ANALYSIS: Client Profile - Coke�s PR team tries a brand new formula. Rather than have a Coke and a smile, employees at the world�s greatest brand have had to grin and bear it over the past 18 months as the company faced contamination scare

For well over a century, Coca-Cola has symbolized the American experience.

For well over a century, Coca-Cola has symbolized the American experience.

For well over a century, Coca-Cola has symbolized the American


No other brand has become so completely interwoven into the American


It is also the first truly global brand, and as such, was the first

company to successfully achieve a quasi-ambassadorial status. So when

the disastrous and very public PR gaffes of the last 18 months happened,

the world took a pause that was anything but refreshing.

The Coca-Cola Company was charged with tainted product and tainted

business practices. Bad water in Belgium caused Coke drinkers to fall

ill. Bad communications in France caused Coke to lose a high-profile

regulatory battle. At home, bad blood among African-American employees

led to a discrimination lawsuit. Then chairman and CEO M. Douglas

Ivester resigned.

In the business world, it was the perfect storm. Coke?s stock went

decidedly flat, losing 36% of its value. Its global tapestry, woven so

elegantly by beloved former CEO Roberto C. Goizueta, was battered.

As with any corporation, leadership telegraphs the strongest message to

stakeholders, and when the company?s board of directors selected Douglas

Daft as Ivester?s successor, it communicated a sea change and helped

staunch the bleeding. An Aussie who spent most of his years in Coke?s

Asian operations, Daft?s appointment represented the company?s

determination to loosen ties to its Atlanta power base. Internally, the

change was palatable because Daft had been a loyal Coke man for 30


Daft hit the ground running. He made key corporate appointments,

engineered a structural re-organization of the company and established a

communications agenda based on the mantra, ?Think local.?

Daft retained Carl Ware, the company?s highest ranking African-American,

proving his deftness at corporate politics. Ware?s controversial

resignation after Ivester?s 1999 management shuffling was said to fuel

the fires of the discrimination lawsuits that are currently blazing

among the rank and file. Ware was handed the reins of global public

affairs and administration, a new division that also signaled Daft?s

commitment to public relations at all levels.

Branding expert Al Ries, chairman of Ries & Ries, has been observing

Coca-Cola for decades from his office in Roswell, GA. ?I think (the

brand) has been eroding,? says Ries, who sees the lawsuit as a terrible

blow to the company. ?It?s still the world?s most valuable brand, but I

think people see Coca-Cola as a bonding brand, a drink that all ethnic

and age groups can enjoy.? A recent study by Interbrand found Coke to be

the world?s most valued brand once again, but Microsoft and other

technology powerhouses are threatening its position.

In April, Daft dramatically decentralized the company, laying off 6,000

employees worldwide. Atlanta bore the brunt of his ax (one-third of the

layoffs), giving credence to Daft?s promise to empower field operations

and communications.

Open doors

Two months ago, Daft hired Charles Holleran as chief communications


Holleran, a 30-year corporate PR veteran, is notable mostly because he

did not rise through the ranks at Coke. In fact, he had no beverage

industry experience at all when he took the job, hailing from financial

services and hi-tech - further proof of Daft?s new open door,

decentralized policy.

Making the PR chief a C-level officer was further testament to Coke?s

new direction.

By all estimations, except for the contour bottle and the secret

formula, Coca-Cola is not the same company it was a year ago.

Maintaining Daft?s momentum of change in the public mind is a

communications function. According to Holleran and media relations

director Robert Baskin, talking to employee stakeholders is the

company?s first line of defense.

Holleran, still admittedly green, has spent the last several weeks

touring operations throughout Europe and the US. ?The forensic evidence

available to me seems to indicate there is a certain amount of stress,?

he admits.

?I hear from the Europeans more about the lessons learned, which means

we?ve gotten through (the contamination scare), but it made us a whole

lot more suspicious of our capabilities.?

Daft is also front and center in the communications plan. According to

Holleran, Daft has been touring global operations centers, making a

corporate mea culpa, a move that Holleran thinks is anathema to most

organizations: ?Daft has done a good deal of healing in this sense by

going around and doing something that is very hard for general

management to do, and that is saying we made some mistakes.?

Baskin says corporate malaise brought on by a seemingly impregnable

15-year run is the root of the company?s trouble. ?There became a belief

of invincibility,? he says. ?Some people said we became arrogant, and

maybe we did. It almost became, in a sense, that we can do no wrong, and

even if we overstep bounds a little bit people will forgive us because

we?re Coca-Cola.?

Unmanaged corporate relationships were also a key factor in both the

Belgian scare and the French debacle over Orangina. (The French

government struck down Coke?s bid for Orangina, calling a takeover of

the French brand anticompetitive). People inside and outside the company

agree that Coke?s failure to solidify relationships with regulators,

international press and community leaders severely weakened its ability

to navigate those tumultuous waters.

Holleran says Daft?s charter clearly empowers local offices to make

decisions and develop relationships without waiting for the high sign

from Atlanta.

John Sicher, editor of industry newsletter Beverage Digest, says the

effect of decentralization can?t be overestimated. ?You will see the

entire company become faster, nimbler and more agile in terms of

marketing product innovation,? he says.

All the right moves?

But aggressive product diversification and innovation raises another

communications hurdle for Coca-Cola that Ries is not confident the

company can navigate. ?Fruitopia has not done well against Snapple,? he

says. ?It was 25 years before they launched Powerade.?

Sicher is more confident. He cites Daft?s Asian track record of

innovating and introducing products in the highly competitive Japanese

market, which sustains thousands of brands with a six-week or less shelf

life. He views the recent experiment with Red Flash soda in Texas as a

harbinger of Coke?s moves in the US and abroad.

Red Flash is an entirely new product developed just for the Lone Star

State and is marketed directly against a popular drink called Big


Such entrepreneurial efforts encourage Ries: ?Daft is trying to be more

responsive and connected to consumers in local markets, and I think down

the road that?s going to pay off.?

Holleran and Baskin are mum about what lies ahead for Coke?s PR efforts,

claiming things are still too much in flux. When the dust settles, Coke

will still have its vaunted brand, albeit with a few dents. If Holleran

is able to deftly communicate Daft?s new strategy to Coke?s

constituencies, expect to see those dents hammered out soon.


PR chief: Charlie Holleran, PR chief who reports to Carl Ware, EVP,

Global Public Affairs and Administration

PR officers: Rob Baskin, asst.VP and director, media relations; Linda

Peek, asst. VP and director, communications strategy; Robert Harland,

director, int?l public affairs; Cathy Worthy, director, corporate


Size of internal staff: 21 in Atlanta, 15 across the US, and

approximately 150 worldwide

External agencies: No agency of record; project work with Shandwick,

Kekst & Company, Cohn & Wolfe, Burson-Marsteller.

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