May 27, 2007
Coke Struggles to Keep Up With Nimble Rivals
By ANDREW MARTIN
“A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good.” —
Andy WarholAtlanta
WALK through any room of the sparkling New World of
Coca-Cola museum here and you get a sense of the unusual purchase Coke has on the American imagination. With a huge, glowing Coke bottle beaming from its roof, this $96 million museum includes a mini-bottling plant, interactive gadgets and a short movie about collectors of Coke memorabilia. Sure enough, a woman wearing a red-and-white Coke pantsuit, with a matching purse, is among the viewers at a recent screening of the film.
Visitors can also create personalized Coke artwork on a computer screen or jot down memories about their first Coke, some of which are posted nearby. One example: “I remember my first kiss in 1972. I was with Joey Zawadski from Chicago. He was visiting his grandmother who lived in my town. He leaned over to give me a kiss and it tasted like Coke. Joey is gone but I still have my Coke. Betty.”
But while it still maintains its enviable pop-culture status, the Coca-Cola Company no longer wields the kind of business clout it did decades ago, when Coke, as jingle after jingle told us, was the “real thing” that graciously taught the world to sing “in perfect harmony.” Instead, lashed to a product and a corporate culture that is older than many of its most well-known marketing pitches, Coke has found itself outmaneuvered, at least in the United States, by a host of more creative competitors, like
PepsiCo. As those rivals have diversified and taken risks, Coke, the beverage industry’s Goliath, has struggled to reinvent itself.
Some, like E. Neville Isdell, Coke’s chairman and chief executive, say the company has a good playbook in hand. When he is not talking about “transformational wellness platforms” and the “need state map,” Mr. Isdell likes to sprinkle the word “fun” into his speeches. He refers to his days as a rugby player as “fun.” He likes a Coke ad because “it’s absolutely brand-centric and it’s fun.” Working in the soft-drink business is fun, too, he says.
But Mr. Isdell’s words aren’t entirely convincing: fun has been hard to come by at Coke headquarters here for quite some time.
A towering 63-year-old from Ireland, Mr. Isdell left a comfortable, tropical retirement in Barbados three years ago to return to one of the world’s most recognizable companies, but one that was in disarray after years of turnover, misdirection and internal squabbles. In doing so, he became the caretaker of one of the most storied legacies in corporate America, and a business that has set standards for savvy global expansion, lithe, and inventive brand management and marketing panache.
Yet the future of the company that Mr. Isdell took over in 2004 was in jeopardy. Coke’s tightly knit and long-serving board selected him after it had unsuccessfully pursued several other big-name chief executives. Meanwhile, PepsiCo, Coke’s longtime nemesis, was clobbering it in the United States, helping to cause Coke’s stock to lose nearly half of its value from its 1998 high of $88.
Now, nearly three years after Mr. Isdell created a “Manifesto for Change,” it remains unclear whether he can reclaim Coke’s former glory. He and his team have largely borrowed their turnaround strategy from the heroes of Coke’s past: blanket the landscape with Coke signs, push the product in developing markets abroad and spend more money on advertising — to recapture, as Mr. Isdell puts it, the idea that “there is a magic around the brand.”
Analysts widely credit Mr. Isdell with improving morale and stabilizing what many considered a dysfunctional company. Coke has a hit in a new product, Coke Zero, and a catchy ad in “The Coke Side of Life,” which focuses on its distinctive bottle; the company is also enjoying brisk overseas sales. Its most recent quarterly earnings were its best in years.
To be sure, Coke — which racked up earnings of about $5 billion on sales of $24 billion last year — remains a formidable presence, in the United States and overseas. The company’s own number-crunchers are fond of saying that a Coca-Cola beverage of some sort is swallowed 1.4 billion times a day in various spots on the planet. (That translates to 58,333,333 servings an hour; or 972,222 a minute; or 16,204 a second.) But Coke is at a crossroads, and it has been slow to make its mark in the booming American market for energy drinks, bottled water and other noncarbonated drinks. Mr. Isdell took a step toward addressing that problem on Friday when Coke announced a $4.1 billion takeover of Glacéau, a producer of vitamin-enhanced water.
