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ECONOMICS: The Sun Never Sets On Cacoola

23 minute read
TIME

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In Brazil, some misguided people vow that it increases sexual prowess, others are under the delusion that it makes a man impotent. In Haiti, they say it is the only thing that will cause Damballah and his wife Ayida Oueddo, a pair of the chief deities of the voodoo pantheon, to put in an appearance at a voodoo session. Chinese bankers have taken to serving it instead of tea, and Italian aristocrats offer it to their guests instead of champagne. Graceful gondolas carry it along the narrow canals of Venice, and sturdy, resigned burros tote it into the dusty Mexican hills. Bright red signs proclaim its worth in the shadow of the Matterhorn and beneath the blank, unastonished eyes of the great Sphinx. The gentle burps which it evokes from the drinker are heard amid the bustle of Parisian sidewalk cafes and amid the tinkling of Siamese temple bells.

People almost everywhere are buying it as if it were the biggest glass of ambrosia in the world for a nickel. Actually, according to the official and modest definition of its makers, it is only “a soft drink . . . best described as delicious and refreshing.” Its name, of course, is Coca-Cola.

The Essence of America. The late William Allen White once described Coke as the “sublimated essence of all America stands for.” To find something as thoroughly native American hawked in half a hundred languages on all the world’s crossroads from Arequipa to Zwolle is still strangely anomalous, somewhat like reading Dick Tracy in French or seeing a Japanese actor made up to look like Abraham Lincoln. But it is reassuring. It is also simpler, sharper evidence than the Marshall Plan or a Voice of America broadcast that the U.S. has gone out into the world to stay.

Coke’s peaceful near-conquest of the world is one of the remarkable phenomena of the age. It has put itself (in the phrase of a Coca-Cola executive with a literary bent) “always within an arm’s length of desire.” And where there is no desire for it, Coke creates desire. Its advertising, which garnishes the world from the edge of the Arctic to the Cape of Good Hope, has created more new appetites and thirsts in more people than an army of dancing girls bearing jugs of wine. It has brought refrigeration to sweltering one-ox towns without plumbing, and it has transformed men one generation removed from jungle barter into American salesmen with an irresistibly sincere approach. It has successfully defied the concerted attacks of all Communist mouthpieces which denounce it as a drink vile, imperialistic and poisonous. Its makers suspect that it is the biggest thing since America provided oil to light the lamps of China and celluloid fables to feed the dreams of the world.

Coca-Cola is not what the non-American thinks of asa typical U.S. business, like steel or automobiles. It is not a product of the vast natural resources of the land, but of the American genius for business organization. It rests on such intangibles as market analysis, sales training, advertising and financial decentralization. Increasingly, through the past three decades, U.S. business progress has been a matter of such intangibles. It was time the world caught up with that fact, which Coca-Cola was demonstrating in an edifice of international business, built on a little water, sugar and flavoring.

Last week, as Cokemen surveyed their empire, on which the sun never sets, their blood almost audibly fizzed with pride.

The Battle for Europe. The most active and vocal resistance to Coca-Cola, which had arisen in France, was showing serious signs of crumbling. An unholy alliance of Communists and winegrowers had forced an anti-soft-drink bill through the Assembly, under which the Health Ministry might ban Coca-Cola (TIME, March 13). So far, the Health Minister has not budged, and it seems unlikely that he will. Meanwhile, Coke’s French bottling firm kept turning out 840,000 bottles of Coke a month, a modest but promising beginning. Bright red & yellow Coke trucks made the approach of spring in Paris seem more colorful than usual. Wine drinkers (the overwhelming majority of all French men, women & children) bent protectively over their glasses; Coca-Cola was on the march.

To the north, Belgium had fallen. Red Pundit Ilya Ehrenburg, a recent visitor to Brussels, indignantly reported catching a man in a café in the act of ordering Coke for himself and his innocent child. In vain, Ehrenburg warned: “A person who starts drinking Coca-Cola soon finds himself turning to other sinister habits.” Belgian bottling plants were hard put to keep up with demand.

