THE REAL THING
Truth and Power at the Coca-Cola Company
By Constance L. Hays
Random House -- 398pp. -- $25.95
For a company whose flagship product has long stood as a global icon of American optimism and success, Coca-Cola Co. has spent much of the past decade beset by inner doubt and turmoil. After a glorious 16-year run under legendary Chairman Roberto C. Goizueta -- Coke's shares soared 3,500% by the time of his unexpected 1997 death -- the former high-flier has come crashing back to earth. Regulatory investigations, a divisive employee discrimination suit, and economic woes in key Asian and Latin markets have left profits weak. Against this backdrop, Coke CEO Douglas N. Daft's surprise Feb. 19 announcement that he will retire after just five years isn't so surprising. Daft's efforts to rebottle the old magic at Coke fell short of expectations.
In The Real Thing: Truth and Power at the Coca-Cola Company, reporter Constance L. Hays of The New York Times makes a compelling case that Coke's struggles in recent years aren't so much the result of downturns in those key global markets -- something the company might prefer that you believe -- as the repercussions from the hubris that built up in Coke over the 1990s. Hays is an intrepid sleuth, able to craft a colorful narrative by gaining the confidence of the normally tight-lipped Coke executives and bottlers. However, her focus on events of the mid- and late-1990s is a liability. The book gives short shrift to the trials and tribulations Coke suffered after Daft took the helm in late 1999. As a result, any reader looking for insights into Daft's resignation will be disappointed.
Hays begins with a tedious retrospective of Coke's early history, starting with Asa Candler's purchase of the Coca-Cola recipe in 1888 from another Atlanta pharmacist. That's followed by an equally plodding account of the evolution of Coke's bottling network. But slowly, Hays reaches the crux of her argument: That a ruinous arrogance crept in over the decades, causing the company to cease dealing in good faith with a number of key constituents, including its bottlers and regulators.
The author chronicles the lengthy campaign to buy out and retire the independent bottlers that were the company's best assets but that Coke execs viewed instead as irritants. She also shows how Coke failed to pay proper homage to European regulators, who got their revenge by vetoing some key acquisitions that could have helped sustain the company's growth rate. As growth began to slow, Coke increasingly tried to make its numbers through debilitating price hikes on the concentrate it sells to bottlers, who handle the actual mixing, packaging, and distributing of the product. After their spectacular rise under Goizueta, Coke's shares fell into a painful spiral under successors M. Douglas Ivester and Daft, even now trading at 40% below the all-time high set back in 1998. The company began blaming each disappointing quarter on a confluence of unfortunate circumstances -- everything from unfavorable currency translations and economic weakness in South America to rainy European summers that dampened demand for its products. Hays's narrative comes to a crescendo in late 1999: Ivester was forced to resign after a series of fateful events, including an overblown contamination scare in Belgium -- for which Coke only grudgingly apologized -- and a revolt by some key bottlers.
To her credit, Hays's effort provides far more original revelations than did previous Coke histories by Mark Pendergrast and former BusinessWeek staffer David Greising. This is a testament to her reporting and her ability to get some notoriously media-shy executives and bottlers to tell their version of events. Frequently, though, we're not sure of her sources since footnotes often refer only to "a former Coca-Cola executive." But there's evidence that Hays persuaded even Ivester, who has been largely a media recluse since his resignation, to cooperate. And her account is mostly dead-on, describing, for example, the role that retired Coke President Donald R. Keough played in Ivester's ouster -- something heretofore known only to a few journalists and true Coke insiders.
The Real Thing's biggest failing isn't its reporting or storytelling, which are both commendable. Instead, this account's tragic flaw is simply the length of time that has elapsed between the book's ending and recent events. Hays follows her rundown of Ivester's resignation with a 27-page summary of the initial efforts by Daft to right the wrongs committed under Ivester and to serve as an agent of change. The brief section seems rather like an afterthought -- and it's offered as if the events described just took place. Unfortunately, given Daft's retirement announcement, the book already feels dated. In the end, The Real Thing comes off like a glass of Coke that has been left out for several hours -- still tasty, to be sure, but a wee bit flat. By Dean Foust