The Glacéau deal is a milestone for a company that has never pulled off a takeover of this magnitude before. Even so, some analysts still wonder whether Mr. Isdell and his board remain too conservative to break from traditions that once served them well but may no longer be suited to a world in which consumer tastes are rapidly — sometimes constantly — shifting.
Tom Pirko, the president of the consulting firm Bevmark and a frequent critic of Coke’s soda-dominated strategy, says the Glacéau deal is a good move for the company. But he says Coke needs to be more innovative and invest more resources in emerging markets. With all of the new drinks flooding the market, he likens the beverage industry to television: there were once only three major networks, but now there is cable, the Internet, DVD, and
TiVo, among others.
“Fabulous icon, but even icons must change with the times and new generations of young consumers,” he says of Coke. “Even a cursory examination of the Coke portfolio shows little creativity in taking risks or sinking serious funds into new products. Instead, Isdell has satisfied himself with baby steps.”
Not to worry, Mr. Isdell counters. In an interview in Coke’s sumptuous 25th-floor executive offices here, where he sits surrounded by Coke-themed artwork, he says Coke is now prepared to do more than take baby steps — as the Glacéau deal shows. And, he adds, Coke is large enough and has been around long enough act with deliberation.
“People are always in a hurry for instant gratification,” he says between slugs from a can of Coke Zero, one of a half-dozen or so he drinks each day. “For all of the problems, this wasn’t a company that was going bankrupt.
“There is no need to go bet the house,” he adds. “This is not a rescue situation.”
“What could be better than making your living by selling a product that makes billions of people happy?”
— Roberto C. Goizueta, Coke chairman
and chief executive, 1981-1997
Invented in 1886 by an Atlanta pharmacist and Civil War veteran and marketed as a tonic for headaches and fatigue, Coca-Cola became a potent symbol of abundance and effervescence as it expanded around the globe. And much of the credit for Coke’s ubiquitous and special place in pop culture resides with a handful of visionary leaders, like Asa G. Candler, who bought the secret formula a few years later for $2,300 and then began a relentless marketing campaign that included plastering Coke’s distinctive script on everything from lampshades and napkins to sheet music and ashtrays.
Robert W. Woodruff, who was known as “the Boss” and who ruled Coke for nearly six decades, was largely responsible for spreading the cola throughout the world, starting in 1926 with the establishment of a “foreign department.” His masterstroke came during World War II, when he vowed that every American soldier would get a Coca-Cola for a nickel. It made lifelong Coke drinkers out of the soldiers and spread Coke’s appeal overseas.
Roberto C. Goizueta, a chemical engineer and Cuban refugee, became the chief executive of Coke in 1981 — the first non-Georgian to run the company — and spent the next 16 years dazzling Wall Street with the company’s growth. According to Coke, a share of its stock was worth $35.88 when Mr. Goizueta took office; by the time he died in 1997, that same share was worth the equivalent of $2,209.72 — pleasing investors like
Warren E. Buffett, who owned boatloads of Coke stock.
By then, Coke had such a firm hold — rivaled by few other companies of any stripe — on the popular American imagination that collectors traded everything from vintage Coke vending machines to salt-and-pepper shakers bearing a Coke logo. After Coke opened the World of Coca-Cola museum in 1990, some 750,000 visitors a year paid to see it.
But like other ubiquitous American brands, from Ford and Polaroid to
McDonald’s and Budweiser, Coca-Cola would begin to lose its magic. It seemed to happen almost overnight, as if unseen forces were conspiring against the company: the stock market bubble burst and foreign economies deflated; tainted cans of coke made Belgian schoolchildren sick; some of Coke’s African-American employees sued, citing an ugly history of discrimination.