Over in Germany, where it had been popular before the war, Coke had just celebrated a triumphant return under the slogan: “Coca-Cola 1st Wieder Da!” (Coca-Cola Is Back!). Once, beer-drinking Germans had thought soft drinks sissified, but the German Coke people licked that by putting ads in the papers proclaiming: “Got a hangover [Katzenjammer]? Drink Coca-Cola.”

The decisive battle for Europe had only just begun. Meanwhile, light for Coca-Cola came in through Eastern windows.

New Shoes in Cairo. “Cacoola,” as it is locally known, was flooding Egypt like a second life-giving Nile. Egyptians, barred by Moslem law from alcoholic refreshments, used to buy sickly sweet, dirty concoctions from street vendors. Now they are enthusiastically consuming nearly 350 million cool, clean Cokes a year. Barely five years after Cacoola appeared in Egypt, the country is dotted with shiny red coolers, many of them presided over by Egypt’s oldtime ice merchants who, thanks to the raised living standard caused by this minor economic revolution, now wear shoes for the first time in human memory. Egypt’s six bottling plants are run (or owned) by the Pathy brothers (Ernest, Ladislas, George and Alexander), Egypt’s shrewdest businessmen. Says Ladislas Pathy: “We have become consciously and willingly intoxicated by Coca-Cola.”

The situation was even more intoxicating in the Philippines. Before the war, Coca-Cola had sold a modest 5,000,000 bottles a year in the islands. Last year, Filipinos tossed off a dizzying 193 million, which meant twelve bottles of Coke for every Filipino, including babes in arms and Huk rebels in the mountains. Filipinos were crying for more. Manilans tell the story of an ex-bootblack who makes a living hanging around Coke machines and selling 10-centavo pieces (the only coins that fit the machines) for 15 centavos to thirsty people who are too eager to go and get the proper change.

The millions of parched throats throughout the rest of Africa and Asia make a vision almost too dazzling for Cokemen to bear. A new bottling plant, complete with badminton courts to attract youthful customers, is about to open in Bombay, India. Japan, where all production is still going to U.S.-occupation personnel, is eager for civilian Coke. Most indigenous palates which have sampled the G.I.s’ drink have been pleased. Sighed one Tokyo waitress: “It has the sweet-and-bitter taste of first love.”

The Amiable Robots. In most places Coke has blended into the local scene as if the brown-green of its bottles and the fire-brigade red of its advertising were some kind of protective coloring. In Brazil, it has become part of the language: buses are known as Coca-Colas (because the fare is nearly the price of a Coke); in British Guiana, schoolchildren get a free Coke on Empire Day; in the Middle East, Coke bottles have become accepted missiles with which to punish unjust umpires at soccer games.

As a matter of first intention, at least, the Coca-Cola Co. is not a missionary in the sense, for example, that the Voice of America is. Except in the sense that it is for free trade everywhere it is not specifically trying to spread the American way of life. Its chief and boundlessly healthy interest is in the liras and the piasters, the tickeys and the centavos which it can induce people to plunk down on store counters or drop into the slots of amiable selling robots. In this laudable endeavor, Coca-Cola has been uncommonly successful. It is currently selling about 50 million Cokes a day all over the world—enough to float a light cruiser. Last year, the Coca-Cola Co. took in nearly $128 million (leaving a net profit of nearly $38 million, a third of it from foreign business).

This did not constitute American exploitation, as the Reds bellow. For at the same time, Coca-Cola’s 270-odd foreign bottlers and 3,000-odd foreign retail dealers grossed roughly $150 million. Not out of idealism, but out of good American common sense, Coca-Cola is in the business of creating business wherever it goes.

