The Coke Machine - Michael Blanding [32]
But more than anything, growth meant returning to the core business of the company: selling more soft drinks. After the New Coke fiasco, Goizueta changed his tune about “sacred cows,” realizing he had acquired “a most unique company with a most unique product.” He abandoned any attempt to change the formula, concentrating instead on increasing per capita consumption, or “per-caps,” around the world. “If we take full advantage of our opportunities . . . eventually, the number one beverage on Earth will be soft drinks—our soft drinks,” he crowed in 1986. Ultimately, he told Fortune magazine, he envisioned a world where the C on the kitchen faucet stood not for “cold,” but for “Coke.” So comical do those comments sound today that they call to mind the Once-ler, from The Lorax, Dr. Seuss’s cautionary children’s book about corporate excess, who crowed about “biggering and biggering and biggering and biggering,” at least until the last Truffala tree was chopped down.
In Coke’s case, growth was never an end in itself—it was always a means to constantly raise the share price. The more bottles or fountain drinks, the more earnings from syrup sales. The more earnings, the more investors would put into the company. As the 1990s dawned, Goizueta was promising annual volume growth of 7 to 8 percent a year—translating into some 20 billion additional drinks sold around the world. That, in turn, meant 15 to 20 percent annual growth in earnings. Goizueta personally called the Wall Street analysts who covered Coke to discuss the company’s earnings, detailing the new markets where the company was constantly treading.
Not surprisingly, analysts rushed to jump on board the Coke gravy train, followed by institutional investors. “If you weren’t owning Coke, you were losing,” said one about the time. Another called Coke “the closest thing we know of to a perpetual motion machine.” Upon learning that Goizueta had been declared CEO of the year in a trade magazine, he said, “Hell, considering all he’s done for shareholders, you should make him CEO of the century.” Stock prices rose with each of their predictions; if an analyst predicted lower earnings, they were frozen out. Goizueta profited handsomely—eventually earning more than $1 billion in stock, his reward for raising the value of the company by more than $100 billion throughout the late 1980s and early 1990s. In 1991 alone, he received a bonus of $80 million when he exercised his stock options—at the time, the largest single payout ever given to an American CEO.
Much of Coke’s growth in those years came in the form of new markets overseas, as the company gradually expanded into countries it hadn’t already colonized. At the same time, executives knew that to raise share value they would have to keep selling more soda in the country where it was created—and that increasingly meant selling not only in more places, but also in larger sizes. In all of the rush to expand volume, however, it never occurred to company executives to ask: Does the world really need that much Coke?
In the age of Big Gulps and supersizing, it’s almost inconceivable that until the 1950s Coke was sold only in 6½-ounce bottles. Even as the company was selling in more and more venues around the country, it was still seen as an occasional treat for after meals or on Sunday afternoons. The arms race with Pepsi changed that. After the upstart company’s “twice as much for a nickel” campaign, Coke was under constant pressure to offer bigger sizes, too. Finally, in 1955, it relented, rolling out 12-ounce “King Size” bottles. Almost at the same time, it released 26-ounce “Family Size” bottles, intended for home consumption with meals.
For decades, the price of sugar still kept a lid on how big Coke was able to go. That changed in the 1980s when Japanese scientists invented high-fructose corn syrup. Unlike sucrose—subject to the whims of international sugar markets