Worse yet, soft drinks became a prime target in the national debate about why so many Americans were fat. Drinking Coke wasn’t so “fun” anymore, and Americans started reaching for bottled water and an expanding variety of other noncarbonated drinks that offered new tastes and better nutrition.
Coke was accustomed to being dominant, but its potent legacy — built on the principle of saturating markets with cola — shackled the company as it tried to adjust to new circumstances. It was slow to offer bottled water, bypassed a chance to buy Gatorade and dragged its feet in trying to acquire the South Beach Beverage Company, the maker of SoBe. (Pepsi now owns Gatorade and SoBe.)
Under Mr. Isdell, Coke is now trying to be a more spritely buyer. Coke’s deal for Glacéau, the company that makes Vitaminwater, offers evidence of that. Vitaminwater is a huge hit among young people, and is on its way to being a $1 billion brand. In other words, it is exactly the type of hip brand that Coke has unsuccessfully struggled to produce on its own or to buy outright in recent years.
If the deal goes through, it would be the biggest in Coke’s history and significantly bolster the company’s portfolio of noncarbonated beverages in the United States — a portfolio that pales next to Pepsi’s.
For his part, Mr. Isdell — who, like many chief executives, is looser in informal settings than in scripted public appearances — says that coming out of retirement to take the job has given him a freedom that he might not have had if he were younger and less secure. He says that he has been hearing about the need for diversification and acquisitions since he took over Coke and that — at least initially — he put little faith in the mantra because the company was so unfocused.
To the disbelief of investors and some members of his staff, he has routinely maintained that selling more soda, and Coca-Cola in particular, rather than diversifying into other beverages or foods, was a crucial first step to a turnaround. The problem was not the brand, he has said, but lackluster execution by Coke employees.
Soon after he took office, he was unusually blunt in pointing out what he considered to be flaws of his work force, from tepid marketing and innovation to a loss of faith in the trademark brand. “We looked in the mirror and saw that the enemy was us,” Mr. Isdell says. “We really didn’t have a coherent view of who we were.”
MR. ISDELL’S faith in the Coke brand is not hard to trace. The son of a policeman, he moved from Northern Ireland to Zambia when he was 10. He joined the local Coke bottling company in Zambia in 1966 and spent the next 35 years with the company and its bottlers, retiring in 2001 after serving as vice chairman of one of Coke’s biggest bottling operations. His career consisted of capturing and overhauling foreign markets, including South Africa, Australia, Germany, India, the Philippines and the Middle East. He counts among his finest memories Coke’s breakthrough in Eastern and Central Europe — what had been “Pepsi country”— after the Berlin Wall came down.
“We had a map that was all blue, and we were changing the color to red as we went through,” he says.
Mr. Isdell’s focus-on-soda strategy looked disastrous shortly into his tenure. By early 2006, the stock had sunk to less than $40, down from $51.07 when he was elected chief executive. The stock closed at $51.89 on Friday. Some analysts say the initial stock slump was attributable to Mr. Isdell’s intentionally painting a gloomy picture about Coke’s outlook.
“He kind of kitchen-sinked it, throwing everything in but the kitchen sink to lower expectations” says Walter B. Todd III, portfolio manager at Greenwood Capital Associates in Greenwood, S.C. “He kind of underpromised and overdelivered, which was smart.”
Mr. Isdell does not deny it, and he argues that getting bad news out early and focusing on the company’s core brands — Coca-Cola, Diet Coke, Sprite and Fanta — is starting to pay off. Instead of looking for quick fixes, he says he needed to go slow to fix problems around the Coke brand before he could risk “transformational” acquisitions.
“We are in a pretty good place on a road that is a long road,” he says.