And a Pinch of CO2. Coca-Cola has avoided the deadly sin of most modern business enterprises: over-organization and overcentralization. The only thing that Coca-Cola sells, outside of the U.S., is its secretly compounded concentrate. This is the same as it was in the day (1886) of Dr. J. S. Pemberton, who invented Coca-Cola—it was then green and supposed to cure headaches. The raw material is shipped to a dozen Coca-Cola-owned plants around the world, and sold to bottlers.

The bottlers add water, sugar and carbon dioxide according to a specific formula, and take care of their own selling—also according to a specific formula. With a few exceptions, Coca-Cola owns no bottling plants or retail stores, leaves the profit from these operations to be made by others. In all countries where it is bottled, Coca-Cola stimulates local industry; virtually all the coolers, bottles, cases, uniforms and advertising material used in foreign countries are made outside the U.S.

The way Coca-Cola manages to keep this loose and sprawling confederation of more or less independent industries producing the same product, with more or less the same advertising and the same sales methods, is one of U.S. industry’s miracles of organization.

Until a better word comes along to denote that process, the dazzled layman can only call it education. Coca-Cola coolly takes hold of Japanese capitalists, Italian intellectuals, German bureaucrats and Bolivian laborers and trains them to do a series of specific jobs in every move and thought the way they are done in America. What is more, the trainees like it.

“Scrap Material, Disposal of.” The first step in the educational process is to teach the teachers. The teachers are called “field men” and Coca-Cola employs about 300 of them, half of them Americans. They are scooped up like so many bottles at the front end of a Coke bottling line, and are put through a preliminary two weeks’ training in New York, during which they are thoroughly rinsed of any wrong ideas they may have had about Coke. Then they move along the assembly line to various U.S. plants, where they are filled brimful with Coca-Cola lore (sample subjects: old containers, scrap material, disposal of; bad gas, how to detect; bottles foaming on machines, common causes and remedies, etc.).

The trainees spend weeks working in plants at every job involved in bottling, paste up posters, ride with salesmen on trucks delivering and selling Coca-Cola. They spend two weeks at Coca-Cola’s central Production School in Atlanta, a minor university. At the end they are given a stiff three-hour exam (sample question: Describe briefly the process followed in cleaning and sterilizing syrup lines and syrup tanks).

Finally, the educational assembly line returns them to New York City, where the graduates get an expense account instead of a diploma and go to take their part in the world—which Cokemen have divided into areas, divisions and territories with the ease of a Georgia politico redistricting Chattahoochee County. The graduates’ pupils, ready & waiting for instruction, are the foreign bottlers.

Bums, Crocks & Scuffles. Choosing a bottler from among the applicants (at the moment, Coca-Cola is weighing more than 1,000 applications from all over the world), the Coca-Cola Export Corp. acts approximately like a fairy-tale king choosing a proper husband for his daughter.

A typical, recent case was the plea for a Coca-Cola bottling agreement filed by a Brazilian named Paulo Pereira Ignacio, who wanted to open a Coca-Cola plant in the town of Rio Preto (pop. 23,972). First of all, he had to have money to support his bride in the manner to which she was accustomed (i.e., enough capital to withstand any possible competition and to finance any possible expansion). Pereira Ignacio passed on that count—his father and he had already made millions in textiles and concrete. But the suitor must also measure up in character and honor and local reputation. When Pereira Ignacio passed on this count, too (he had studied at Cornell, entertained progressive views on labor relations), a formal bottler’s agreement was finally signed.

Company field men helped Pereira Ignacio pick a desirable site and gave him detailed layout suggestions for the kind of bottling plant he would need. If, for instance, he was figuring on a yearly production of 150,000 cases, he would need to allow 720 sq. ft. for the bottling room, 364 sq. ft. for the conference room, 152 sq. ft. for toilets, stairs, etc. The company also advised him and his staff what machines to buy (including water purification apparatus on which Coca-Cola insists) and how to run them. Typical was the matter of Bums, Crocks and Scuffles.

