Fizz (29 page)

As Moxie faded away, Pepsi found itself fighting for survival. It could have increased the price of a Pepsi, but the cost of a soda hadn't changed for the best part of a century. Soda cost a nickel back when John Pemberton cooked up his first batch of Coca-Cola, and it was still five cents in 1947. Americans expected five-cent pop, and any company that increased its price faced losing customers to competitors who held onto the traditional price tag, a risk Royal Crown Cola learned about the hard way. In 1947 Royal Crown upped the price of its cola from five to six cents and watched sales collapse. Within weeks its bottlers had returned to the nickel price point, having concluded that declining profit was better than no profit at all.

Adding to the pressure was Coca-Cola. The Atlanta cola king knew its smaller rivals with their bigger bottles were more vulnerable to rising prices, and Coke decided to stick to its nickel price tag for as long as it could bear, hoping that its competitors would either go bust or be forced to raise their prices before it would.

If Coke's price freeze and cost-sensitive shoppers weren't enough of a problem, Pepsi also had its advertising to consider. Pepsi had turned itself into America's number-two soda with its “twice as much for a nickel too” promotional campaign. Increasing prices would require a complete marketing overhaul, and there was no guarantee the company would develop an equally powerful campaign.

With so much risk attached to a price rise, Mack looked for ways to save money, but options were few. Cutting back on the company's international
expansion was out of the question—that would let Coca-Cola storm the world unopposed. So Mack homed in on smaller savings, pruning nonessential costs here and there. One of the victims of the cuts was the Pepsi Scholarship Program, one of several company initiatives that had smashed through the racial barriers of the 1940s.

Mack described himself as “an unrepentant capitalist and a liberal” and had used his position at Pepsi to put his politics into practice. Shortly after taking charge of Pepsi in 1939 he discovered that there wasn't a single black employee at the company's vast plant in Long Island City due to union opposition to mixed-race production lines. Unable to mollify the union, Mack added two black-only production lines. He hated the segregation, but he figured that at least the move would force the union to recognize black workers.

In spring 1940 Mack built on this by hiring Herman Smith, a twenty-eight-year-old African American, to oversee the promotion of Pepsi to black consumers. The appointment made Pepsi one of the few large American corporations with a black person in a senior role. In July Mack went a step further by launching the Job Awards for American Youth, a paid internship program offering college graduates a job at Pepsi for a year. A structured internship program was groundbreaking enough, but Mack's initiative also broke from convention in its commitment to racial and gender equality. The awards were open to black and white students alike, and co-ed colleges were required to submit one male and one female candidate. At a time when less than two thousand of the twelve million African Americans in the United States had a degree, this was radical stuff.

Seven of the thirteen graduates selected that year were women, and two were African Americans: Allen McKellar and Jeanette Maund. The
Weekly Review,
a black newspaper based in Indiana, declared their appointment as Pepsi sales representatives “a forward step by business in giving qualified Negro youths a break.” McKellar and Maund were charged with building Pepsi sales in black communities throughout the United States. Training was minimal; no one at Pepsi—or, for that matter, any other large corporation at the time—knew anything about selling to black people. “No one knew anything about it back then,” McKellar said in a 2012 talk at Webster
University. “They didn't have any method of going into the black market at that time. We had to come up with our own ideas.”

McKellar and Maund traversed the country by train, crisscrossing America to visit Pepsi bottlers and help them reach out to black communities in their area. Much of their work took place in the South, where segregationist Jim Crow laws were in effect. They found themselves rubbing up against racism at every turn. Train conductors would draw the curtains on their windows when coming into stations so that white passengers would not see them and cause trouble because there were black passengers—as opposed to railroad employees—on board. Some of the Pepsi bottlers they came to help struggled to accept the idea of black people teaching them how to improve their sales and tried to get them to clean the plant or make deliveries. Even finding a bed for the night and something to eat was a challenge, since restaurants and hotels would refuse to cater to black customers. For Maund, who grew up in Massachusetts, the racism of the South was a shock. “She couldn't understand why there were segregated fountains— colored and white—restrooms—colored or Negro or whatever they called them,” the South Carolina-born McKellar told Stephanie Capparell, author of
The Real Pepsi Challenge.
“Nothing was integrated in the South. Nothing.”

