The Coke Machine - Michael Blanding [37]
In one notorious speech to employees, Ivester cued the background noise of howling wolves, comparing the Coke company to a wolf among sheep and all but howling along. In truth, though, Pepsi was on the ropes by the mid-1990s, its market share stagnating. Coke showed no quarter, forcing food distributors to refuse to carry Pepsi if they wanted to keep their accounts for Coke. Convenience stores, meanwhile, had to agree to increasingly restrictive advertising agreements if they wanted to stock Coke in their store—agreeing not to hang signs for other products, or committing 70, 80, or even 100 percent of the available shelf space for soft drinks to Coke. (Eventually, Royal Crown Cola sued in Texas for violations of antitrust laws, earning a $15.6 million verdict.)
Even as it was dominating the field, however, Coke was having difficulty meeting its high earnings expectations year after year, especially as the market for soft drinks became increasingly saturated. Pepsi solved its problem, in part, by diversifying, buying up first Frito-Lay and then Gatorade and becoming as much a snack food vendor as a soda company. (Soft drink sales now account for less than 20 percent of Pepsi’s business.) But Coke saw its future in liquid, specifically in carbonated soft drinks, which still make up more than 80 percent of its sales. It would need new markets to swim in, and so it redoubled its efforts to put its red-and-white dynamic ribbon within all 360 degrees of customers’ sight lines.
In all of the pressure to continue expanding, Ivester and company never asked: Did the world really need all of that Coke? The answer to that question took them completely by surprise. After years of drinking more and more gallons of sugar-laced beverages, people finally couldn’t ignore the consequences of all of that consumption in one area: their health. As it turned out, increasing evidence showed that Coke was not only “biggering” its own beverage sizes, sales, and profits—but also “biggering” American waistlines. The ensuing controversy over soda’s role in a burgeoning crisis of obesity and diabetes presented the company’s biggest challenge in more than a century, finally putting the brakes on its engine for growth.
In actuality Coke had been here before. When Coca-Cola first gushed from Gilded Age soda fountains, it was touted as a panacea for anything that ailed you. Within just a few decades, however, the tide turned on Coke, with the public increasingly questioning whether that bottle full of fizz could really be all that good. The drink hadn’t quite lived down its associations with cocaine, for starters. In the early years of Coke, the press stirred up sensational visions of “Coke fiends,” hopped up on Coca-Cola terrorizing good southern women. (The overtly racist coverage said more about the anxieties of the South after slavery, since the fiends were invariably black and the women invariably white.)
By the turn of the century, however, there was a wide backlash against patent medicines in general, as muckraking newspaper and magazine stories, starting with a series by Samuel Hopkins Adams in Collier’s in 1905, exposed what was really in those elixirs—including chloroform, turpentine, and an awful lot of alcohol. At the same time, the publication of Upton Sinclair’s The Jungle, which blew the lid off the dangers and lack of sanitation in the meatpacking business, led to increasing strictures on what food manufacturers could put in the products that Americans ate. It was the dawn of the Progressive Era, a reaction to the excesses of Gilded Age capitalism, in which government increasingly clamped down with increased regulations.
In this general climate, one man emerged as the flawed hero of the consumer movement—Dr. Harvey Washington Wiley, the head of the government’s Bureau of Chemistry. Wiley nearly single-handedly railroaded a new law, the Pure Food and Drug Act (commonly called the Pure Food Law), through Congress in 1906. It proceeded on a simple if suspect proposition—that adding artificial preservatives and colorings to food or patent