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Sarah Marshall
I never get paid in vodka and worships, you know, what have I done wrong? Welcome to youo Wrong about the show, where sometimes and without meaning to, we take a little break. We have not had a new episode for you in a month. It's been a month since Election Day feels related. I know it's probably been an overwhelming time for you. It's been an overwhelming time for us also, in terms of good things, I, Sarah Marshall, am doing some live shows with our beloved friends Kelsey Weber Smith and Miranda Zickler of American Hysteria. Our producer, Carolyn Kendrick, has a new album out each Machine. So things are busy all over in scary ways, in exciting ways. And we're just so happy that you're here along for the ride with us as I'm recording this. It's the day of our Seattle massive seance show at the Moore, December 10th. But we have a couple more shows coming up. We are doing our massive seance where Chelsea Weber Smith and I decide to not just talk about spiritualism and ghosts, but try to summon some real ghosts of our own. And we're going to be doing a show in San Francisco at the palace of Fine Arts Theater on January 11th and in beautiful, breezy downtown LA at the Regent Theater on January 24th. We really hope that you can be there. And if you can't, our goal is to send out just a big glob of love and energy and Fleetwood Mac that will find you wherever you are. You'll never get away from the sound of the woman that loves you. So on a lighter note, or kind of lighter, our new episode is on the Cola wars with Miles Klee. I was very excited to do this topic. It is the last lyric and We Didn't Start the Fire, the Billy Joel magnum opus. And that seemed like a fun episode to me. But it is, of course, also a history of some of the ugliest aspects of American colonialism, of business, of the collusion between business and war and government. And say it with me, it was capitalism all along. Miles Klee, of course, wears many wonderful hats. He writes for Rolling Stone. And we are going to talk today about the history of Coke, where it came from, how it or anything else can become quite so ubiquitous, and why we as Americans have such strong feelings about Coke versus Pepsi. That is about it for me. We have bonus episodes for your perusal. We have a new one up today about Bachelor Nation with Megan Burbank. I have never seen an episode of the Bachelor. Megan recaps the Bachelor as part of her work as a gadfly and gal about town. And so she told me the tale of the Bachelor slash the Bachelorette. And boy, did I have a lovely time again. Kind of a lighthearted topic, but it gets right to the core of a whole lot of stuff. And that's it. Thank you for joining us. Thank you for being with us. Thank you for listening. Thank you for journeying with us for however long you have been. Here's your episode. Welcome to your Wrong about the podcast, where we talk about life under capitalism. And with me today is Miles Klee. Miles, hello.
Miles Klee
Hello. How are you?
Sarah Marshall
I'm pretty good, I think, appropriately for what we're recording. We're in the time of year. It's October, as we're having this conversation, and it's the period where America can't decide if we're selling Halloween stuff or selling Christmas stuff. And it's just both at once, which is a very. That's how we do fall. Yeah. How are you doing? How does October find you?
Miles Klee
I'm good. Yeah. Nightmare Before Christmas predicted this.
Sarah Marshall
Yeah. And I'm having you on today to talk about a topic that, to me, and for many people, I feel like I should be saying this in, like, a James Lipton voice for whatever reason, which to me is inextricable from the lyrics by Mr. Billy Joel. Hypodermics on the shore China's under Marshall Law Rock and roller cola wars I can't take it any more. And I've always found it delightful that of all the songs listed in Billy Joel's We Didn't Start the Fire. The thing that leads him to not be able to take it anymore is the Cole Awards. And that's what we're talking about today. The straw that broke Billy Joel's back.
Miles Klee
And this is a strong man we're talking about. He just couldn't put up with it. No, I mean, what. What are your feelings about cola products or soda more generally? Do you have any dog in this fight?
Sarah Marshall
Yes. I mean, I. I was raised by a Diet Coke woman of the 90s.
Miles Klee
Well, we're starting off on the same page here, because I wanted to do this episode because it's just crazy to me how loyal I was to the Coca Cola brand as a kid and into adulthood.
Sarah Marshall
Yeah.
Miles Klee
I mean, part of it is that. Part of it is just that soda is addictive. Right. But I was also strangely dogmatic in my belief that Pepsi was bad. It tasted wrong. If a restaurant served Pepsi instead of Coke, that was a problem. I mean, I think to people who don't really drink soda? This probably sounds ridiculous. They would maybe argue the flavor is the same, but to this day, I swear I would know the difference in a blind taste test. And I will always prefer Coke. That's just a fact.
Sarah Marshall
Oh, yeah?
Miles Klee
Yeah. So the question is, have we been brainwashed?
Sarah Marshall
Right? Am I making that up? Am I in fact the pod people?
Miles Klee
You know, it's funny, I was on the phone with my mom and sister talking about this topic the other day, and the seemingly innate belief that Coke is better. And they both laughed and they said, well, it is, though, and there's a political dimension to that as well.
Sarah Marshall
Yes, well, and I. And the sort of American quest for being the best of something or dominating an area. And also maybe this. Like, if they do taste different, then maybe it's based not on superiority than on, like, Coke gets there first, so everything else feels like an imitation. Unless you're in Pepsi country, wherever that is.
Miles Klee
Yeah, well, let's talk about Coke getting there first. So what we recognize as soda kind of dates back to early 19th century, before that artificially carbonated mineral water had taken off as a health fad. And people started adding fruit flavors and extracts that we've been using to mix beverages since, like, medieval era. At this time, sodas are still associated with medicine, you know, sold in pharmacies. So there's kind of a snake oil cure for whatever ails you, huh? Right away you also see how geopolitical forces have a role to play here. So, like, British colonizers in tropical regions had to take the anti malarial drug quinine, but it was so bitter, they mixed it with sugar and water, which gave us tonic water. Then they invented. Because, of course, they also had to get wasted on the job.
Sarah Marshall
No, you don't want to be sober when you're taking over a country.
Miles Klee
No, no, no, no. And I'm sure listeners are aware of Coca Cola's origins as like, a dubious medicine, but what I didn't know is that it came directly out of the Civil War.
Sarah Marshall
Yeah, tell us about that. Because I feel like there's a joke about it in the T.C. boyle book the Road to Wellville, and that's my historical context for it, but that doesn't get me that far.
Miles Klee
Yeah, so it's a Southern brand. I mean, a young doctor and chemist named John Pemberton served as a lieutenant colonel in the Confederate army. And in a pointless battle that took place in Columbus, Georgia, a week after Robert E. Lee surrendered at Appomattox.
Sarah Marshall
Oh, get it together, you guys.
Miles Klee
He took a Saber wound to the chest. Unfortunate. In the following years, he became addicted to morphine that he used to treat the pain from this injury. And meanwhile, he was inventing patent medicines at his drugstore. Eventually, he came up with something intended to cure his addiction. And other veterans hooked on morphine in this post war period. Pemberton's breakthrough is called not joking French Wine Cola.
Sarah Marshall
I drink it, I'd buy it, I'd try it out. $2.99. Right.
Miles Klee
Oh, I mean, and when you hear what's in this? This was his take on a mid 19th century French patent Madison called Vim Mariani, which mixed Bordeaux wine and coca leaves. Oh, the ethanol in the wine extracts the cocaine from the leaves. So, yes, it's a wine and cocaine cocktail.
Sarah Marshall
Boy, that would be a really good follow up to the espresso martini. If we had slightly different laws, it would be huge. Oh, my God. The hot girl drink of the gear.
Miles Klee
Every Bravo reality show would just have a contract to basically shoot a fire hose at this stuff at the cast.
Sarah Marshall
Drinking it out of big gold flutes the whole time.
Miles Klee
For continuity, Pemberton adds extracts from the kola nut, which is a seed of a plant native to Africa that has caffeine in it, and the aromatic flower damania, a woody shrub found in the Americas. So cocaine, of course, was a legal pharmaceutical at the time. It's considered a remedy for morphine addiction. You could just get off morphine and on cocaine, and supposedly that's fine. Yeah. I think, just needless to say, we could surmise that the drink's popularity extends beyond its health applications, quote, unquote.
Sarah Marshall
I mean, I don't know how the cola got from Africa to Atlanta, but it does feel like colonialism has something to do with it. And so the fact that we have an African nut being used as an ingredient by a former Confederate soldier is like. It's just there.
Miles Klee
Oh, yeah. And we'll see how the colonialism goes both ways as these brands expand abroad. And we should also note that the coca leaves, those are coming from perfect Peru.
Sarah Marshall
Right. Wow.
Miles Klee
So these are. These are all very exotic ingredients that are being extracted from elsewhere in the world, and that will cause problems for.
Sarah Marshall
Coke later on and sold to Americans with a pack of random claims, which is really a lot of continuity, as somehow French perfect.
Miles Klee
So by 1886, Pemberton moves this burgeoning operation to Atlanta. That'll remain Coke's headquarters forever.
Sarah Marshall
And they will not be subtle about it.
Miles Klee
No, no, it's a. It's a big part of the identity. But he runs into a big problem right away, which is that Fulton county, you know, where Atlanta is, bans alcohol that same year. So he could still sell French wine cola elsewhere in the state, but he needs a non alcoholic version for the home market. His new formula, replacing wine with sugar syrup became Coca Cola, which he marketed as the temperance drink, a supposed cure for, quote, nervous affections.
Sarah Marshall
Oh, boy. It's non alcoholic.
