Authors: Tristan Donovan
Having offloaded the company's excess weight, Goizueta turned his attentions to Coca-Cola's core business of selling soda and, as he told Coke employees at a convention in Palm Springs, California, under his leadership the company would take risks. “The days are gone in which an inflexible adherence to a sacred cow will ever give renewed impetus and breathe life into a competitor like it happened when we chose to stick only with the six-and-a-half-ounce bottle for a number of years when our main competitor was going to a larger size,” he said.
Those sacred cows included the Coca-Cola formula. Goizueta knew the Coca-Cola recipe, and as a chemist, he knew it was just that: a recipe, not some holy relic with magic ingredients. His job was to increase the value of Coca-Cola shares, not to defend tradition. So he started reducing the amount of sugar in Coke, replacing it with high fructose corn syrup (HFCS), which was cheaper than sugar but tasted pretty much the same. By the end of 1984, Coca-Cola fountain syrup contained no sugar, just HFCS, and sugar accounted for just a quarter of the sweetener used in the bottled and canned versions of the drink. He used the move to signal to Pepsi that Coke was ready to fight back by announcing the recipe change as Pepsi's bottlers gathered for their annual conference. The news that Coke had cut its overheads by dumping sugar stirred up unrest among its rival's bottlers, who now wanted Pepsi to follow suit so they could reap the savings, despite concerns from Roger Enrico, Pepsi-Cola's new man at the top, that HFCS could harm the taste of Pepsi.
Goizueta also dusted off plans for Diet Coke. The concept of launching Diet Coke had been floating around since the early 1960s, when the company was formulating Tab. In 1979 the company revived the idea and developed plans to launch Diet Coke after discovering that just putting Tab in a Diet Coke-branded container would cause a large spike in the proportion of people who said they preferred it to Diet Pepsi. But after the initial work the company's chief executive Paul Austin pulled the plug without explanation. On taking over from Austin, Goizueta relaunched the project, and in August 1982 Diet Coke arrived in a blaze of publicity supported with
the slogan “Just for the taste of it, Diet Coke.” By the end of 1983 it was the number-one-selling diet soda; a year later it had displaced 7Up as America's number-three carbonated soft drink.
While most of its success was due to the brand, it was also the first diet soda to use the new artificial sweetener aspartame, also known as NutraSweet. Aspartame tasted better than saccharin and, at that time, was free from the cancer scares that so damaged the image of diet soda in the late 1960s and early 1970s. It was also only available to Coke initially, as the company bought all the supplies before Pepsi could react. By the summer of 1984 Diet Coke was sweetened with 100 percent aspartame while Diet Pepsi was stuck with saccharin and its metallic aftertaste for a couple more years.
Diet Coke's launch revived interest in sugar-free soda, and as diet drinks gobbled up market share, it only added to the pressure on 7Up. Diet drinks, Dr Pepper, and Coke's lemon-lime soda Sprite were bad enough, but the Uncola was also finding itself losing ground to a small but fast-growing beverage called Mountain Dew. Mountain Dew started as a joke between two brothers, Ally and Barney Hartman. Back in 1926 the pair opened an Orange Crush bottling plant in Augusta, Georgia, only to watch their business fall apart during the Great Depression. Despite the failure, Orange Crush offered them the rights to bottle the drink in Knoxville, so the pair pulled up stakes and moved to the Tennessee city to start over. To their disappointment they found that Natural Set-Up, the lemon-lime soda that they loved to drink with Old Taylor Kentucky Bourbon, wasn't available in their new hometown. So they concocted an imitation for their personal use and named it Mountain Dew, a slang term for moonshine.
Mountain Dew became an inside joke among the Hartmans and their friends. One day in 1946 the Hartman brothers decided to amuse themselves by pretending to launch it at a soft drinks convention. To prepare for the fake launch they asked John Brichetto, a neighbor who liked drawing cartoons, to create a label they could put on some bottles to take to the convention. Riffing on the Mountain Dew name, Brichetto drew a shoeless hillbilly carrying a rifle and a bottle of moonshine. At the pretend launch in their hotel suite the Hartmans spun a tale of brewing it at their very
own moonshine still in the Tennessee mountains. It was a joke, but on the train home they were joined by Charlie Gordon, owner of a Johnson City bottling plant called Tri-City Beverage, which made Hires Root Beer and a grape soda created by the Tip Corporation. As they drank bourbon and chatted, Gordon expressed an interest in bottling their joke soda. In 1951 the Hartmans finally decided to test out Mountain Dew on the marketplace, launching it with its hillbilly image intact and the slogan “It'll tickle yore innards.” It flopped. Gordon bought the rights to bottle it in Johnson City in 1954, but again it struggled. In 1957 the Hartmans sold off the struggling brand to the Tip Corporation.