Coke’s soft-drink sales volumes increased 4 percent last year, and earnings per share rose 6 percent — respectable, but a far cry from the 15 to 20 percent numbers that Coke posted in the 1990s. In the first quarter this year, soft-drink volumes increased 5 percent, attributable largely to huge gains overseas. Earnings per share jumped 15 percent, as did company profits.
The company’s goal is 3 percent to 4 percent volume growth, with high single-digit growth in earnings per share. Asked if Coke could again reach double-digit growth, Mr. Isdell says, “that’s a question we’ll answer in small increments.” He says that much of the company’s growth will depend on the growth of the global economy.
Some analysts are cheered by Mr. Isdell’s results.
“They are focused on execution and letting the numbers tell the story instead of just talking about hope,” says Christine Farkas, a
Merrill Lynch analyst. “It turns out in the end that Neville’s strategy has been pretty much correct.”
Mr. Pecoriello says Coke is capable of sustaining double-digit growth during the next five years if it maintains its momentum. “We do think the turn is real, but there’s more room for upside,” he says. “There’s still a lot to fix in North America. They’re still improving the innovation pipeline. They still need to execute all the productivity savings.”
But believing in Mr. Isdell means believing in a bright future for soda, and there are many who remain unconvinced. According to Beverage Digest, the industry publication, overall global soft-drink volumes were up by 2 percent in 2006; but in the United States, which accounts for a third of the overall consumption, soda sales are declining.
Mr. Todd of Greenwood Capital, for one, said he bought several thousand shares of Coke after Mr. Isdell was hired but eventually sold them because he became tired of waiting for promised changes. “I don’t think he’s addressed the bigger-picture issue, and that is that 80 percent of their business comes from carbonated soft drinks,” Mr. Todd says.
NOW the saying is you have to be global. We were global when global wasn’t cool.”
— Roberto C. Goizueta
Coke is now available in more than 200 countries, the result of an aggressive global expansion that began in 1906 in Cuba, Panama and Canada. Today, about 70 percent of Coke’s sales are overseas. In the first quarter this year, Coke’s volume growth in China was 17 percent; in its Eurasia division, which includes Eastern Europe, India and Russia, volume increased 16 percent.
Coke officials say they have turned around problematic markets like Japan, India, Nigeria and Germany. But on Coke’s global map, the United States remains a glaring black spot that is not only embarrassing, but could potentially infect other markets around the globe. The United States, together with Canada, generates 21 percent of the company’s profits.
Last year, Coke’s overall beverage sales in the United States were flat, and soft-drink sales were down slightly. In the first quarter this year, Coke’s overall United States sales were down 3 percent.
And it could get worse.
Consider, for example, what is happening at a McDonald’s restaurant on the corner of 13th and Woodlawn in Wichita, Kan. The experiment does not look like much — just two unmarked coolers behind the front counter. But what’s inside the coolers is a surprise, because McDonald’s has always given Coke preferential treatment: not only are there Coke products like Dasani and Powerade, but there’s also Mountain Dew, Lipton Green Tea and Gatorade, each made by Pepsi.
McDonald’s installed the coolers during the last year in about two dozen restaurants, mostly in Kansas and Missouri, after it realized that a growing number of customers were buying their Big Macs and Chicken McNuggets and then heading elsewhere for drinks. Besides the coolers, the test-market McDonald’s are also offering free “flavor shots” that allow customers to personalize drinks.
“It’s really about us selling more beverages,” said Karen Wells, McDonald’s vice president for strategy in the United States. “Everything we’ve heard so far is very positive from our customers.”
Coke remains the first choice of McDonald’s and is working closely with the hamburger chain on the test marketing. But Ms. Wells said that consumers would ultimately decide McDonald’s beverage choices — a view that threatens a cozy relationship that began in 1955 with a handshake between the McDonald’s legend Ray A. Kroc and a Coke executive guaranteeing that Coke drinks would be given preference at the hamburger chain.
Indeed, Coke still dominates the fountain trade in America’s fast-food restaurants, a particularly lucrative slice of the business that accounts for 31 percent of the company’s soft-drink volume in the United States and Canada.
