugar broke back to 10 cents. Despite Howard’s catastrophic error, Woodruff blamed Dobbs, with whom he’d clashed egos from the beginning. He forced Dobbs to resign, a bitter payback for the deal he had engineered to put Woodruff in charge. In his place, Woodruff reinstalled Howard Candler as president—at least for the time being.
Finally, the verdict in the bottler case came down in June 1921 in favor of Hunter and Rainwater, declaring the bottling contracts permanent. Now with the upper hand, the bottlers again offered a compromise allowing them to make a profit of 15 cents a gallon, a nickel more than they’d originally offered. Even as the rift was repaired, it was never healed. From then on, the bottlers were always suspicious of the intentions of the parent company, and the Coca-Cola Company was always looking for schemes to take back what Candler gave away. It would take another sixty-five years to again consolidate the bottlers under its influence.
With the lawsuit over, however, Coke had successfully weathered several crises to come out on top. The stock price rebounded from a low of $25 a share to back above $40, and sales, too, soon rose again, to $24 million by 1923. Everybody was happy, except Candler. When he heard of the deal brokered by his children to sell the company under his nose, he was publicly enthusiastic but privately devastated. “They sold out a big share for a fancy price,” he sniffed. “I wouldn’t have done that, but they did.” More and more, the man responsible for creating the world’s most successful brand sank into self-pity. Writing to Howard, he said, “I sometimes think that once I lived in Heaven and, wandering, lost my way. . . . I was once counted with Atlanta’s builders . . . now I am companionless, not needed nor called for any service.”
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