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