In a 16-page illustrated pamphlet, Pereira Ignacio was told that Bums (bottles so disreputable that they must be discarded), Crocks (bottles chipped on the bottom) and Scuffles (bottles chipped around the trademark) are a hazard to the business and that there are ways of avoiding that hazard through careful tests, proper storage, the use of scuffing inhibitor compounds, etc. Meanwhile, the bottler’s advertising department (whose expenses the Coke company shares on a decreasing scale for the first five years) was also getting instruction. Advertising must never be “competitive, offensive, tricky, brash.” To be on the safe side, Coke’s division headquarters in Rio de Janeiro sent along to Rio Preto sample posters, color films for ads, patterns for metal signs, lengthy instruction on how to build billboards, paste up posters, and mix paste (“. . . use three gallons of water to each pound of flour . . . Stir up the flour into a batter with cold water . . .”).

At last came the great day of the formal opening: the priest blessed the shiny new machines, the mayor made a short speech. But the education of the bottler and his staff had only just begun. There was, after all, a matter far more intricate than the mere running of machines—the matter of selling what the machine produced.

The Story of Barsoum. Coke’s field men in charge of sales promotion speak an idiom of their own; e.g., a Coke sign outside a store is “point of purchase sign,” and cleaning a dirty Coke sign means “revitalizing the point of purchase sign.” Nothing in the world of sales promotion is said only once: repetition is the key to understanding—and the good promotion man, if he has occasion to use the phrase “key to understanding” at a meeting will hold up a key to underline his point.

Few things are said that can be written down on a blackboard, and few things are written down that can be expressed in a picture. Coke sales promotion men put out a slide film on any subject under Coca-Cola’s sun (the way lesser men might toss off a memo). Often, a message is too important even for the screen and live drama is used: any good Coke sales promotion man is ready, like a veteran stock actor, to jump into any number of roles at the drop of a bottle cap.

But most Coke skits, carefully rehearsed, revolve around simple, symbolic characters strongly reminiscent of medieval morality plays. Typical was a dramatic production put on at a recent meeting of 55 Egyptian and other Near Eastern bottlers in Cairo. Protagonist was Barsoum, a Coca-Cola Dealer with a fine Egyptian mustache and an uncertain faith in the product; for possession of his soul contended, like angel and devil, the Good Coca-Cola Salesman and a salesman of a competing soft drink, obviously representing the Forces of Evil. Another character was the Confused Coca-Cola Salesman, neither good nor bad but caught in the limbo of inadequate know-how. Under the influence of the competition’s salesman, Barsoum gets careless, fails to ice his Coke cooler, lets point-of-purchase signs go un-revitalized, even pushes the competing soft drink. But the Good Salesman puts everything right in the end and the Confused Salesman gets straightened out.

The epilogue (on the importance of refrigeration) showed evidence of greater theatrical cunning, reminiscent of Pirandello. Discovered at stage center is a bright red Coca-Cola cooler. Enters a Coke field man, who begins talking about refrigeration. Suddenly a loudspeaker hidden in the cooler’s cool interior cries out: “Stop talking! I can speak for myself.” Coke man hurriedly exits, Cooler continues: “I’m a 24-hour salesman … I advertise the product, I cool the product, I present your product attractively . . .”

And a Dash of Movie Hero. Most sales promotion material emerges from the amazingly fertile brain of a short ex-lawyer and Rhodes scholar named Frank Harrold, who runs the entire sales promotion department of the Coca-Cola Export Corp. with the help of only two assistants, a few stenographers, and what amounts to a commuter’s ticket on all the world’s airlines. Harrold has developed a green kit containing fat instruction books, slide films, records, etc. Even a man with a stammer and an inferiority complex can become a dynamic lecturer. Sample instruction for a salesmen’s meeting:

CALL MEETING TO ORDER. IF WIVES ARE PRESENT, YOU WILL WISH TO MAKE AN APPROPRIATE RECOGNITION OF THAT FACT. HAVE A LARGE CALENDAR HANGING PROMINENTLY IN THE FRONT OF THE ROOM. STEP TO CALENDAR.

