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Arrogance Readers
will work up a thirst reading all four hundred pages of Constance Hays’ new
book, The
Real Thing: Truth and Power at the Coca-Cola Company. The thirst will
take several forms. First, there’s a clear realization from recent press
stories that a lot has happened at the company since Hays left off at the end
of her book. Perhaps a sequel? Second, Hays tends to meander while telling
her story, avoiding a strict chronology. Third, you can develop a dry mouth
reading succeeding pages of corporate arrogance. After a while, you stop
producing saliva. Here’s an
excerpt from the beginning of Chapter Eleven “Cracks in the Empire,” pp.
216-221: John Philis runs
one of the last soda fountains in In the
beginning, Philis made sodas and ice-cream sundaes
to order and also sold chocolate-covered caramels, creams, and other kinds of
candy from be-hind a big glass
counter that took up nearly half the
store. He invested in wrought-iron tables and chairs so people could come in
and sit down for a while. This was
the way the Lexington Candy Shop functioned until after the end of World WarII. In 1948, the store cut back most of its candy and became a luncheonette, open from early in the morning until early evening. Lives had been altered, and business had to respond. There was more money to be made in the restaurant business than in chocolates, Soterios Philis believed. The postwar world had set new patterns for the way people worked and lived and what they spent their money on. Having a place where a man or a woman with a demanding job could get a quick bite to eat, or take the family for a meal, promised a better future for the Philis family than devoting so much space to sweets. A half century later, the place does a brisk trade in everything from home-made clam chowder to slices of coconut cake, with extra money coming in from the sale of
lottery tickets, candy bars, and cigarettes at a counter in the front. John Philis cooks the roast beef for the sandwiches in an oven
at the back and happily hews to
a menu that suggests that, apart from iceberg lettuce, vegetables haven’t
been invented yet. There is no tofu io be found, no trends like Thai seasoning
in evidence. The place is warm and
toasty in the winter and cooled by air conditioners in the summer. It opens early in the morning for breakfast
and doesn’t shut its doors until 7:00 p.m., and its customers include the cashiers from the grocery store across the street as well as parents pushing their
stroller-bound babies across the old terrazzo floor. The owners are
accessible and the waitresses friendly; they tend to remember their
customers’ names, as well as what they like to order. From the very
beginning, the store sold Coca-Cola, mixing it up with syrup pumped from a
container behind the soda counter and carbonated water propelled by a sprayer
into the glass. The Cokes could be enhanced in various ways, with cherry
flavoring, vanilla, chocolate, and coffee, and there is still a Coca-Cola
sundae on the menu, which involves full-strength Coca-Cola syrup spooned over
a scoop of vanilla ice cream and topped with whipped cream and a cherry. It
is one of the few places that will dispense Coca-Cola syrup on demand. A few
pediatricians still send families to the shop to buy a small amount of the
stuff be-cause they think it soothes a child’s upset stomach
like nothing else. Soterios Philis made his
allegiance to Coca-Cola obvious throughout the store. He
hung up Coca-Cola posters and nailed
a Coca-Cola clock to the wall. He accepted the free glasses that Coke
salesmen offered him, and he used Coca-Cola decorations all over the mirrored wall behind the lunch counter.
More than that, he refused to serve Pepsi. He liked the taste and the image
of Coke better, particularly during World War H, when Woodruff’s pledge to
provide Cokes to all the GIs, wherever they were, struck him as not only patriotic but the right
thing to do. When he retired, his family stuck by Coca-Cola. They kept it as their cola of choice in the luncheonette, despite regular visits from the Pepsi salesmen, Much of their loyalty had to do with taste as well as with the marketing of Coke versus Pepsi. “It tastes better than Pepsi,” John Philis says. ‘And Pepsi never developed the classic American image that Coke had, and has. It’s the classic American drink. It’s nonalcoholic, and the image portrayed with it is always one of fun.” He admits that he may be a little biased. He
drinks Coke all the time himself and refers to it as “nectar of the gods.” He
still serves many of his drinks in Coke glasses and curates a large Coca-Cola
shrine in the store, filled with commemorative bottles from all over the
world, as well as toy trains and trucks bearing the Coca-Cola logo. With such a deep attachment to Coke, the Lexington
Candy Shop might be expected to get VIP treatment from the Coca-Cola system.
But Philis says
the opposite is true. He gets random
bills for products he never ordered and finds out about special prices from
other restaurant owners, prices that his own Coke salesman never offers to
him. He has been pressured to give up his old-fashioned but appealing practice of mixing Coca-Colas one at
a time at the fountain; over and over, Coke representatives have tried to get
him to replace his equipment with premixed soda dispensers, the kind found in convenience stores, fast-food
restaurants, and bars. They tell him all Cokes should taste the same, and
they can’t be sure, when he mixes one himself, that that will be the case.