The welcome in the black communities they visited couldn't have been more different. They were the pioneers of black equality in corporate America and role models for schoolchildren who hoped for a better future. Stores dumped Coca-Cola for Pepsi, and loyal Coke drinkers switched allegiance in recognition of the company's willingness to reach out to black America. Pepsi rapidly conquered much of the black market, and by 1946 the company had grabbed 45 percent of the cola market among black consumers against Coca-Cola's 36 percent and Royal Crown's 16 percent. The pair had not only blazed a trail in opening up corporate America but also turned Pepsi into the leading cola among African Americans.

Mack kept pushing at the racial boundaries. His wartime Pepsi-Cola Centers for Servicemen were integrated, even though the military remained segregated. The four Pepsi-Cola Junior Clubs that he opened in Queens and Harlem to give teenagers something to do during World War II were also open to all races. Mack's bold commitment to racial equality was a world
away from mainstream corporate America, which avoided openly courting black customers for fear of a white backlash. Companies thought nothing of racist advertising such as Hires Root Beer's 1937 ads in
Life
magazine that showed a stereotypical black porter serving a white couple alongside the words: “Yassuh … it's genu-wine Hires.”

After the war Pepsi stepped up its efforts to win over the black market. In 1945 it launched the Pepsi Scholarship Program, which awarded university scholarships to two students from every state and an extra two scholarships for African Americans in each segregated state. A couple of years later the company hired Ed Boyd, an African American who had been working for the civil rights group the National Urban League, to head up its Negro-Market Team. Under Boyd, the team developed groundbreaking ads that championed black progress as much as they promoted Pepsi. One of the team's most popular campaigns was “Leaders Within Their Own Fields.” Launched in 1948, this series of ads in black newspapers profiled successful African American professionals who worked in areas such as science, banking, or business. People such as Ralph Bunche, who worked for the United Nations on the issue of Palestine, and Cornelius Ford, a successful livestock trader and the only black member of the Buffalo Livestock Association. The ads proved so popular that people would call Pepsi's headquarters asking for copies, and black schools would put them on classroom walls to raise their students' aspirations. In fall 1948 Boyd and his team followed this campaign with another groundbreaking ad, showing a happy black family enjoying Pepsi. It was the kind of image soft drink companies used all the time but only with white families. Ronald Brown, the smiling seven-year-old boy reaching up hopefully for a Pepsi in the ad, went on to become the first African American secretary of commerce during Bill Clinton's first term as president.

While Pepsi pushed for equality, Coca-Cola struggled with the issue of race during the 1940s and 1950s. While its boss Robert Woodruff donated generously to black schools and churches and the United Negro College Fund, he and the company erred on the side of caution. In 1950 Woodruff even endorsed Georgia governor Herman Talmadge, a staunch opponent of racial integration who regarded the civil rights movement as
a Communist plot. Woodruff toasted the candidate as “the second-greatest governor, sired by the first-greatest governor.” If his endorsement of the younger Talmadge upset the civil rights campaigners, his praise for his white supremacist father Eugene was even harder to swallow, given that the elder Talmadge openly admired Adolf Hitler and called black children “the enemy.” Woodruff's support for the Talmadges inspired calls for a black boycott of Coca-Cola. By January 1951 Coca-Cola had responded by starting to advertise in African American newspapers.

As the civil rights movement gathered momentum, Woodruff became an increasingly active supporter of the cause. In December 1964 when Atlanta's white business leaders were refusing to buy tickets for a dinner to celebrate Martin Luther King Jr. being awarded the Nobel Peace Prize, Woodruff intervened and used his considerable influence to get the city's businessmen to come out in support of the civil rights leader. And, on hearing of King's assassination, he told Atlanta's mayor to spare no expense on the funeral, offering to cover the city's costs himself if necessary.

While Coke faced calls for boycotts from the black community, Pepsi found itself clashing with white supremacists as the battle over civil rights intensified. In 1965 the company appointed Harvey Russell as its vice president of corporate planning, a move that prompted the Ku Klux Klan to distribute thousands of flyers with a photo of Russell and his wife with the words: “Below, picture of Negro vice president of Pepsi-Cola, at left, and his white wife, in center; Let the Pepsi people know what you think of their vice president and his white wife.” Pepsi's African American sales team hit back with an unofficial “Fight the Klan, Drink Pepsi” campaign. By then, however, corporate America was finally catching up with Pepsi's way of thinking.