“This is no ordinary day, men. No, sir.”

(USE RED CRAYON AND DRAW LARGE CIRCLE AROUND THE DATE.)

“This is a red-letter day. It’s the start of a carefully planned program which is going to affect the lives and pocketbooks of everyone in this room . . . Let’s stop and think for a moment about happiness.

(PAUSE.) That’s right, I said happiness . . . Sometimes you wonder what it is that makes you feel so good. It seems to me one of the things that makes a man feel best is making someone else happy . . . doing something that brings a smile or a shout of pleasure to someone else’s lips.”

To make everybody happy, the good Coca-Cola driver-salesman must be part Boy Scout and part diplomat, with a dash of the movie hero thrown in. His supreme duty: to make friends with the dealers. His list of “do’s” commands: “Look your best. Greet the Dealer. Smile . . . Show interest … Be courteous … Be honest . . . Keep promises. Make change . . . Thank Dealer.” Of course, there are refinements of these simple tenets: “If, for example, the dealer’s wife has just presented him with a new baby, the friendly salesman congratulates him . . .”

The friendly salesman, of course, does not argue, does not sample the merchandise in the store, does not interrupt when the dealer says something, does not make remarks to women customers. He keeps his mind on the cooler (a subject which takes six hours of lectures and demonstrations alone), sees that it is properly stocked, and that the Coke is placed nearest the cooling unit.

The good salesman carries a special slide rule (called “profit meter”) with which he can figure in a trice the dealer’s profit on any given number of Coca-Cola bottles, personally puts up Coke advertising (“don’t leave your sign for the dealer to put up—he might give it away to one of his friends”), keeps his truck in perfect order and drives carefully. Curves must be taken smoothly so that Coke cases won’t slide off; pedestrians must not be frightened, much less injured—they are all potential Coke customers.

The dangers of not driving carefully are dramatically demonstrated to the student salesman by a little red toy wagon driven by a male doll which carelessly smashes the wagon against a stone (the instruction book thoroughly lists, among the required props, “one stone about half the size of your fist”). The point: “Because he didn’t take proper care of his little red wagon, Juan was out of business” (PAUSE BRIEFLY AND LOOK AT MEN SO AS TO ALLOW POINT TO SINK IN . . .)

Signor Pretti. To see how the point was sinking in, a TIME correspondent last week accompanied a Coke salesman on his round of Milan. A few minutes before 8, dark, heavy-set Giovanni Pretti, 30, had put on his tan & red uniform and cast a last look into the mirror from which signs asked him: “Hair Combed? Shaved? Uniform Clean and Neat? Shoes Shined? Friendly Smile?” He lovingly polished his brand-new Bianchi truck (one of 62 now covering Milan) and climbed into his seat.

As he skillfully drove through downtown Milan’s maze of narrow streets, he explained: “I have a position of responsibility. Now you will see, everywhere we go today the people will not call me just ‘Pretti’ or ‘Come here, Pretti.’ Instead, they will say ‘Signor Pretti,’ for I am the representative of Coca-Cola.” At his first stop, on the Via Santa Marta, Signor Pretti made a few cheerful remarks, straightened a Coke sign on the wall and departed. At the Zi’ Cori, a tiny refreshment room, Pretti wiped the dust from the red Coca-Cola disc, stopped to listen to the woes of the proprietress’ daughter: her fiancé had been called to arms, and in order to persuade the Blessed Virgin to keep the young man from harm, the girl had—as a special sacrifice—given up her daily quota of a dozen Cokes. “She has become as thin as a nail,” wailed her mother, “and I have been afraid she would die.”

Pretti clucked sympathetically and went on to the sleek Barca d’Oro, an expensive restaurant. In these elegant surroundings Pretti smiled and bowed politely, but in the dimly lit workers’ restaurant in the Via del Gesù he shifted to an easy manner and a broad Milanese dialect. He explained: “I must put myself in harmony with the environment.”