Miles Klee
Yeah, it still had cocaine in it, but.
Sarah Marshall
But no alcohol, which is just. We're interesting people. Anyway.
Miles Klee
I should say too, that I mean, the cocaine, the amount of cocaine is often wildly exaggerated when this comes up today, because I think we like imagining people at the turn of the century just absolutely zooted off soda. That's just a very funny image.
Sarah Marshall
So it is. It's very fun.
Miles Klee
We'll just indulge that.
Sarah Marshall
Yeah, but. But it does seem like, you know, it's. You don't want to put too much cocaine in your soda or else people are going to have heart attacks and not buy it. Again.
Miles Klee
I will shout out Pemberton's partner, Frank Mason Robinson. He came up with the name Coca Cola and he also wrote the flowy Coca Cola script that you recognize in some ways the true genius behind the product. I have to say.
Sarah Marshall
Yeah, that script is gold.
Miles Klee
Hasn't changed, really. You know, Pemberton didn't live to see his invention become a global or even nationwide phenomenon. He died in 1888. Before that, Coca Cola had caught the attention of Asa Candler, a Georgia tycoon, a politician who would later become mayor of Atlanta. So over the next couple of years, he secured ownership of the formula and brand for a total of $2,300.
Sarah Marshall
Love it.
Miles Klee
Or about 80 grand in today's dollar. Still a great deal.
Sarah Marshall
Well, you know, something similar happened with Jello where it was invented by this guy who just like could not make it work commercially for whatever reason and sold the rights to it for $400 at the time, which was like around 1900.
Miles Klee
Yeah. I love how often in the, in the history of these sodas that somebody else comes along over and over and says, well, I have, I have bigger ideas for this than this asshole can possibly pull off.
Sarah Marshall
So.
Miles Klee
So in Candler's case, this involved taking down existing local competitors and prying the Coca Cola named loose from Pemberton's opium addict son.
Sarah Marshall
Oh, well, that sounds like he would have to do some stuff that might stop someone else from sleeping well at night, I would wonder.
Miles Klee
And over the course of this succession style drama, he also Formed the Coca Cola company that still exists today. But even before his takeover was complete, Candler went on the offensive with advertisements that sound quite familiar more than a century later. So in 1889, he took a full page ad in the Atlanta Journal to announce that his drugstores were, quote, sole proprietors of Coca Cola. Delicious, refreshing, exhilarating, invigorating. Now, wouldn't you want to drink that?
Sarah Marshall
I mean, yeah, it's. It's. I don't know. I feel like the amount of caffeine people are forced to consume daily, it's like, are we different? I don't know. Dutch brothers is doing really well.
Miles Klee
I mean, I would identify this as the moment when Coke acquires this identity of something more than a health tonic, you know, an outcome. Now it's this effervescent treat. So by the turn of the century, 1903, Coca Cola has a competitor marketing itself in almost the exact same terms.
Sarah Marshall
Oh, no.
Miles Klee
This is Pepsi Cola, which is bottled in New Bern, North Carolina. It has the tagline exhilarating, invigorating, aids digestion.
Sarah Marshall
Oh, no.
Miles Klee
So Pepsi was originally called, and I love this, Brad's drink. A pharmacist named Caleb Bradham came up with the formula in the 1890s. Like Coke, he was using cola nuts.
Sarah Marshall
Oh, my God.
Miles Klee
As his business grows, Bradham buys the trade name Pep Cola and rebrands to Pepsi to fit the claim that the soda is good for dyspepsia or indigestion.
Sarah Marshall
Love it.
Miles Klee
Side note, not true. That's like an old wives tale.
Sarah Marshall
So many good concepts in there, though. I also, doesn't Brad's drink sound like there's like a diner with like a regular named Brad and he orders the weirdest thing? You know, it's like a, like a grape soda with an egg in it. They're like, yeah, it's Brad's drinking.
Miles Klee
Nobody else orders it.
Sarah Marshall
It's just for Brad. Yeah. Okay. Well, that's. How on earth does Asa Candler deal with this glove? Slap to the face.
Miles Klee
Well, it's interesting. There are different challenges at first. So unlike Coke, Pepsi Cola contains no drugs, not even caffeine. Wild Bradham. Yeah. Bradham specifically wanted to create a beverage without the narcotics found in other soft drinks. Because, you know, this is actually sort of starting to become a political issue. I mean, this is relevant in terms of competition because through the early years of the 20th century, Coca Cola is facing pressure to remove its, let's say, active ingredients. The gilded age has produced all these really potent drinks. And along with that came new anxiety over their habit, form and quality. A lot of this backlash is distinctly racist and anti immigrant based around fears that the non white underclass is likely to become these dangerous raving addicts of soda.
Sarah Marshall
Because every time white people get addicted to something, we're like, it's not we, we, we're fine, we, we can have all we want, but it's other people, minorities, they can't have it. That would be awful.
Miles Klee
Yeah. And like I said, Coca Cola is a product of the Jim Crow South. You know, the same climate cooked up a moral panic about cocaine supposedly contributing to black crime. So by 1903, Candler amended the original formula, switching to decokanized coca leaves. He sells the cocaine extract that is produced as a byproduct to pharma companies because it's still a Pharmaceutical. In 1906, the US government passes the Pure Food and Drug act, which eventually gave us the FDA and made manufacturers liable for stuff like, you know, accidentally putting arsenic in children's candy.
Sarah Marshall
Yeah, you shouldn't do that. I mean, yeah, I know that there's a lot to complain about in America, but like, I am very appreciative of the existence of the FDA and the ada. And it's worth pointing out Pepsi takes.
Miles Klee
Advantage of this by adopting the slogan, the original Pure Food drink.
Sarah Marshall
Oh, love it.
Miles Klee
Yeah. It was conceived from the start as a beverage without potentially harmful ingredients or additives. Coca Cola has all the problems here. The Department of Agriculture seizes 40 barrels and 20 kegs of a shipment and brings a lawsuit against the company alleging that it's added caffeine content is a public health hazard. So concerns just about the caffeine at this point.
Sarah Marshall
Oh, my God. Yeah.
Miles Klee
This gets tied up in the courts for years. Coca Cola originally wins. The government appeals all the way up to the Supreme Court, says the case should not have been dismissed and would have to be tried in a lower court. But Coca Cola, to avoid this, voluntarily cuts its caffeine content in half, covers all legal costs, you know, Meanwhile, Pepsi is kind of rolling along here. No issues with the government yet. It's still small, still a health food. Yeah. It's pioneering what will become a long term strategy of celebrity endorsements. And it runs newspaper ads featuring race car driver Barney Oldfield, who calls it, quote, a bully drink. Refreshing, invigorating, A fine bracer before a race.
Sarah Marshall
I love it. You gotta have a fine bracer.
Miles Klee
World War I is a turning point for both brands. Unlike Pepsi, Coca Cola is spending millions on advertising already. Basically an unprecedented level of mass marketing at this point, it's already nationwide. It's exporting abroad. It's part of why they're facing government scrutiny.
Sarah Marshall
Right.
Miles Klee
But this popularity also means they're dealing with more than 100 imitators selling knockoff sodas. Knockoff Coca Cola.
Sarah Marshall
Can I ask is because one of the reasons we're. I don't know that this timing for this episode felt right was that Coke has managed to associate itself so strongly with Christmas. When does that happen?
Miles Klee
Pretty early. Yeah. We will see that there are, like, in the 1930s and 40s, they get a lot of Santa ads. It's part of their. Becomes part of their family. Wholesome holiday marketing, which is, you know, kind of knitted in with their. All their nostalgia plays. Because Coke, even. Even as soon as it exists, is immediately already playing on nostalgia for the very recent past. Essentially perfect Coca Cola and the hundreds of franchisees it has bottling the soda around the country realize they have no good way of protecting the brand. In 1914, their head attorney, Harold Hirsch, calls on everyone to band together behind a new bottle design, telling them they will have to absorb the immediate expense because, quote, we are not building Coca Cola alone for today. We are building Coca Cola forever. And it is our hope that Coca Cola will remain the national drink to the end of time.
Sarah Marshall
Oh, it feels very American to, like, invent a thing and then the next day be like, this will be the most important soda. And, you know, until the history of time. And it's like, okay, it's soda. You know, calm down.
Miles Klee
Several glass companies are given the challenge to create a bottle so distinct that you would recognize it by feel in the dark or lying broken on the ground.
Sarah Marshall
I gotta say, they did do that.
Miles Klee
I mean, they snapped. The winning company came up with the curvaceous design we all know sometimes referred to as the hobble skirt shape. There was a trend at the time for narrowly tapered skirts that hobbled women who wore them, they couldn't walk in them, as well as the Mae west bottle for similarly horny reasons.
Sarah Marshall
I think the Mae west bottle, that's fantastic.
Miles Klee
It was actually inspired by an illustration of elongated cocoa pod. But, you know, sex sells.
Sarah Marshall
Businessmen in the early 20th century would just get turned on by, you know, pencils.
Miles Klee
Yeah, Shapes.
Sarah Marshall
If they looked at them long enough.
Miles Klee
Candler becomes mayor of Atlanta. No more time for Coca Cola. He steps away, he gives controlling stake in the company to his kids. They apparently weren't up for the job or just wanted some quick cash, so they sold it to Investors led by another Atlanta businessman, ERNEST WOODRUFF, For $25.