“McDonald’s seems to want to expand its beverage offerings to better compete with convenience stores,” says John Sicher, the publisher of Beverage Digest, an industry trade publication. “I believe most beverages they’ll serve in the future will still be Coke products, but what ‘most’ means will be the issue for Coke. Coke needs to keep expanding its noncarbonated offerings.”
All of these developments obviously thrill Pepsi officials. “This is all about giving people more choices, particularly when it comes to product variety, portability and health and wellness,” says David DeCecco, a Pepsi spokesman. “We’re pleased to be working with McDonald’s, and we hope consumers respond favorably to this market test.”
Over the last five years, PepsiCo’s stock has risen 37 percent, while Coke’s has fallen about 9 percent. In the last year, however, Coke stock has jumped about 17 percent, while PepsiCo’s has increased by about 14 percent.Coke is also encountering a seismic shift in consumer preferences — of the sort that is challenging the newspaper business and hamstringing automakers. Worried about their health and lured by new drinks, Americans are reaching for bottled water, sports drinks, green teas and juice instead of soda. The decline in soft-drink sales isn’t just for full-calorie sodas like Coca-Cola Classic, with about 10 teaspoons of sugar per 12-ounce can. Sales of diet soda are declining too, in part because artificial sweeteners make some consumers nervous.
The problem is so serious that Coke executives no longer refer to soda as just plain “soda.” “Soft drink,” “pop” and “carbonated beverage,” are also verboten. Instead, the favored term in Atlanta these days is “sparkling beverage.”
Information Resources, the market research firm, found that dollar sales of carbonated soft drinks declined by 1.4 percent in 2006, to $13.3 billion. (The company’s data does not include
Wal-Mart.) By contrast, sales of energy drinks jumped 44.6 percent, to $637 million. In other categories, bottled-water sales increased 14.4 percent, to $4.6 billion; sports drinks rose 10.8 percent, to $1.6 billion; and ready-to-drink teas and coffees jumped 25.4 percent, to $1.2 billion.
Taken as a whole, soda sales still handily outweigh all other beverage categories combined, but the trend lines are ominous for a “sparkling beverage”-dependent company like Coke. William Pecoriello, a
Morgan Stanley analyst, found in a survey last year that teenagers, who used to be among the biggest consumers of soda, increasingly prefer other beverages.
“If you lost that generation, as they age they aren’t suddenly going to start drinking carbonated soft drinks,” says Mr. Pecoriello. “That’s the importance of Coke closing the non-carb gap.”
Yet that insight has hardly been a secret. Coke and Pepsi executives have talked about the importance of noncarbonated beverages since the early 1990s and have rolled out all sorts of new products to attract cola-weary customers. But in that effort, Coke has seemed to always be a step behind.
“The difference was, Pepsi meant it and Coke didn’t,” said Emanuel Goldman, the veteran beverage analyst who retired from ING Barings in San Francisco and now works as a consultant. “Coke really didn’t mean it when they said they were an all-beverage company.”
Pepsi now commands a 50 percent market share for noncarbonated drinks in the United States, with Coke a distant second at 23 percent (without Glacéau). Coke has 43 percent of the soda business in the United States, compared with Pepsi’s 31 percent. Pepsi owns the leading brand in nearly every noncarbonated drink category in the United States: bottled water (Aquafina); sports drink (Gatorade); enhanced water (Propel); chilled juice (Tropicana); bottled tea (Lipton, a joint venture) and ready-to-drink coffee (
Starbucks, a joint venture).
COCA-COLA is the “sublimated essence of all America stands for — a decent thing, honestly made, universally distributed, conscientiously improved with the years.”
— Attributed to William Allen White editor, The Emporia Gazette of Kansas, in 1938.
