The Coke Machine - Michael Blanding [54]
Isdell predicted it would take eighteen to twenty-four months to turn around the company’s fortunes—a remarkably accurate prediction in retrospect. “I came back to the Coca-Cola Company to make sure that we are the leading growth company in our industry,” he said, reiterating on another occasion: “Regardless of what the skeptics may think, I know that carbonated soft drinks can grow.” Almost immediately, he committed an extra $400 million to marketing and innovation, mostly for cola drinks. In public appearances, he adopted an almost identical tack to the ABA’s Neely—denying soft drinks’ role in the obesity epidemic, while at the same time offering up the industry as part of the solution to the problem. “Carbonated soft drinks are going to be carriers of health and wellness benefits,” he assured analysts in a November 2004 conference call. At a food industry conference, he added without irony: “Healthier consumers are going to be good for us. . . . They will grow older, healthier, wealthier, and hopefully therefore able to buy more from us. Which at the end of the day, let’s face it, is our goal.”
In the meantime, the juggernaut of anti-soda legislation continued to roll over statehouses. By this time, Chicago and New York had joined Los Angeles and Philadelphia in banning soda on the city level. The first hole in the dike keeping sugar-sweetened soda in high schools, however, started at a small middle school in New Jersey. In April 2005, students at the East Hampton Middle School boycotted food from their cafeteria, demanding they receive healthier options. A few months later, New Jersey passed the first state junk food ban with a ban of soft drinks in high schools. The soft drink companies got together to debate new guidelines, emerging in August with rules nearly identical to those Coke had pushed all along—no sugar soda in elementary schools; no soda in middle schools during the day; and half non-soda choices in vending machines in high schools.
But that wasn’t enough to stave off soda’s biggest defeat yet. Three years after California’s anti-soda bill went down in defeat, new governor and former bodybuilder Arnold Schwarzenegger championed a new bill to victory that included a blanket ban on all soda in schools—including even diet drinks. When Jackie Domac heard the news, she was ecstatic. “I was very, very happy because I felt like my students’ efforts had really come to fruition,” she says. Her only disappointment was that the law included a long phase-in period; schools wouldn’t be required to comply until July 2009.
No Sundblom Santa Claus could cheer the Coke faithful when it got the news just before Christmas 2005 that PepsiCo had for the first time ever passed Coke in total market capitalization—$98.4 billion to $97.7 billion. Much of that rise was based on Pepsi’s food divisions; Coke was still the undisputed leader in selling soda. At least there was a bright spot with the first inkling that Isdell’s strategy paid off. The company saw a 4 percent increase in all products, including a 2 percent rise in carbonated drinks in the last quarter. “There is growth still in carbonated soft drinks and we have demonstrated that,” crowed Isdell.
Emboldened by the rising tide against soft drinks, however, activists were preparing for their endgame. Finally, they had a plan to make Big Soda into the next Big Tobacco and turn the Coke polar bears into Joe Camel. They were going to sue.
The window outside Dick Daynard’s office at Boston’s Northeastern University still says “Tobacco Control