At the same time over in Johnson City, Tri-City Beverage had a new boss, Bill Bridgforth. Keen to save money, Bridgforth started dropping branded drinks and building a range of Tri-City sodas. One drink he ditched was Sun Drop, a fizzing mix of orange and lemon billed as a “citrus lemonade” that had been created by J.F. Manufacturing, the St. Louis business that used to supply Al Capone's soda business with root beer extract. Bridgforth replaced Sun Drop with a citrus lemonade of his own creation, but while people loved the taste the brand failed to connect. So in 1960, feeling that Mountain Dew had a good brand but an unpopular taste, he started selling his citrus lemonade under the Mountain Dew name. By 1962 the Tip Corporation had followed his lead. Two years later the drink had captured enough of the market in the southeastern states for Pepsi to buy the rights to the greenish-yellow beverage.
Pepsi kept the hillbilly image, hoping to tap into the popularity of hillbillies in the wake of the hit TV show
The Beverly Hillbillies.
To help relaunch the drink, the company hired an actor who spent a week in Philadelphia pretending to be a hillbilly from the real-life village of Turkeyscratch, Tennessee. The actor spent his time causing traffic jams as he drove around in a bright red 1929 Model A Ford weighed down with jugs of Mountain Dew and petitioning the city authorities to let him open outhouses for making moonshine on Philadelphia's parking lots.
For a while the hillbilly branding worked, but by the start of the 1970s it was clear it wasn't gelling with the nation, so Pepsi dropped it for a less unusual image that was equally unsuccessful. With Mountain Dew making
little progress, Pepsi cut back on its advertising of the beverage, but then something strange happened: Mountain Dew started selling. The drink was growing by word of mouth, and so fast that by 1976 its sales had tripled in just two years despite Pepsi's limited promotional efforts.
As Mountain Dew's sales gathered momentum, rivals started launching their own citrus lemonades hoping to cash in. One of the first clones was Rondo from Schweppes, which had finally broken into the United States with its tonic water during the 1950s, thanks to a promotional campaign fronted by its US boss, former British Royal Air Force wing commander Edward Whitehead. With his distinctive ginger hair, long goatee, and English mustache, Whitehead became a well-known figure in America thanks to ads that showed him touring the United States and introducing people to the refined pleasure of the company's mixers and the British cocktail gin and tonic. Thanks to that twenty-year advertising campaign and the company's 1969 merger with the British chocolate giant Cadbury, Schweppes became a sizable force in the US beverage market. Even so, Rondo flopped. Coke did better with its enduring imitation Mello Yello, but it still couldn't match or stop Mountain Dew's rise.
With Mountain Dew coming up fast, 7Up's owners Philip Morris dropped the Uncola campaign and in March 1982 hit back by promoting the lemon-lime drink's lack of caffeine in the hope of attracting health-conscious shoppers. The “Never had it, never will” campaign did little more than spark a rapid counterattack from 7Up's rivals. Before the year was out, people could buy caffeine-free Coke, Pepsi, and Dr Pepper, and 7Up's anticaffeine attack had been defused. Philip Morris never found the magic marketing formula for 7Up. In 1986 it sold 7Up's international operations to Pepsi and two years later offloaded the US business to Dr Pepper.
The defensive rush of Mountain Dew, Dr Pepper, and caffeine-free sodas reflected just how competitive the business had become. The average American was drinking three times as much soda in 1980 as in 1950, guzzling through the equivalent of four hundred twelve-ounce cans a year. As sales soared every sliver of market share became immensely valuable. Even a 0.1 percent slice of the market was worth millions of dollars, and with so much at stake no soda company was willing to give any ground.
So when new flavors proved popular, beverage companies would rush in with their own versions to grab a slice of action orâat the very leastâ stop their competitors from reaping the rewards. If one company offered a cherry cola then everyone was going to have a cherry cola. This race for market share also inspired a rash of acquisitions and mergers. Coca-Cola snapped up Barq's root beer, Thums Up, and Inca Kola. Pepsi followed up its purchase of 7Up's global business and Mountain Dew by buying Mug root beer. Cadbury Schweppes went on a buying spree, absorbing dozens of famous brands including Hires, A&W, Canada Dry, Dr Pepper, 7Up, Vernors, Royal Crown, and Orangina. By the early 2000s, Coca-Cola, PepsiCo, and Cadbury Schweppes would control more than 90 percent of the soda market.