Sarah Marshall
Million in what year?
Miles Klee
That would be 1919.
Sarah Marshall
Okay.
Miles Klee
It goes public that year at stock priced at $40 one share, bought that year, with dividends continually reinvested about $10 million today.
Sarah Marshall
Gosh darn it.
Miles Klee
So that's what I'm using my time machine for.
Sarah Marshall
Yeah.
Miles Klee
So this acquisition creates a central part of the Coke legend. As collateral for the loan Woodruff needed to acquire the company, he gave his bank the only written copy of the formula for Coca Cola syrup, and they kept it in a vault in New York. When the loan is repaid, he gets it back and puts it in a vault in his Atlanta bank. The document is now in Coca Cola's own publicly displayed vaults at their World of Coca Cola museum. And the formula remains one of the ultimate trade secrets in existence, in part because they've never patented, I mean, which. It would have made it public domain 20 years later. This way they can keep it secret. I mean. But as you might guess from the cheeky museum display, there's a bit of theater to this. I mean, if you pulled off an Ocean's Eleven heist and got your hands on the formula, you still wouldn't be able to market it as Coke, which is the valuable part, and the brand is the product. You also can't compete with Coke's global distribution system. And on top of everything else, you don't have a special contract with Stepan Company in New Jersey, which is the only corporate entity in the US that is specifically authorized by the DEA to import Coca leaves.
Sarah Marshall
It still has coca leaves in it.
Miles Klee
Staphon doesn't even process that much coca. And you don't taste. You're not tasting that in the drink. It's just this weird signature thing. And it goes to all this trouble to decokanize these leaves. And this company is still thought to be creating about $200 million worth of cocaine annually as a byproduct of the leaves it processes, which is either destroyed or sold to the only pharma company in the US Permitted to receive it as like an expense experimental drug.
Sarah Marshall
Basically, you're really. You're giving some good heist inspiration in this section, I think I will say.
Miles Klee
That the arrangement with the Staphon Company, which decokanizes the leaves, this whole arrangement is a result of Coca Cola's power already in the early 1920s because they effectively lobbied Congress as they passed something called the Harrison act, which otherwise outlawed the importing of Coca, but includes a special provision for the use of decokanized leaves. And whose idea do we think that was?
Sarah Marshall
Hell, you know, is this an expression of the fact that by this point they're big enough and they're generating enough gross domestic product, I guess, that it's valuable for the government to stay on their good side?
Miles Klee
I think so, yeah. I mean, they have done a good job not only of cozying up to government power and political power, but for certain. This is like, again, they were a product of, you know, the Gilded age and up through the Roaring twenties. And big business is, you know, good for everyone at the top. They're all basically the same people. As I said, Candler becomes, you know, mayor of Atlanta. It's like you basically have politicians running the place already. So the connections go really deep. And especially in Atlanta, as we've just said, we're going to see just, you know, how. How powerful they kind of are in that area and, you know, increasingly in D.C. as well. Yeah. I mean, as all this was happening, Pepsi is failing. It goes bankrupt. In 1923, Pepsi sold to a new owner who can't revive it over about a decade. Coke is offered the chance to buy Pepsi several times, but never does.
Sarah Marshall
Are the people running Pepsi, like, the people aren't responding well to purity, sir.
Miles Klee
They're like, you know, we have a bottling operation. Like, it's kind of big. Like, don't you want this? I mean, instead, in 1931, Pepsi is bought by a guy named Charles Guth.
Sarah Marshall
Love it.
Miles Klee
Guth is what you might call a bit of a bastard. Not only was he known for being sued by his business partners after screwing them over.
Sarah Marshall
That's familiar.
Miles Klee
He was acquitted in a murder trial in his 30s. Oh, after killing. Yeah, he killed his black chauffeur.
Sarah Marshall
Jesus.
Miles Klee
Supposedly because of a dispute that arose over a Guth not wanting his milk delivered at the same time as the chefs. Makes no sense. A really awful case that the NAACP brought a lot of attention to at the time. Of course, he gets away with it. And this wonderful human specimen is, of course, the president of a major candy company called Loft. When he buys the Pepsi formula, of course.
Sarah Marshall
Yeah.
Miles Klee
So, yeah, so he's like a classic Willy Wonka character.
Sarah Marshall
I mean, in a way, I find it impressive that it made it to trial at all, as opposed to being just kind of dismissed by the system at the time.
Miles Klee
Yeah, that's how bad it was, basically. Yeah. So he acquires it through his own family business, as opposed to Loft, the candy company. His own family business makes soft drink syrups. And he's motivated to do this also.
Sarah Marshall
Because of spite against Papa, I would guess.
Miles Klee
Actually, no, against Coca Cola. Oh, chiseler that he is, he's mad that Coca Cola won't give him a discount on the Coke he's selling at his own drugstore.
Sarah Marshall
Okay, all right.
Miles Klee
So he says, fuck it, we're a Pepsi soda fountain now and I own the brand. Things still don't go that well. Guth tries unsuccessfully to get Coca Cola to buy him out at one point, but they won't. Then he has the chemists at loft the candy company reformulate the Pepsi Cola formula. Goth moves the company to Queens, New York. They come out with a six ounce bottle. But the game changer comes at the height of the Depression. Pepsi debuts a 12 ounce bottle that is critically the same price as the 6 ounce bottle, just a nickel. By the mid-1930s, Pepsi can be found around the world. It's the second largest company after Coca Cola. Boom. Done.
Sarah Marshall
Wow. Yeah. Undercutting until you achieve domination and then not doing that anymore is truly one of the great American business strategies.
Miles Klee
You know, Pepsi is really stealing Coke's playbook here. I mean, they're leaning hard into the advertising game because there's not much to distinguish it on the flavor level. People don't really get a difference between the two. So they're hiring skywriters, they're putting the name everywhere. They're just drilling it into people's heads and it works.
Sarah Marshall
And that does feel like kind of a marker of what the 20th century and then, you know, the 21st century became about for consumers, where you have, you know, companies marketing virtually indistinguishable products and having to continually find ways to make them seem different from each other.
Miles Klee
But something else interesting was going on, and that's to return to Coca Cola, which was based in the deep Jim Crow south, led by Ernest Woodruff's son, Robert Woodruff, a segregationist who publicly said his fair share of racist things. It did not market directly to black people at all. I mean, part of the reason cocaine was removed from the drink, as we said, was because of this racist moral panic. The Coke ads at this time really painted as a drink of wholesome white respectability. Often there's a white guy in a suit, in a tie, which I don't associate with soda at all. I even found a poster where it's like a man in a tuxedo and a woman in a gown being served Coca Cola on a silver tray by a black butler.
Sarah Marshall
All right, Right. So it is the soda of White supremacy as well.
Miles Klee
Yeah. I mean, some of this is, like, less overtly harmful. I mean, some of the 1930s images are by Norman Rockwell. So pure uncut nostalgia, but still a very, like, genteel Southern white milieu. I mean, it's like, it'll be like a little white boy in a big straw hat fishing with his dog, and he has a Coke. So you get the picture.
Sarah Marshall
Well, it's like when you see sort of a Republican attack ad now and it's like a white family in a cornfield, you're like, fuck you. You know, and you're like, I'm not against any of these things, but I know what this is standing for and what it is. Saying it's against unnecessarily nostalgic, white idyllic imagined past feels still part of it.
Miles Klee
Yeah. And it's not as subtle as they think.
Sarah Marshall
No. Yeah.
Miles Klee
I mean, Charles Guth, who literally murdered a black man, probably wouldn't have seen the possibility here. But fortunately for Pepsi, shareholders of the Loft Candy Company sued him for breach of corporate duty for snatching up the Pepsi Cola formula for himself instead of selling it to them. They also accused him of using their assets and employees to build the Pepsi empire and line his own pockets. Guth lost this case, and it was such an important precedent that there's now a principle in corporate law known as the Guth Rule, which basically says that if you as a company director recognize in business opportunity that your employer can financially and logistically take advantage of you can't just take it yourself behind their backs. It would have been different if Loft couldn't afford to buy Pepsi or was in some radically different industry. But they're like the world's biggest candy company. Obviously, they would acquire Coca Cola's upstart competitor if they'd had the chance. And naturally, they realized this as soon as Pepsi started to actually succeed.
Sarah Marshall
Wow.
Miles Klee
So in the aftermath of this lawsuit, Loft merges with Pepsi, keeping the Pepsi Cola name, and Guth is replaced with a new CEO, Walt, or Mac. Mac is a far more liberal Jewish man from Queens, and he is the one who starts to appreciate that Coca Cola has no standing in black markets.
Sarah Marshall
Oh, interesting. So he likes noticing things.
Miles Klee
He's a noticer. He hires an African American sales team that targets urban northern regions and black areas of the South. They put out ads with black models that don't conform to offensive stereotypes. There's no Aunt Jemima and Uncle Ben. It's like middle class, well dressed, aspirational families. Some ads highlight prominent black Businessmen and women, they get Duke Ellington as a spokesman. It's this extraordinary experiment in multicultural marketing. All because Pepsi notices that Coca Cola is deliberately ignoring this whole segment. But it is not by any means some enlightened or woke campaign. Let's say that it's there probably no.
Sarah Marshall
Such thing as a woke ad campaign.
