The Coke Machine - Michael Blanding [33]
The rock-bottom price of syrup now allowed Coke to grow exponentially—especially in fountain sales. Fast-food execs had long known that the way to drive profits was not to offer bigger hamburgers but to offer bigger sizes of the high-margin items such as french fries and soft drinks that went with them. It wasn’t until the late 1980s, however, that the concept of “supersizing” really caught on. By then, fast-food companies realized that they could make more money by bundling a burger, fries, and a Coke into a “value meal” and selling it at a discount. They offered further discounts on larger and larger sizes of fries and sodas—both of which could be more easily increased in size, and with a greater profit margin, than could a hamburger or fish sandwich.
As Eric Schlosser describes in Fast Food Nation, in the 1990s a 21-ounce medium soda at McDonald’s sold for $1.29, while a 32-ounce large soda sold for only 20 cents more. But the cost for ingredients was only 3 cents more—for 17 cents of pure profit. Everyone won—the customer got exponentially more soda, the restaurant got more profit, and the company sold more syrup. And if that wasn’t enough, customers could request to “supersize” their drinks—a stomach-busting 64 ounces and 610 calories a pop. By 1996, supersizing accounted for a quarter of soft drink sales. (It was the same story at the 7-Eleven chain of convenience stores, which introduced the 32-ounce Big Gulp, the 44-ounce Super Gulp, the 52-ounce X-Treme Gulp, and finally the 64-ounce Double Gulp. The true champion, however, was “The Beast,” an 85-ounce refillable cup released by Arco service stations in 1998.)
With two-thirds of the fountain sales market, Coca-Cola was the clear beneficiary of the new drive to push volume. And as consumers became more and more accustomed to larger sizes of soft drinks at fast-food restaurants and convenience stores, the company quietly retooled vending machines and supermarket displays to increase package sizes as well. In some ways, it was the consumers’ fault. In the skittish days after New Coke, the company engaged in more and more consumer testing, all of which pointed in one direction: “Bigger is better,” according to Hank Cardello, Coke’s director of marketing in the early 1980s, who has since broken with his industry roots to become a health advocate. “The mantra was bigger packages, bigger servings, and more of everything per container,” he writes in his 2009 book Stuffed.
In 1994, Coke began introducing a new 20-ounce bottle, fashioned from polyethylene terephthalate (PET) plastic in Coke’s trademark “contour” shape—a variation on the old green-glass hobbleskirt bottle. It quickly replaced the 12-ounce can to become the standard serving size for Coke. The new container was a boon to the company—reversing years of discounts on multipack boxes of cans and allowing it to charge a premium price on the new, larger bottle. Along with the bigger sizes, Coke doubled down on Woodruff’s “arm’s reach of desire” strategy to put Coke anywhere and everywhere it could. “Our goal was to make Coca-Cola ubiquitous. At all times, at all places. . . . Coke Was It,” writes former brand manager Cardello. “My job was to keep the logo in your face, and present it in the most positive light. And I had access to a huge war chest with which to accomplish this.”
In 1997, Coke’s annual report laid bare its strategy with striking candor, stating, “We’re putting ice-cold Coca-Cola Classic and our other brands within reach, wherever you look: at the supermarket,