So how did Coke lose its magic? Macroeconomic factors played a role. So did a raft of bad publicity over issues of obesity, racial discrimination and food poisoning. But internal issues were also in play. Mr. Isdell surveyed his top executives about the problem when he took charge, and arrogance, he says, was a common answer. Complacency was another.
Trying to figure out why it has taken Coke so long to regain its swagger is an equally complicated question. But taking a look at turnover in the management ranks and stasis on the board of directors provides a clue.
During the 10 years since Mr. Goizueta died, Coke has had three chief executives, three general counsels, four chief operating officers, four heads for North America, and six chiefs of marketing (a particularly troubling metric, given Coke’s reputation for brilliant ads and promotions). The president’s post, the company’s No. 2 job, was vacant for nearly half the decade.
The chief marketing position is now vacant because Mary E. Minnick, who was touted as Coke’s most forceful voice for change and the highest-ranking woman in the company, resigned abruptly earlier this year after it became clear that Muhtar Kent, who was named president and chief operating officer in December, was the heir apparent to Mr. Isdell.
Of the top 150 employees at Coke, 61 are new to their jobs or the company, Coke officials say. The turmoil in Coke’s executive ranks contrasts sharply with its board, one of the most entrenched in corporate America. It has largely been in place since Mr. Goizueta’s term, when the demand for Coke seemed unlimited and double-digit growth was a given.
Of the 11 current members of the board, eight have served 10 years or longer, and four of those have logged 25 years or more. The average tenure for board members is 16.6 years, nearly double the average of Fortune 500 companies, according to an analysis by the Corporate Library, which tracks corporate governance issues and compensation for executives and board members. Coke has the 10th-longest-serving board among Fortune 500 companies, the analysis found.
The average age of the 11 directors is 68. Except for Mr. Isdell, all of the board members are American. One is African-American and one is a woman.
(By comparison, the average tenure of PepsiCo’s board is six years, and the average age of its members is 59. Of the 10 members, there are 7 men and 3 women; five of the members were born outside the United States, including the chief executive Indra K. Nooyi, 51, who was born in India.)
Though Coke’s board treated Mr. Goizueta with reverence and left him alone, it has taken a much more hands-on approach with subsequent chief executives. When
Douglas N. Daft resigned as chief executive in 2004 after a turbulent tenure, the board embarked on a ham-handed, highly public search to land a hotshot chief executive from another company. The board ultimately turned to Mr. Isdell, who had already been passed over for the top job once, after Mr. Goizueta’s death.
Donald F. McHenry, a former United States ambassador to the
United Nations and a board member since 1981, said in an interview that the board had not handled transitions well since Mr. Goizueta’s death. He called the process that led to Mr. Isdell’s selection “pretty sloppy.”
“The leaks were unconscionable,” says Mr. McHenry, who is also a professor of diplomacy and international affairs at
Georgetown University. “It was not the way to run a railroad.”
Mr. McHenry says the board has given Mr. Isdell leeway to run the company as he sees fit; Mr. Isdell does not dispute that. As for the age and tenure of the board, Herbert Allen, a director since 1982, says it has the benefit of experience. Asked about the lack of diversity, he says: “When we are sitting in the room, the opinions are certainly diverse.”
Some have disagreed. Marc Greenberg, an analyst at
Deutsche Bank, said in a February note to investors that some of the board’s recent actions were “anathema to real, lasting structural change in how the company does business and may ultimately limit Coke to a high-single-digit earnings grower, even as more appears possible.”
But the Glacéau deal caused Mr. Greenberg to temper that view. On Friday, he said that the Glacéau deal signifies that at Coke “there is a recognition that the world is changing.”
SAILIN’ ‘round the world in a dirty gondola. Oh, to be back in the land of Coca-Cola!”
— from “When I Paint
My Masterpiece,” by
Bob Dylan.
Muhtar Kent, who became Mr. Isdell’s sidekick in December as president and chief operating officer, has been traversing the United States in recent months, trying to figure out why Coke is having such problems in its home market.