Miles Klee
Oh, no. I think it's just an instructive example because it's something that looks progressive, but it's actually just pretty cutthroat.
Sarah Marshall
Right. And. Well, and it's like the idea of like. Like that selling a product to somebody means noticing that they're there and that they exist as people. And that's sort of humanizing, but it's also, you know, it's fundamentally about realizing that you could get their money.
Miles Klee
So, yeah, and Pepsi still has to walk this super fine line because by courting a black customer base, they risk white backlash. They could. They could have the go, woke, go broke problem. And over the 1940s, they do see a stigma develop so that even as Coca Cola becomes known as the Jim Crow soda, Pepsi gets attached to, like, racial epithets. I mean, you have a few attempts at boycotts as well by racist white people. And this all comes to a head in 1949 when Walter Mac gives a speech at a bottle or convention explaining that Pepsi will have to gain, quote, a little more status and no longer be strictly identified as, quote, an N word. Drink.
Sarah Marshall
Buddy, buddy, buddy.
Miles Klee
Yeah, yeah. Our liberal hero, not so much.
Sarah Marshall
I tried to not have high hopes, but even so, you know, so Edward.
Miles Klee
Boyd, a Pepsi employee who was one of the only black corporate executives in America back then and genuinely adored Mac other than this, was so offended by this that he walked out of the presentation he had seen. He'd overseen a lot of the sales strategy that helped Pepsi make inroads with black markets, all while his team faced discrimination from other Pepsi employees, not to mention out on the road, and even threats from the Ku Klux Klan. He leaves the company and his team basically disbands. Only one member will climb the corporate ladder, Harvey C. Russell, who in 1962 becomes the first black vice president at any major American corporation. However, I mean, as Pepsi is expanding in the US World War II gives Coke a big opening to expand their footprint abroad.
Sarah Marshall
Oh, boy.
Miles Klee
And it comes to be seen, for better and worse, as a defining symbol of Americanism and globalization.
Sarah Marshall
How Does World War II help Coke out? What does that involve?
Miles Klee
It all kicks off with a kind of corporate patriotism. Robert WOODRUFF Declared in 1941 that every American serviceman should be able to get a bottle of Coke for a nickel no matter where in the world, no matter what it cost the company. This entailed a huge effort to ship the soda to the troops and set up dozens of bottling operations as close to the front lines as possible in North Africa and Europe, South Pacific. As the secondary brand, Pepsi had a much harder go of it and complained that the US Government was favoring Coca Cola in its military theaters. Coca Cola was exempted from sugar rationing, for example, which is crazy to me. Yeah, but Pepsi still sold plenty of soda at, like, army bases and defense plants and what have you. I mean, the war benefited both sides, no doubt.
Sarah Marshall
It is fascinating to think of just the construction crews that were knocking up these Coke plants in Algeria or whatever during World War II. What was that like day to day? The World War II Coke plant? Was it scary? Were they going to bomb you to take down morale?
Miles Klee
Yeah, I don't know if those were targeted, but it probably looked like any other munitions manufacturer.
Sarah Marshall
Right?
Miles Klee
God, gotta worry about that.
Sarah Marshall
If something is manufactured and distributed on the scale that we do things, you know, for the last hundred years or so, then like, nothing ever stays simple. It always gets involved in war and corporate racism and everything else.
Miles Klee
This also sets us up for a great example of Coca Cola playing both sides. Of course, it becomes associated with the patriotism of, you know, our boys in World War II. But before the US entered the fray, Coca Cola had distributed sodas at Hitler Youth rallies and embraced the swastika bottling conventions in Germany, in part because a competitor in Germany had tried to demonize it as a Jewish drink.
Sarah Marshall
Coke.
Miles Klee
I mean, the weirder footnote here is once the US imposed the trade embargo with Germany, preventing the import of Coca Cola syrup, the siloed German branch of the company tried to invent a substitute using the crappy available ingredients. They had what the head of the regional operation called leftovers of leftovers. And they called it Fanta, short for the German word fantasy or imagination, because they were told to use their imagination to come up with a good name. Just something fun to think about when you see someone drinking Fanta.
Sarah Marshall
It's more connected to the Nazis than I expected. But what's nice about it is that it means that the Nazis had terrible soda. That's something. Wow.
Miles Klee
They wanted Coke and this was the best they could do.
Sarah Marshall
They really ended up pretty far away if the modern version is at all close.
Miles Klee
You know, as Coke is spreading around the world, there are many who try to Stop its relentless march into their domestic culture. This process becomes known as Coca colonization. Very clever. I don't know who came up with that, but man, that's good.
Sarah Marshall
I do really like that. Yeah, because it is. I mean. And is that from a sense partly of this being the period when America does start to take over the world with our products and our exports and everybody starts wearing our trash?
Miles Klee
Absolutely, absolutely. There is an awareness of America becoming a superpower and in particular spreading our capitalist nonsense everywhere. So some of the staunchest opponents of Coke in the post war era would be the French Communist Party, God bless them, which not only argued that the company was no help in their efforts to, you know, rebuild the war torn nation, but that its vast corporate hierarchy could be used for espionage.
Sarah Marshall
I don't see why not.
Miles Klee
Who can blame him? I'm sure Coke had spies abroad.
Sarah Marshall
You know, you're just like spitting out Netflix series left and right here.
Miles Klee
You know, it could be a ten season show. Um, another funny development of note this time. You know how in the south people say Coke to mean any kind of soda? I do.
Sarah Marshall
I love that. Yeah.
Miles Klee
Yeah. So that's because from the very early days, people abbreviated, abbreviated the name Coca Cola that way. And Coca Cola fought for decades to reverse this trend unsuccessfully. They didn't want any association with the coal based fuel Coke. And besides, they hadn't trademarked Coke.
Sarah Marshall
Okay?
Miles Klee
So they went as far as running ads in the 1910s pleading with people to order Coca Cola by its full name to ensure they're getting the genuine article. Because if you just say Coke, who knows what you're getting right now, you guys, it makes no difference. They just continue to live with the problem that Coke might turn into a generic trademark. You know, similar to how anybody can sell their pain relievers as aspirin, even though that used to be like a bear brand name.
Sarah Marshall
Huh?
Miles Klee
If you lose control of the the word, then it's over. In the early 40s, they start to use Coke and advertising materials and they create a very confusing mascot to explain that Coke and Coca Cola are same thing.
Sarah Marshall
Something that anyone could have figured out because that's how language works. But yeah, okay, who is this horrible mascot?
Miles Klee
His name is Sprite boy. There was no such soda as Sprite, by the way. This was a rather demonic looking elf child who wore a Coca Cola bottle cap for a hat. And he was designed by the artist Haddon Sunblom, whose illustrations of Santa Claus for Coke ads are some of the most recognizable depictions of the character that we've discussed. I should say there's a bit of a misconception that Koch like invented our contemporary image of Santa, the red and white jumpsuit being some kind of subliminal brand hypnosis. But the 19th century artist Thomas Nast was doing basically the same thing before Coke existed. So in the second half of the century, you know, as we said, America is this superpower. And a lot of the jockeying between Coke and Pepsi comes to resemble kind of a cold war chess game where they compete to infiltrate new countries before the other.
Sarah Marshall
Right. And you begin to resemble each other more closely than you resemble anybody else.
Miles Klee
Before we move past the mid century fascism, though, I will drop my most academic reference. There's a Theodore Adorno passage I happened to come across the other day that really made me bolt upright. Adorno was writing about the rhetoric of Martin Luther Thomas. This was a fascist American demagogue on right wing Christian radio in the 1930s. And Adorno had this to say, quote, the mode of selling an idea is not essentially different from the mode of selling a soap or a soft drink. Socio psychologically the magical character of the word leader and therewith the charisma of the Fuhrer is nothing but the spell of commercial slogans taken over by the agencies of immediate political power. That's bars. That's bars. I mean to me the example of a soft drink is really striking. If you flip this around, if you flip this around for this era, you could say we're enthralled to the global dominance of the big soda brands. The same way people can support authoritarian rule and be excited about that.
Sarah Marshall
It's something that it doesn't cost that much. You kind of go through it, so you need to keep buying it, so they need to keep advertising it. And they're all basically the same. And so it has to come down to selling the feeling. And yeah, that if you look at just our current totalitarianism, that it is about selling an emotion, selling an affect of space. But there's nothing of substance really in the pitch.
Miles Klee
So for the soda giants, the 50s and 60s are all about maximizing optimism over American prosperity and technological progress. But without any of the pesky anxiety of the atomic age, nobody at Coke commercial is worried about getting nukes.
Sarah Marshall
It's true. I can't think of any.
Miles Klee
A ton of TV ads, a medium that transforms and heightens this rivalry. The increased exposure really allows Pepsi and Coke to insinuate themselves into the very fabric of American experience and leisure. I mean cola is there when you go to the movies. It's there when you're at the beach. It's what you drink at the holidays. It's what Santa Claus drinks.
Sarah Marshall
Let's all go to the lobby, you know.
Miles Klee
The companies also settle more into their identities. Coca Cola wedding itself to the kind of American iconography that feels idealized and timeless. Pepsi striving to define itself as the new and different choice of younger people. The future. Their big win on the youth front is from a 1963 campaign about the so called Pepsi generation. This is an idea that came out of a slogan contest won by a woman in Wisconsin. Her prize was a car, so congrats to her.