In the Via del Gesù, Pretti met his sharpest test. As he carried his case of Coke into one restaurant, a wine-drinking taxi driver called out: “There comes the licorice water!” Pretti indignantly reeled off a long list of Coke ingredients which had nothing to do with licorice. “Have you,” Pretti asked, “ever tasted Coca-Cola?” Said the taxi driver: “Once—and never again.” Said Pretti: “Ah, but you must try Coca-Cola in the wine.” He produced two bottles and poured them into a glass of Chianti. Two of the customers tasted the mixture. They approved of it cautiously. As Pretti left they were ordering another round. “You see,” said Pretti outside, “that is the system. You have to keep talking.”

Off the Old Block. Titular principal of Coca-Cola’s vast educational institution is ex-Democratic Boss James A. Farley, chairman of the board of the Coca-Cola Export Corp. But the boss of the Export Corp. is its president, slight, dapper James Curtis, who has spent nearly 27 of his 48 years with the company and whose gentle New Orleans drawl makes “Coca-Cola” sound like a whispered caress.

Actually, the heart of Coca-Cola remains Atlanta, and its hard, all-powerful head remains Robert Winship Woodruff.

It was his father, Ernest Woodruff, who in 1919, for $25 million, bought the Coca-Cola company from Asa G. Candler, who in turn had got it from Inventor Pemberton for $1,750. Hardy old Ernest Woodruff was accused by his enemies of every sharp business trick in the book, and suspected even by his friends of chewing broken Coca-Cola bottles to strengthen his teeth. Son Bob is a chip off the old block. The steel of Young Bob’s determination early clashed with the flint of his father’s will, and the resulting sparks could have lit up Atlanta and environs. Bob quitEmory University and went to work selling fire extinguishers. He did so well that his father relented, gave him a job in the Atlantic Ice & Coal Co. (which he owned along with Coke). But he flared up again when young Bob, too dynamic for the old man’s tastes, ordered a fleet of White trucks to replace the old ice buggies. Bob went to work for the White Motor Co. Old Ernest finally bowed to his son’s indomitable business talent, in 1923 made him president of Coca-Cola.

Bob Woodruff, who has the build of a lumberjack, the face of an intelligent fullback, runs the company with a relentless executive grip. He recalls how, in the 1920s, he discovered one day that per capita Coca-Cola sales in Montreal were larger than those in Miami. Then & there he decided that Coca-Cola was destined to spread beyond the U.S., across the world.

One of Woodruff’s smartest moves was his policy of supplying U.S. soldiers anywhere in the world with nickel Cokes, no matter how much money the company lost in the process. The Coke bottling plants which moved along with the invading U.S. armies and brought the sight and taste of Coke to millions of people who had never heard of it before were actually the biggest impetus of Coca-Cola’s present international boom.

A Matter of Survival. Favorite of Woodruff’s several homes is Ichauway, a 47,000-acre Georgia plantation. His guests are usually roused before dawn to go hunting, and kept up long beyond midnight playing poker. Woodruff is strenuous company. Recently one of his associates went to a doctor complaining of high blood pressure. Asked the doctor: “What have you been doing?” When the patient answered that he had just spent an hour with Bob Woodruff, the doctor said: “Oh just go home and go to bed. That’s all you need.” Woodruff rarely relaxes, but likes to refresh his pauses with Martinis.

Said one of his Atlanta friends once: “He’s always been one for prophesizin’ and realizin’. Now he is re-prophesizin’ and re-realizin’.” In 1950 there was plenty of realizin’ for Bob Woodruff and his Cokempire.

To many, the world of 1950 looked like a poor prospect for free international business. Prophet Woodruff swept pessimism aside. Said he last week: “We’re not selling the world short, we’re playing the world long. We decided that we would live with the world and that the world would survive, that it must survive, as a decent place to live in.”

If that was the way Coca-Cola’s Bob Woodruff felt about it, the world had better take another swig of Coke and make up its mind to survive.

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