“If you go south of the border to Latin America, you will see millions and millions of signs of Coca-Cola, over outlets that serve Coca-Cola,” Mr. Kent said. “Sixty-five to 70 percent of everything we sell is based on impulse. That’s our business. There isn’t one sign in the United States. No more.”
Mr. Kent is 54, balding and stocky, and has the frenetic energy of a teenager. The son of a Turkish diplomat, he was born in New York and grew up in Asia, before attending college in England. He joined Coca-Cola in 1978 and has worked around the world for the company. In 1996, Australian regulators accused Mr. Kent, who was working in Europe for a Coke bottler based in Australia, of insider trading after he sold 100,000 shares of the company just before a profit warning.
Mr. Kent settled the complaint without admitting guilt by repaying $400,000 in profits and $50,000 to cover the costs of the inquiry. He says that he considers the sale an “honest mistake” and that he was unaware of the timing of the sale because he relied on a financial adviser to manage his portfolio.
Mr. Kent says he is now focused on turning around Coke’s North American business, including Coke’s always-fragile relationship with its bottlers, who have struggled to grow and have started distributing other, non-Coke products, like Arizona Iced Tea, to remain competitive.
Since Mr. Isdell took over, Coke’s research and development budget has more than doubled. And Mr. Kent says the company is counting on a beefed-up innovation laboratory to deliver new products and packaging to lure customers. The lab is tucked away in a rather unsavory corner of the company’s sprawling headquarters, at the end of a cracked driveway at the back of a low concrete building that looks more like an elementary school than a tech center. A sign on a plain steel door reads “KO Lab.”
“It’s kind of got that skunk-works feel,” says Danny Strickland, Coke’s chief innovation and technology officer. But the KO Lab is less a laboratory than a showroom where Coke takes commercial clients to show off its latest products from around the world and to brainstorm about new ones.
Images of Coke’s patents cover one wall, and there are touch-screens throughout that describe the “need states” of consumers, like “comfort and relaxation” and “health, beauty and nutrition.”
The lab also displays all kinds of new products. “Mother” is a natural energy drink that has been introduced in Australia, while Nanairo Acha, a tea sold in Japan, changes color depending on its temperature. Coke Zero was created here. The lab is also exploring new ways to market Coca-Cola. A “super cool” vending machine keeps soda colder than its freezing point, so that when the cap is opened the bubbles form tiny ice crystals.
Coke is also pumping up the brand. On Thursday, Coke officially opened its new, 92,000-square-foot museum, replacing the old World of Coca-Cola Museum. What is remarkable about the museum is that visitors pay to walk through a building full of Coke ads, albeit interactive and slickly displayed. Museum officials say they expect more than one million visitors a year. (Admission is $15 for adults, $9 for children.)
The museum tour ends in a tasting room that offers Coke products like Bibo from South Africa and Vegitabeta from Japan. On the way out the door, each visitor gets an eight-ounce bottle of Coke before being deposited, inevitably, into a store jammed with Coke memorabilia. The whole experience is like a corporate version of Graceland,
Elvis Presley’s former home: the same fresh-faced docents, the same reverent fans, the same relentless merchandising.
It also says a lot about how Coke wants consumers to view it.
In the “Advertising Theater,” visitors can watch some of Coke’s most famous ads. Now showing is one of Mr. Isdell’s favorites, a relatively new commercial called “The Happiness Factory” that takes a whimsical look at the inside of a Coke vending machine. A quarter descends into the guts of a machine, entering a surreal world of oddball characters that prepare the bottle for consumption and celebrate its famous hourglass shape with a parade.
The commercial is “fun.” It also represents the promise of Coke’s powerful legacy and the current aspirations of Coke’s executives: happiness, inspired by a Coke bottle.
“The magic of the bottle,” Mr. Kent says. “Nothing else comes close.”
Unless, of course, it proves to be a water bottle.