Sarah Marshall
Yeah, should have given her more. But that's how they get slogans. They get some lady to come up with it and then never, you know, pay her royalties. It's great.
Miles Klee
Pepsi's play here was to maintain that it is actually different from Coke. A cool alternative preferred by a cool alternative crowd. Commercials were showing attractive young people riding motorcycles and surfing. They called Pepsi drinkers livelier, active people with a young view of things.
Sarah Marshall
Nice. Yeah, it implies being kind of exciting and edgy without committing to any kind of idea ever, which is ideal, I'm sure, for marketing.
Miles Klee
Yeah, they kind of had their cake and ate it too here because they were appropriating sort of a burgeoning counter culture, but without, you know, getting specific. And they're selling a lifestyle as opposed to a beverage. Right.
Sarah Marshall
Yeah.
Miles Klee
They in 1965, acquire Frito Lay or merge with them, expanding into the snack market. And then that's on their way to buying Pizza Hut, Taco Bell and kfc, which is, you know, where you're still going to get Pepsi products to this day.
Sarah Marshall
That's very. And Sierra missed RIP Coke was also.
Miles Klee
Changing with the times, though kind of more behind the scenes. Of course, by now they've realized that they have to compete for their share of black customers. Robert Woodruff is no longer president of the company, but kind of steered it from the board of directors for decades. He seemed to understand where the civil rights movement was taking the country. Interesting anecdote is that Martin Luther King Jr. Had won the Nobel Peace Prize in 1964 and was set to be honored at a huge banquet dinner in his hometown of Atlanta the following year. Certain business and political leaders who you can probably imagine were against King and his politics, threatening not to take part. The story goes that Woodruff put the word out that he supported the banquet and would be attending even if no one else did. And the rest of town fell in line because that's how powerful he was at this point. Supposedly, Woodruff didn't want Atlanta and by extension, Coca Cola, embarrassed by a snubbing of a civil rights hero.
Sarah Marshall
So, again, it's. Yeah, it's a strategy.
Miles Klee
Yes, Yes. I don't think he gives a shit about people's rights.
Sarah Marshall
Right. Well, and it's like when you look today at sort of, you know, the way corporations are tweeting at each other and it's. Yeah, you know, Wendy's is beefing with Burger King. It's like, you know, they're never going to be people. So Coke has figured out a couple things. They're slow learners, but they do know how to survive.
Miles Klee
And, you know, he is. He is basically like the most powerful person in Atlanta. I mean, he. Woodruff, is at the White House the night King is assassinated in 68, and actually learns of his death directly from LBJ, then immediately calls his people down in Atlanta to make sure nothing goes wrong with the public memorial. And he personally paid for funeral expenses the city couldn't cover, sent the Coca Cola Company jet to bring Coretta Scott King back to Atlanta for the funeral. And it does have. Again, you know, to be a little cynical about it. It is all these, like, he's paying a lot of attention to these appearances. Let's say that.
Sarah Marshall
I don't know, to build on the previous point, you can never train a corporation to have morals, but you can train them to know they're being observed. And maybe that's the best we can do.
Miles Klee
Very true. The war on drugs is taking shape. There's a US Agency called the Federal Bureau of Narcotics, predecessor of the dea. It's actively working to eradicate coca crops in Central and South America. To stifle cocaine production, of course, despite the cultural significance of the plant in these regions.
Sarah Marshall
Right. Yeah.
Miles Klee
Coca Cola is worried they won't be able to get their leaves from Peru to be decokanized by their chemical firm in New Jersey. But they're so powerful, they can go straight to the FBN and say, hey, we'd like to set up a secret Coca farm in Hawaii.
Sarah Marshall
What?
Miles Klee
The feds are like, sure thing. And they even negotiate with the Peruvian government to make sure that supply channel remains open as well. All for an ingredient they don't need.
Sarah Marshall
Alrighty. But that's what makes it fun when you think about it.
Miles Klee
Mm.
Sarah Marshall
Getting the government to bend the law so you can do something that you don't need to be doing.
Miles Klee
Plus, you know, the name is still Coca Cola, So I guess they just have to stick with it.
Sarah Marshall
Yeah. So that, I don't know. That is an incredible expression of what a big superpower they are, you know, because it's like, who else could have done that in the 80s? It's kind of hard to imagine. Reagan, maybe a bit.
Miles Klee
Well, this was just in the 60s. I mean, they saw the writing on the wall.
Sarah Marshall
Oh, my gosh. Yeah. They're like. Yeah. Okay. So this is an area where they are quick on the uptake. Yeah.
Miles Klee
They saw that this was about to happen. Yeah. These crackdowns. Speaking of addictive substances. So a final novelty of the 1960s cedar scene. Curiously, it was a third company, RC Cola. Shout out to them, Beat Coke and Pepsi to the diet soda fad.
Sarah Marshall
Good job, rc. Also, Tab. Tab was around way before Diet Coke. Right.
Miles Klee
So Tab is a Coke product.
Sarah Marshall
What? Oh, my God.
Miles Klee
Okay, so Pepsi responds to RC Cola in 1963 with a line of diet drinks called Patio. There's a bunch of different flavors. This actually gets a subplot on season three of Mad Men, if people remember that.
Sarah Marshall
Patio. Good name. I like it.
Miles Klee
Patio Diet Cola is soon just Diet Pepsi. Coca Cola is very uptight about using the name on anything but the flagship product. So they come out with the diet cola tab at the same time.
Sarah Marshall
Oh, okay.
Miles Klee
And the commercials have. The commercials have to specify this is made by Coca Cola, so you can trust it. But they don't. They. They refuse to put the name on there.
Sarah Marshall
Fascinating. Yeah. Can I just tell you my. I have a personal favorite Tab commercial.
Miles Klee
Oh, please.
Sarah Marshall
It's so good. It's shot in Stepford Wives vision and it's got this very eerie jingle. And basically it's about drinking Tabs. So you can be a mind sticker stick on your husband's mind when you're not around so he doesn't forget you and have an affair. Be a mind sticker drink Tab. Keep your shape in shape. Your husband will forget you. Goodnight, ladies.
Miles Klee
It's a commercial that is dark.
Sarah Marshall
Yeah, it's rough. I don't know. I guess it's kind of silly for my mind to be this blown, but I really had been under the impression, why had I thought Tab was somehow independent? And why do I care? It just goes to show the whole theme.
Miles Klee
Yeah, Just an upstart soda company that came out of nowhere.
Sarah Marshall
It's an independent. Yeah, I guess. Oh, God.
Miles Klee
I mean, it's funny because while there are obviously. Obviously adds that focus on the diet culture aspect of this, the Diet Pepsi commercials kind of take aim at Tab for supposedly having this, like, gross aftertaste because of the saccharine that's in it.
Sarah Marshall
Well, yeah, it did.
Miles Klee
So they were, like, really laser focused on how Diet Pepsi tastes just like real cola. And there's a very unsubtle subtext of, like, FYI, the other diet cola tastes like shit.
Sarah Marshall
Well, you know, I mean, if you. If it's true, you might as well point it out.
Miles Klee
Yeah. Well, that's an interesting segue to 1971.
Sarah Marshall
Oh, Don Draper.
Miles Klee
Which brings a masterstroke from Coke, a worldwide commercial spot known as the Hilltop ad, which some consider the greatest commercial ever made. And, yes, to spoil the series finale of Mad Men, the ad that Don Draper's implied to have written. You could argue that it takes the Pepsi generation concept and levels it up to a kind of utopian mindset. You get a multicultural group of young people on top of a hill holding Cokes labeled in all different languages, singing, I'd like to teach the world to sing in perfect harmony. I'd like to buy the world a Coke and keep it company.
Sarah Marshall
It's the real thing. Coke is what the world wants today. Coca Cola, it's so good. Like, it's so sinister. I think it's quite evil. But, like, I have goosebumps thinking about that ad. I really do think it's fantastic.
Miles Klee
For some reason, this cost the equivalent of $1.9 million to make.
Sarah Marshall
How expensive were those kids?
Miles Klee
It became the most expensive commercial ever produced to that point. But, you know, I guess if we're considering the upheavals of the late 60s, festering trauma of Vietnam, you can see how this sunny take on globalization, American greatness, exported seamlessly to non Americans who embrace it, might have been comforting.
Sarah Marshall
Yeah. Well, and also, it's. I think I remember, you know, because it, like, zooms out and it's this sort of, like, United Colors of Benetton thing of, like, multicultural everyone brought together by Koch. But the first face it's on is a young blonde white woman. Right.
Miles Klee
So, yeah, like, keeping its core focus still very prominently. You know, a lot of white people leading the. Leading the charge, I guess you could say, of course. But it still wasn't everywhere. So this is where we have to introduce Donald Kendall. He's a Pepsi boss. One of the chief architects of the cola wars. As pure a company man as you'll ever find. He drank Pepsi for breakfast.
Sarah Marshall
Did he ever do the hot Pepsi like Laverne?
Miles Klee
I have no doubt.
Sarah Marshall
I mean, yeah, you gotta try it, at least if you believe so much.
Miles Klee
He had no College degree. He worked his way up from a job at a bottling plant to become president and CEO in the early 60s. Before that, however, Kendall struck up a friendship with one Richard Nixon.
Sarah Marshall
Okay.
Miles Klee
Who had formerly represented Pepsi in his legal career.