Advertising became a crucial battleground as the three soda giants fought to outspend and outsell one another. In 1983 Coca-Cola paid big bucks to get the actor and comedian Bill Cosby to star in TV commercials in which he needled Pepsi by holding up a can of Coke and saying: “If you're number two or three or seven, you know what you want to be when you grow up.” Pepsi hit back in late 1983 by hiring Michael Jackson, the world's biggest star, to front its revival of the Pepsi Generation concept “Pepsi, The Choice of a New Generation.” To get Jackson on board the company handed over an eye-watering $5 million, making the campaign the most expensive ever made at that point in time, even before the cameras rolled. Roger Enrico, Pepsi-Cola's boss, initially balked at the price tag but relented because, as Jackson's promoter Don King told him, “This is Michael Jackson. He is bigger than God.”
The deal involved two commercials, sponsorship of the Jacksons' reunion tour, and a personal appearance by Jackson at the press conference where the deal would be announced. Enrico met Jackson for the first time at the New York City press conference. It was, he recalled in his book
The Other Guy Blinked,
an awkward encounter. “What do you say when you meet Michael Jackson? He's so shy he makes you shy. So we stand next to each other and don't say much of anything. After a bit, I make some small talk. And then Michael leans over and whispers in my ear. And what he says is: âRoger, I'm going to make Coke wish they were Pepsi.'”
But when it came to filming the ads, Enrico probably wished he worked at Coke. After showing the softly spoken pop star the storyboards for the ads, Jackson said it was all fine except he didn't like the music or the commercial. When Pepsi's ad men asked why, the singer responded that his face was on camera too long. “I don't want you to show me for more than a few seconds,” he replied. The Pepsi advertising team was stunned; $5 million and he won't let us show his face for more than four seconds? But Jackson insisted. Instead, he told them, they should film his shoes, his gloves, and his silhouette before revealing his face at the very end. There was better news on the music. Why don't you use “Billie Jean” instead, Jackson asked. He didn't have to ask twice. Pepsi dumped their jingle and happily adopted Jackson's mega hit. As anticipation about the Jackson ad spread, the music video channel MTV offered to broadcast it for free if it got an exclusive. Free airtime? OK, said Pepsi.
All was going well. The world's biggest star, free advertising on MTV, “Billie Jean,” huge public excitement. Then on January 27, 1984, as the ad was being filmed in Los Angeles, disaster struck. As Jackson danced down a staircase the magnesium flash bombs surrounding him fired early, setting his gelled hair on fire. For a few moments he danced on unaware. “I was dancing down this ramp and turning around, spinning, not knowing I was on fire,” Jackson recalled in his biography
Moonwalk.
“Suddenly I felt my hands reflexively going to my head in an attempt to smother the flames.” As Jackson was rushed to the hospital with third-degree burns, the Pepsi advertising team looked on in horror. “I remember the medical people putting me on a cot and the guys from Pepsi were so scared they couldn't even bring themselves to check on me,” wrote Jackson.
Jackson threatened to sue Pepsi but eventually settled for a payment of $1.5 million, which the star used to fund a burns center at the Los Angeles hospital that treated him. The world's most expensive commercial had just gotten even more expensive, but the advertising deal of the decade was still on. And when the Jackson ad premiered in February 1984, more than eighty-three million people tuned in to watch what was, after all, just a Pepsi commercial.
But while the high-profile commercials captured the imagination of the public and the media, the real fight for soda dominance was an invisible war
taking place in the streets, the stores, and restaurants around us. These, says former Pepsi executive Bob McGarrah, were the trenches of the Cola War: “The cola wars were fought in the vending channel, the on-premises channel and the store display stands.”
The fast-food chains were one of the biggest of these under-the-radar battlefields. Soda had already played a crucial role in the birth of fast food. Back in 1919, a real estate developer named Roy Allen visited Tucson, Arizona, on business and while he was there, tried a root beer made by a local pharmacist. Impressed, Allen bought the rights to the recipe and later that year opened a roadside restaurant in Lodi, California, that sold hamburgers and his root beer to passing drivers.