But back in the late 1940s all of Pepsi's efforts on race equality seemed under threat. To cut costs Mack found himself forced to put the Pepsi Scholarship Program on ice along with plans to expand the Negro-Market Team from four to twelve people. These cutbacks did little to stop the rising tide of price inflation. As the 1950s approached Pepsi watched the gains it had made in the previous decade unravel: by 1949 sales were nosediving, and in 1951 Wall Street analysts were predicting Pepsi would go bust for the third time. With time running out Mack hatched a plan to put Pepsi in cans.

Canning originated in France where, in 1795, the government offered the enormous sum of 12,000 francs to anyone who could devise a superior way for the nation's army to preserve its food supplies. Nicolas Appert, a confectioner from Châlons-sur-Marne, was among those who took up the challenge. He believed that food sealed in airtight glass jars that were then heated in boiling water would not spoil. It took Appert fifteen years to perfect the process, but in January 1810 he claimed the prize after demonstrating the effectiveness of his method by preserving soup, vegetables, meat, and—in one case—an entire sheep in his jars. No one, including Appert, knew why it worked, only that it did. That mystery would only be solved more than fifty years later when Louis Pasteur worked out that the airtight seal kept out microorganisms that caused decay and that the boiling of the can killed the microbes already within the jar.

Word of Appert's innovation soon spread across the English Channel, where a merchant named Peter Durand refined the idea. Seeking an alternative to the heavy and fragile glassware used by Appert, Durand rolled sheet iron into a cylinder before soldering flat discs of iron to the top and bottom to create an airtight container. To prevent rusting, he covered the iron sheets in tinplate. Lighter and more durable than Appert's glass jars, Durand's “tin” can became a favorite of militaries across the world. By the 1850s canned food was on sale to civilians too, and the arrival of the can opener that same decade finally ended the days of needing a hammer and chisel to open the containers.

Food and still liquids were commonly sold in cans by the beginning of the twentieth century, but carbonated drinks, including alcoholic beer, had proved problematic. The challenge was twofold. First, the carbon dioxide gas made the liquid acidic, which caused it to corrode the metal and react with the lining of the can, ruining the taste. Second, while food and still liquids were canned at the same pressure as the outside air, the gas within a carbonated beverage made the pressure inside the can greater than the outside atmosphere. This pressure difference meant that cans of carbonated liquids with inadequate or weak seals would leak or even explode, with the accompanying danger of injury from the sharp ruptured metal.

With fortunate timing, the canning industry finally cracked the problem of storing beer in cans just as Prohibition ended. The brewing industry
wasted no time in adopting the new container. Cans offered numerous benefits over glass bottles. They were lighter and required half the space for the same volume of liquid, saving on transport costs. The flat cylinder shape allowed them to affix more eye-catching paper labels that encompassed the entire package rather than just part of the bottle. Cans chilled quicker too, and the contents didn't spoil as quickly. Even better, cans were a “one-way” container designed to be thrown away after use, which meant there was no need to lug empties back to the factory for cleaning and refilling. Nor would customers have to pay the refundable deposits added to the cost of beverages sold in returnable bottles to encourage them to bring them back. By 1941 10 percent of the beer sold in America came in a can.

The success of the beer can caught the eye of ginger ale makers Clicquot Club, and in early 1936, a year after the first beer can landed on the shelves, the company became the first soda firm to join the canning revolution. Clicquot Club used a new type of can, the cone top. Unlike the standard flat-top cans, the conical heads of these containers tapered to a small opening sealed with a standard bottle cap, which made them easier to open and fill. But Clicquot Club's revolution didn't go well. The canning industry might have figured out how to deal with beer, but fizzy drinks were more acidic and more carbonated. Clicquot Club produced one hundred thousand cans of its ginger ale only to face a barrage of complaints from all quarters. Stores and warehouses were far from impressed at the sticky, sugary trail of liquid the leaking cans left behind, let alone the ones that exploded. Even when the cans made it in one piece to shoppers' homes, people found that the ginger ale had reacted with the lining and the taste of the drink was ruined. Before the year was out Clicquot Club had pulled its canned drinks off the shelves.