Sarah Marshall
What? Okay. Love it. That is a very Nixon thing to do. Honestly, he loves soda.
Miles Klee
That's why Nixon.
Sarah Marshall
Exactly.
Miles Klee
The two of them traveled together to Moscow in 1959, when Nixon was vice president.
Sarah Marshall
Okay.
Miles Klee
For an exhibition of American products, Kendall wanted to beat Coke to the Soviet Union.
Sarah Marshall
Can we do an operetta about this? This trip?
Miles Klee
This is when he had the kitchen debate with Khrushchev. But when that wasn't happening, Kendall wanted Nixon to guide Khrushchev to the Pepsi display at the exhibition where Khrushchev sampled the drink. Khrushchev tried it and deemed it, quote, very refreshing. The New York Times ran a headline, I just love that said, cola captivates Soviet leaders.
Sarah Marshall
Incredible.
Miles Klee
Kendall wouldn't be able to set up Pepsi operations behind the iron curtain until 1973, but it was the first American consumer product made and advertised in the country.
Sarah Marshall
Good going, Pepsi.
Miles Klee
It gets weirder because to get around the currency exchange issues over the next two decades, Pepsi continued to strike barter deals through third parties, accepting payments from the USSR in the form of Stolifnaya vodka, as well as Russian submarines and warships that could be harvested for scrap. And Kendall would later tell an advisor of President George H.W. bush that we're disarming the Soviet Union faster than you are.
Sarah Marshall
Nice. I mean, it does seem like they're getting some of their junk, but. Yeah, I never get paid in vodka and warships. You know, what have I done wrong?
Miles Klee
Why don't you have a navy?
Sarah Marshall
I don't know.
Miles Klee
Kendall, unfortunately, also connects Nixon with a Chilean Pepsi bottling magnate who was seeking to oust President Salvador Allende in the early 70s, which may or may not have influenced the President as he helped to set the stage for a coup in Chile.
Sarah Marshall
Okay. Wow.
Miles Klee
On the flip side, Kendall was also the guy who convinced Nixon to install a tape recording system in the Oval Office so he could refer back to audio transcripts when later writing his memoirs.
Sarah Marshall
Kendall.
Miles Klee
So we have him to thank for the Watergate tapes. Incredible character.
Sarah Marshall
That's amazing. Is it true? Also, the thing of, like. Because the way I remember it is that there was supposed to be a button that Nixon could press to start recording, but he just couldn't master it. And finally, they were just like, okay, fine, we'll just have it record everything.
Miles Klee
I think we Got everything. In fact, Kendall is on the Watergate tapes because at some point he shows up and gives Nixon advice about what to do.
Sarah Marshall
Perfect. And then they have a nice soda, I hope.
Miles Klee
Yeah, yeah. Back in the us. So to market, Kendall is responsible for a memorable, though pretty cynical Pepsi pitch in the mid-1970s known as the Pepsi Challenge.
Sarah Marshall
Oh no.
Miles Klee
The idea here was to stage blind taste tests of Coke and Pepsi in malls and stores to demonstrate that when people don't see the branding, they actually prefer Pepsi.
Sarah Marshall
I feel like this might have backfired.
Miles Klee
You know, there are a lot of theories about how Pepsi gained an edge in this comparison, that the obvious truth is that when people do see the labels, they pick the brand they have already aligned themselves with. That's always been Coke's advantage. They're the default name. But other things that could have swayed customers included whether the sodas were served at different temperatures, a natural bias toward sweeter tastes served in smaller doses, and how the cups were labeled. It wasn't a scientific study by any means. I mean, the participants preferred Pepsi by a really slim margin. Anyway, it didn't prove much. The idea was just to make you question your own buying habits. Right.
Sarah Marshall
The idea was just to make us question reality. Yeah.
Miles Klee
I mean, toward the end of the 70s, Coke answered Pepsi's victory in Soviet Union by breaking into China first.
Sarah Marshall
Haha.
Miles Klee
They are the first foreign corporation allowed in. Almost three decades after the communist revolution, anti American propaganda within the country tended to regard Coke as a prime symbol of capitalist empire and waste. And communist party media pretty sharply criticized Coca colonization. But Coca Cola chairman J. Paul Austin was not going to let Pepsi win this time. He constantly lobbied Chinese diplomats in Washington. He would bring them boxes of Cokes and then gave them a refrigerator when he realized that they were drinking it at room temperature.
Sarah Marshall
Oh yeah, it's not going to make a great impression anyway.
Miles Klee
Yeah, yeah, it just doesn't. It doesn't hit. But they're impressed by Coke's factories, their technology, their quality assurance. I mean, this has been the model for a lot of the company's international franchising. They give away cutting edge infrastructure, they let foreign partners run the plants, and they just import the secret syrup. That's it.
Sarah Marshall
Wow. Yeah. It is fascinating that they managed to have that much syrup leverage.
Miles Klee
So let's come back to the United states for the 1980s.
Sarah Marshall
Oh boy.
Miles Klee
The fiercest years of the cola wars.
Sarah Marshall
The years which drive Billy Joel to madness, apparently. Yeah.
Miles Klee
From here through the late 90s, Coca Cola is helmed by a guy Named Roberto Goizueta, whose family defected from Cuba when Castro rose to power. Like Kendall at Pepsi, he's someone who rose fast in the organization at a really young age. He was such a maniacal arch capitalist that I could spend 20 minutes just reading you insane quotes from him.
Sarah Marshall
Wonderful.
Miles Klee
He takes over in 1980 and instantly decides the company has no direction. Rudderless. It's a disaster. It's gradually been losing market share to Pepsi in stores, and it's barely holding on to the top spot thanks to distribution in restaurants and the like. Goes. Talks a big game about Coke not competing with Pepsi, but with coffee, tea, milk, water. Saying stuff like. Saying stuff like, what's our share of the stomach? His goals were, quote, a Coke within arm's reach of everyone on the planet.
Sarah Marshall
Oh, my God.
Miles Klee
And quote, to make it impossible for the consumer to escape the Coca Cola company. I mean, he sounds like a Bond villain.
Sarah Marshall
Yes.
Miles Klee
He's an incredible guy.
Sarah Marshall
It's like, yeah, I don't know if you need a level of dominance where you want people to be unable to escape. It's like, but why?
Miles Klee
Asked if he ever drank Pepsi, he said, only when I've eaten something I don't like and I want to throw up.
Sarah Marshall
Okay. Love it. Love the commitment.
Miles Klee
Most importantly, though, he believed in action and change. He said, don't wrap the flag of Coca Cola around you to prevent change from taking place. It is extremely important that you show some insensitivity to your past in order to show the proper respect for the future.
Sarah Marshall
And I thought Hannah Arendt said that, but what do I know? Wow. It is like. I don't know. I love the sort of the, like, the corporate intensity. Like, it does feel like much like war, corporations exist so men can feel like they're doing something important by destroying each other. It's very interesting. All right, well, great. This is very dramatic.
Miles Klee
In 82, he takes the extraordinary step of putting the brand name on what is essentially a reformulated version of Tab. This is the Diet Coke juggernaut we know and love.
Sarah Marshall
Nice.
Miles Klee
They buy the film company Columbia Pictures because the Reagan years are an insane frenzy of mergers and acquisitions. And the company wants to see Coke products and movies that are then shown at theaters that sell Coke. That's. That seems like a good idea at the time.
Sarah Marshall
There are. They're right. There was a bump in Coke products and movies in the 80s. I feel like now that you're saying.
Miles Klee
That to me, they sell it. They sell it at a profit to Sony by the end of the decade because they realize they have no business in the film game goes away to also swaps out the sugar and Coke for correct syrup to save on costs.
Sarah Marshall
Oh, wow.
Miles Klee
Rip to the. To the good Coke.
Sarah Marshall
Yeah.
Miles Klee
Both Coke and Pepsi unveil caffeine free versions which would have pleased the puritans who were making us think about it at the beginning of the century. PepsiCo gets its own new hungry CEO in 1983. This is Roger Enrico, whose original job at the company was in the marketing department for Funyuns. He climbed fast. Enrico aggressively signed celebrities to endorse and advertise Pepsi, including Madonna, Michael J. Fox, Lionel Richie, and the biggest of all, Michael Jackson, who inks a record breaking $5 million deal. Famously, Jackson's hair caught fire while he was filming a pepsi spot in 1984. We all know that.
Sarah Marshall
Yeah.
Miles Klee
The brand having these stars on their side only contributes to the ongoing sense of Pepsi being young and hip compared to their dusty old rival. And on top of that, they're running these amusingly mean commercials that dunk on Coke in unexpected ways. There's one where a UFO hovers over Coke and Pepsi vending machines and then uses its tractor beam on the Pepsi machine. There's another where archeologists in the future find a Coke bottle and don't know what it is.
Sarah Marshall
It is like Pepsi embrace bitterness at a certain point.
Miles Klee
Yeah, yeah. You have. I think you have to. Right?
Sarah Marshall
Yeah.
Miles Klee
The upshot is that by 1985, Pepsi is clawing its way to a 30% market share. This is is just unprecedented. A Diet Coke is also somewhat cannibalizing the sales of original Coke. So the company knows it's time for a big swing. You might know what's coming here. Sergio Simon, a marketing executive at the company who had previously worked at Pepsi and spearheaded the success of Diet Coke, advanced the idea that Coca Cola's secret formula should be changed again.