They want him to sell Coke their way. “We want to make it as difficult as
possible for you to keep your system,” one salesman told him and his business
partner, Bob Karcher, in a moment of candor. Philis, who still
wears a white coat and a tie to work the soda fountain, noticed the change
when the longtime bottler for “They used to give away signs, cups, glasses, clocks,” he says. How else would his
luncheonette have become so strictly, and obviously, devoted to Coke? “Now
they don’t give away anything. You have to buy everything.” There are occasional
exceptions. Not long ago, a Coca-Cola Enterprises salesman wanted to give
him, absolutely free, some cartons full of thirty-two-ounce cups to hold
Coca-Cola. One quart, in other words, in a city of the calorie-conscious and
the time-pressed. “I know my customers,” Philis
said, “and not a lot of them are interested in the thirty-two-ounce serving.” Starting in 1997, the year Coca-Cola
Enterprises acquired a large stake in the As
a relic of the way Coke used to be, Philis gets the feeling—from Coke people—that he is in
the way. He has trouble understanding
that attitude. “We’re all in the same boat,” he said. “We’re all in this
together, and they seem to have lost that focus.” He owns shares of Coca-Cola stock but worries
aloud that the company is not
what it appeared to be in the past. “They have this arrogance that ‘we can do anything we want,’ “he said. “A
lot of it was ingrained, and a lot of it was strengthened by the incredible success they had starting in the 1980s,
making millionaires out of so many
people.” You could dismiss Philis’s
concern as a blip on the screen, since he represents such a tiny slice of
Coke’s business. But there were other people watching the Coca-Cola Company
in the 1990s who had begun to ask similar questions. One of them was Frank Barron, the third-generation
bottler from “Look around this room,” Barron said, standing in
his office and waving an arm at all the plaques and certificates of
appreciation he has collected from charities, civic organizations, and church
groups over the years. “They don’t do this anymore.” Ultimately, he believes,
the bottling business is a local business, one that wraps
itself around every other aspect of life in a small town or a big city,
translating its understanding of what is important there into sales of more
Coca-Cola. When Coca-Cola Enterprises took over the Barrons’ franchise in 1986, Frank Barron stayed on as a salaried consultant to Coke. “It was to keep up my political contacts,” Barron said. It would still be useful to Coke for him to know all the elected officials in his city and state; to this day, he still knows almost everyone, and many of them seem to believe he is still a Coke bottler. But as he watched Coca-Cola Enterprises ignore what he knew to be the foundation of the business, he picked up the phone and called Summerfield Johnston, the head of Coca-Cola Enterprises, to complain. “You guys have got to get into the local scene,” Barron told him. “You are getting eaten up!” The places he had carved out and
occupied for Coke, on the local school board and at the heart foundation,
were being taken over by Pepsi. At the same time, the new Coke bottlers in Borne were crunching
numbers, rearranging routes, and cutting costs. Decisions were no longer
being made in Coca-Cola
Enterprises was ten or eleven years
old, on the cusp of adolescence,
by the time Frank Barron began to worry about it. Like
an adolescent, it was growing wildly in all directions. It kept getting bigger, thanks to Coke’s strategy;
and because of its scale, it put
endless pressure on the other independent
bottlers that remained. In 1997, Dick Montag
decided he had to sell the Coke franchise that three generations of his
family had owned and run in “They
would offer prices to them that would
drive down margins to the point where they were lower than what we had paid
for the product,” Montag said. About 80
percent of his business was being affected.
He tried to make up the loss through his network of vending machines
and other dispensers of cold Coca- Cola drinks, which historically are
off-limits for price battles. But he
could see how the wheel was
turning. He did not feel extreme pressure to do whatever Coca- Cola Enterprises
was promising its customers. But there was subtle force applied to
bottlers like him. “Everything, ultimately, was up to me,” he said. “But
there was certainly ‘encouragement’ to go along with chain buys. It was to our advantage to try to cooperate.” Montag was one of only four independent bottlers left on the West Coast by the time he decided to sell. In June 1997, he parted with the company that his grandfather and great-uncle had founded after striking out in wilder frontier businesses. They had panned for gold and chopped down timber, but in 1905 selling Coke seemed to them a much better way to make a living. They made the investment, took on the responsibility, and handed it down through two generations. By the time it got to Dick Montag, the world had changed. After ninety-two years, he sold the family franchise to Coca-Cola Enterprises. The experiences of John Philis
and Frank Barron and Dick Montag happened
independently of one another, but their stories shed light on the kinds of
relationships the biggest Coke bottler formed with the world. After more than
a decade, Coca-Cola Enterprises was no longer a mystery but a distinct
business force that people paid close attention to. It was designed by Coke,
and it was an essential part of Coke. And
not long after Doug Ivester replaced Roberto Goizueta,
another person had begun to scrutinize the ties between these two elements
of Coca-Cola. Hays writes like the journalist she is. Each chapter stands well on its own, and her style facilitates telling a
complicated story in a way that makes for easy reading. The Real
Thing presents less history than some readers may want, but more
conflict. Executive readers will find some valuable lessons on the pages of The Real
Thing. Steve
Hopkins, April 23, 2004 |
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ã 2004 Hopkins and Company, LLC The recommendation rating for
this book appeared in the May 2004
issue of Executive Times URL for this review: http://www.hopkinsandcompany.com/Books/The
Real Thing.htm For Reprint Permission,
Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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