Sarah Marshall
Oh God, yeah.
Miles Klee
Then you can call it New Coke.
Sarah Marshall
Yep.
Miles Klee
And push an advertising blitz for this revamped flavor, which would be noticeably sweeter. More like Pepsi.
Sarah Marshall
It is a great example, I think, of how you shouldn't try and compete by doing the thing your competitor is doing, which just so happens to be the opposite of the thing that you have always done.
Miles Klee
It makes sense if you consider Coke's insecurity about being a lumbering dinosaur in the end. But I think as any consumer alive right now is aware, New Coke did not survive.
Sarah Marshall
It's like, yeah, the one thing we know about it is that it didn't make it. And. Right. But it's like this idea of Coke for better and for worse and in benign ways and in quite evil ways, building itself year by year as like the establishment drink. The drink of nostalgia and childhood and idyllic white families. And then, you know, take us kind of like panic and dick shit, you.
Miles Klee
Know, as soon as New Coke comes out, customers revolt.
Sarah Marshall
Yeah, I would.
Miles Klee
I mean it would be one thing if they could still buy original Coca Cola, but they couldn't. It's just New Coke, they went all in. All in?
Sarah Marshall
Yeah, and it seems like they've made fairly conservative choices until now. Like they wait to get into, you know, very to change. They kind of wait stuff out. And in this case it's like. You couldn't have thought this over a little bit?
Miles Klee
Well, as you're sort of describing, I mean, they're a victim of their own manufactured nostalgia. Once you take away real Coke, suddenly that's all anyone wants because you can't have it anymore.
Sarah Marshall
Yeah, it's the real thing.
Miles Klee
You don't have people embracing New Coke or Pepsi really. You just have customers forming organizations called like Old Cola Drinkers of America and signing petitions demanding Coke bring back the original formula. Yeah, and this is all despite Coke's own internal research which indicated that people did prefer New Coke. It's this encapsulation of our loyalty to an emotion as opposed to a product. Nobody cares what the product is.
Sarah Marshall
Yeah. Is it better or does that matter? Like how much better can it be versus the comfort you get from it tasting the same as it has tasted since you were born.
Miles Klee
So Pepsi and Roger Enrico see this blunder as their moment of triumph. This guy is so delightfully petty that after the failed rollout of New Coke, he buys a full page ad in major U.S. papers that says, quote, after 87 years of going at it eyeball to eyeball, the other guy just blinked. Wow, that goes so hard.
Sarah Marshall
These guys are like frickin Carnegie. This is great.
Miles Klee
I mean, three months later, Coca Cola puts regular Coke back on the shelves under the name Coca Cola Classic. This proved so popular that there are conspiracy theories to this day about the company deliberately sabotaging itself with New Coke just to make people clamor for the Coke that had been taken away. They quickly regained their market share. Pepsi remains the number two beverage company and as of this year, actually Dr. Pepper has edged out Pepsi and sales volume.
Sarah Marshall
What, this is because of Mormons?
Miles Klee
Yeah, apparently by connecting with Gen Z. Oh, who like a spicier soda.
Sarah Marshall
Fair enough.
Miles Klee
Surprisingly, Coke did keep trying to sell New Coke after rebranding it as Coke 2, which feels even sillier.
Sarah Marshall
It does. It's like the first Coke is a family pet that died.
Miles Klee
You can imagine their scientists being Finally, Coke 2 cracked it. You know, Crystal Pepsi only ran from like 1992 to 1994 and yet occupies like a large part of my memory for some reason.
Sarah Marshall
Right. Well, it had that Van Halen song in the commercial. Right. That was, that was, you know, can't do better than that.
Miles Klee
Some of the stunts of the 80s and 90s were truly absurd. Coke and Pepsi competed to be the first soda into space.
Sarah Marshall
Okay, who won and how? Or did anybody?
Miles Klee
I don't think there are any winners here. Coca Cola invented a special dispenser can for zero gravity first. But Pepsi contacted the White House and demanded the chance to hurriedly develop their own gadget. Eventually, both cans went up on a Challenger mission in 1985.
Sarah Marshall
Oh, no. Yeah, that one didn't go well.
Miles Klee
Coke in 1990 has another really harebrained scheme with a multimillion dollar promotion called the Magic Can. This is part of a tie in with a new Kids on the Block concert tour that summer.
Sarah Marshall
Oh, boy.
Miles Klee
The gimmick here is that certain cans of Coke instead of soda, contain cash or vouchers for other prizes that would jump out from a spring loaded device when you popped the tab. Now, to make it impossible to tell which cans were winners just by picking them up, the company partially fills them with gross smelling chlorinated water, which was also meant to keep you from drinking out of a prize can once it was opened.
Sarah Marshall
For once, they're overestimating the intelligence of the American public. And also, I hope nobody opened one of these while driving.
Miles Klee
If this is sounding like a very. Your scientists were so preoccupied with whether or not they could, they didn't stop to think if they should type moment like, that's right on the money. I mean, stores report that customers are shaking up cans trying to determine which ones have prizes. The packaging was faulty and it leaked. Sometimes the money or tickets would get soaked in the chlorine water. A little boy did end up going to the hospital after drinking some of the chlorinated water. He was fine. He was fine. Thank God. Scrapped the campaign. They scrapped it in three weeks. But the company can't recall the magic cans that are already on sale because thanks to the ingenious design, there's no way of telling them apart from the regular cans.
Sarah Marshall
They've become too big to. I guess too big to fail is a more specific. You know, it means Too big for the government to allow them to fail or else we'll all die. But in this case, they're just like too successful to tell good and bad ideas apart. Maybe at this point, Pepsi faced an.
Miles Klee
Even more insane disaster. In the early 90s, its manufacturer in the Philippines held a contest called Number Fever, in which the underside of bottle caps were printed with a three digit number and confirmation code that corresponded to different prizes, including a grand prize equivalent to about 40 grand in US dollars. Importantly, that's like hundreds of times the average monthly salary in the country. Winning numbers were announced nightly on the news. And the promotion is so popular that Pepsi extends it. One night a news channel announces that the number 349 is the grand prize winner. They were supposed to be just two winners, but because the contest had been extended, there were already 800,000 bottle caps in circulation. With that number, without the confirmation code, yeah, paying out that many grand prizes would have cost around $32 billion. Thousands of customers in the Philippines try to redeem their caps. Pepsi initially points out that they don't have the confirmation code. Then they try to buy these people off for $20 apiece. Some customers take this deal, but others form a consumer group and start holding protest rallies that sometimes turn into riots. People are tipping over Pepsi trucks and setting them on a fire.
Sarah Marshall
Jesus.
Miles Klee
Executives receive death threats. Three employees are killed when someone throws a grenade into a warehouse. A couple more people die when a homemade bomb is thrown at a Pepsi truck. One of the men accused of orchestrating the bombings will go on to claim that Pepsi paid him to stage them as false flag attacks so they could smear the protesters as terrorists. The fraud suits about number fever would take another 15 years to fully settle, with a number of plaintiffs finally receiving a few hundred dollars. But it only took about a year for Pepsi to recover the market share it lost in the country during the scandal.
Sarah Marshall
Man, that is like, I don't know. Yeah, it feels like these are the years when the consequences of the supremacy start coming back. Maybe where it's like right, like you are sort of this like God sized power if you're promising people money and then not giving it to them. And it sort of, I don't know, it's hard to blame people for wanting to take Pepsi down and not thinking through the consequences.
Miles Klee
Around the turn of the millennium, Coke and Pepsi continue to expand their product lines to keep pace with one another. You may remember Coke selling surge to challenge Pepsi's Mountain Dew. Some people still hoping that'll come back. The tie ins get more and more expensive. Pepsi is the official beverage of the Star wars prequels. In 2001, Coca Cola faces a lawsuit from a Colombian trade union seeking $500 million in compensation for the deaths of three members, claiming that a Coke bottling partner in the country assisted right wing militaries in murdering them. Columbia, because of its never ending civil war, is one of the most dangerous places for union activism. Coke and the bottlers eventually get the complaints dismissed. But if you've ever heard offhand comments about quote unquote, Coca Cola death squads, they're referring to this controversy. Coke continues to deny the allegations through the aughts, but it's just one more example of how these corporate behemoths wind up embroiled in every kind of geopolitical conflict thanks to their kind of imperial ambitions.
Sarah Marshall
Right, right. And if you're expanding aggressively into international markets and trying to maintain a foothold, then at a certain point you do, I think, have to commit the same kind of crimes as governments do, just in order to keep your place. Not that it's justified, but that that's.
Miles Klee
How people justify it now throughout the rest of the 20th 1st century. So far, I, I can't help but feel that some of the fight goes out of the cola giants era. I think that some of it is because outside of the super bowl, we don't really experience the TV ad monoculture once did.
Sarah Marshall
That's true.
Miles Klee
But because of the escalation of their battle in previous decades, Pepsi and Coke are just stuck burning ungodly amounts of money to remain in the public eye. This is like the paradox of being a product that's everywhere and that everyone already knew about. You have to continually reinforce your omnipresence.
Sarah Marshall
Yeah.
Miles Klee
I mean, Pepsi and Coke both now spend around $4 billion a year on advertising.
Sarah Marshall
That's amazing. I mean, I, and that does, I don't know, that goes back to the arms race comparison because I feel like, like what if Coke just decided to stop advertising completely? Wouldn't they be fine? I mean, not really, but you know, but they would though. We wouldn't forget about them. You know, I.
Miles Klee
They can't take that chance, Sarah.
Sarah Marshall
No, they can't. They can't, they can't. What am I saying?
Miles Klee
And you know, sometimes the efforts to remain a part of the con and backfire enormously. You mentioned the Kendall Jenner ad. So this was, this was interestingly like Pepsi kind of going for like a Coke style message.
Sarah Marshall
Yeah.
Miles Klee
You know, the spot features of what vaguely resembles a Black Lives Matter protest Of course. With all the slogans kind of downgraded to being generic. Facing off against the cops.
Sarah Marshall
Yeah. But it's like the timing is sort of. Yeah. The implication is there.
Miles Klee
They're like, we're here and we have signs.
Sarah Marshall
We are young.
Miles Klee
I'm surprised there wasn't a sign that just said sign on it, you know?
Sarah Marshall
Yeah.
Miles Klee
And the tension is diffused when Kendall Jenner, of all people, hands an officer a can of Pepsi and the whole scene turns into a celebration of soda and togetherness.
Sarah Marshall
You're just like, what were you going for, you guys?
Miles Klee
So the social media outreach is so intense that Pepsi pulls that commercial after a day.
Sarah Marshall
Incredible. Faster than the Like a Prayer ad.
Miles Klee
But I guess to sort of wrap up. I mean, the question that inspired this episode was, why was I not only a Coke drinker, but in some way committed to Coke over Pepsi?
Sarah Marshall
Right.
Miles Klee
Can be answered in part by its relative success. I mean, maybe without consciously choosing I wanted to back a winner. And maybe Pepsi drinkers want to root for an underdog.
Sarah Marshall
If we ever find any of them.
Miles Klee
We'Ll know we can't really uncouple our cola desires from the fact that they've been locked in combat for more than a century.
Sarah Marshall
Yeah.
Miles Klee
It's possible that neither would have prospered at this level without the other company kind of driving it to, you know, even greater extremes. I mean, personally, I have to conclude that while the cola wars may have sold oceans of soda, they were more about the frenemies you made along the way.
Sarah Marshall
Aw, that's nice. It is fascinating, isn't it? It's like tracking the expansion of Christianity. Biles. What a romp. You're gonna go get a Coke at some point, but until then, like, what are you up to? And where should people find more of your weird, wild stuff?
Miles Klee
Yeah, my byline is over at Rolling Stone, where I'm a staff writer. You can also find me on Twitter for the time being. I guess at you wouldn't post my terrible joke framing like the. You wouldn't download a car. And I'm just on my own name at bluesky. Yeah. You know, I'm just shitposting around, so you'll see me.
Sarah Marshall
Thanks for just having a great brain and using it around town. I really appreciate it.
Miles Klee
Thank you for having me.
Sarah Marshall
And that was our show. We have learned so much. Thank you so much for being with us through this year. Thank you for your patience as we get back to you, and I promise we won't ever leave you alone for so long again. Thank you to Miles Klee. Please check out his work over at Rolling Stone. Thank you to Corinne Ruff for editing. And thank you to Carolyn Kendrick for editing and producing. You can check out her new album, each Machine, over at Bang Camp. She's got a song about the devil out. You're gonna like it. We will see you in two weeks.
Miles Klee
Sa.
Podcast Summary: "Cola Wars with Miles Klee"
You're Wrong About episode titled "Cola Wars with Miles Klee" explores the intricate history and fierce rivalry between Coca-Cola and Pepsi. Hosted by Sarah Marshall, the episode features Miles Klee, a writer for Rolling Stone, who delves deep into how these two beverage giants have shaped American capitalism, culture, and global perceptions over more than a century.
Sarah Marshall introduces the episode by expressing her fascination with one of Billy Joel's notable lyrics from "We Didn't Start the Fire," specifically referencing the "Cola Wars." She sets the stage for an exploration of the historical and socio-political dimensions of the rivalry between Coca-Cola and Pepsi.
Notable Quote:
Sarah Marshall [03:47]: "Our producer, Carolyn Kendrick, has a new album out each Machine. So things are busy all over in scary ways, in exciting ways."
Miles Klee recounts the creation of Coca-Cola by John Pemberton, a Confederate army veteran who developed the beverage as a remedy for his morphine addiction post-Civil War. Initially marketed as "French Wine Cola," it combined ingredients like cocaine and kola nuts, reflecting the patent medicine trends of the late 19th century.
Notable Quotes:
Miles Klee [07:51]: "He took a Saber wound to the chest. Unfortunate."
Miles Klee [08:35]: "Coca Cola has all the problems here. The Department of Agriculture seizes 40 barrels and 20 kegs of a shipment and brings a lawsuit against the company alleging that its caffeine content is a public health hazard."
Parallel to Coca-Cola's trajectory, Caleb Bradham created "Brad's Drink," which eventually became Pepsi-Cola. Originally marketed for its digestive benefits, Pepsi emphasized being a pure food drink, distinguishing itself from Coca-Cola's medicinal roots.
Notable Quotes:
Sarah Marshall [14:26]: "Pepsi was originally called Brad's drink."
Miles Klee [14:38]: "Pepsi was bought by Charles Guth, president of Loft Candy Company, who reformulated it and expanded aggressively during the Great Depression."
As Asa Candler acquired Coca-Cola, he invested heavily in nationwide advertising, branding Coca-Cola as a refreshing and exhilarating beverage. Pepsi countered with similar strategies but positioned itself as the choice for the young and active, leveraging slogans like "Pepsi Generation."
Notable Quotes:
Miles Klee [13:46]: "Coca Cola has captured the attention of Asa Candler... securing ownership of the formula and brand for a total of $2,300."
Miles Klee [27:21]: "Pepsi is really stealing Coke's playbook here... they're hiring skywriters, putting the name everywhere."
The episode delves into how Coca-Cola, rooted in the Jim Crow South, marketed itself as a symbol of white respectability, often sidelining Black consumers. In contrast, under new leadership, Pepsi made strategic moves to target Black communities, utilizing multicultural marketing and partnerships with prominent Black figures, albeit amidst significant racial tensions and backlash.
Notable Quotes:
Miles Klee [28:36]: "It is the soda of White supremacy as well."
Miles Klee [31:22]: "Pepsi hires an African American sales team... featuring ads with Black models that don't conform to offensive stereotypes."
Coca-Cola's global strategy, dubbed "Coca colonization," involved exporting American capitalist values alongside the beverage. The creation of Fanta in Nazi Germany during World War II exemplifies Coca-Cola's adaptability and its entanglement in geopolitical conflicts.
Notable Quotes:
Miles Klee [36:37]: "This process becomes known as Coca colonization... Americanism and globalization."
Miles Klee [35:30]: "Coca Cola had distributed sodas at Hitler Youth rallies and embraced the swastika bottling conventions in Germany."
In the 1980s, Coca-Cola's attempt to reformulate its flagship drink into "New Coke" backfired, igniting consumer backlash and nostalgic clamor for the original formula. Concurrently, Pepsi capitalized on this turmoil with the "Pepsi Challenge," blind taste tests that suggested a preference for Pepsi over Coke, further intensifying the rivalry.
Notable Quotes:
Miles Klee [60:52]: "So Pepsi and Roger Enrico see this blunder as their moment of triumph."
Sarah Marshall [62:27]: "It's like this idea of Coke for better and for worse and in benign ways and in quite evil ways, building itself year by year as like the establishment drink."
The episode highlights ongoing marketing battles, including Pepsi's controversial Kendall Jenner ad, which attempted to align the brand with social movements but was swiftly pulled due to public backlash. Both companies continued expanding product lines and engaging in high-stakes advertising campaigns to maintain dominance.
Notable Quotes:
Miles Klee [72:26]: "The social media outreach is so intense that Pepsi pulls that commercial after a day."
Sarah Marshall [48:09]: "I have a personal favorite Tab commercial... it's about drinking Tabs."
Concluding the episode, Sarah and Miles reflect on why consumers remain loyal to either Coca-Cola or Pepsi. They suggest that deep-seated emotional connections and the companies' relentless competition have cemented their places in American culture, making the Cola Wars a prolonged saga of corporate rivalry intertwined with societal values.
Notable Quotes:
Miles Klee [73:08]: "We can't really uncouple our cola desires from the fact that they've been locked in combat for more than a century."
Sarah Marshall [73:29]: "It's like tracking the expansion of Christianity. It's a romp."
Sarah Marshall wraps up the episode by acknowledging the extensive journey through the Cola Wars, highlighting the complexities of corporate strategies, cultural influences, and the enduring legacy of Coca-Cola and Pepsi in shaping consumer behavior and American identity.
Notable Quote:
Sarah Marshall [76:02]: "What a romp. You're gonna go get a Coke at some point, but until then, like, what are you up to?"
Conclusion The "Cola Wars with Miles Klee" episode offers a comprehensive look into the historical battles between Coca-Cola and Pepsi, revealing how their competition reflects broader themes of capitalism, race, globalization, and consumer loyalty. Through engaging storytelling and insightful analysis, Sarah Marshall and Miles Klee illuminate the profound impact these soda giants have had on both American society and the global market.
Further Information: