Salt Sugar Fat (18 page)

In pursuing this massive consumption,
Dunn rose nearly to the top of the company. He became president for North and South America, a job that entailed winning the brand loyalty of nine hundred million people. He lived Coke and loved his work and the company, a devotion shared by many at Coke, and for all those years he had no qualms about what he sold. He achieved this peace of mind, he said, by simply not thinking about what he sold. Rather, he thought only about the selling, and the selling was great, until it wasn’t anymore. This moment came one day in 2001 when his lieutenants took him to a part of the world that excited them like no other: Brazil. The economy there was booming, and the population there had the potential to match the soda consumption levels in the United States; Coke only had to show them the way. As Dunn toured some of the targeted neighborhoods, he felt his stomach sink. Suddenly, the kids there, along with the kids in the United States, seemed so unfairly lured, so helpless in the face of the company’s tactics, so utterly vulnerable to the addictive powers of Coke, that Dunn decided his company had gone too far. After trying over the next four years to steer the company back to saner nutritional policies, he resigned. For the first time since then, he agreed to discuss some of the company’s deepest secrets that ultimately led to his own deepest regrets.

Jeffrey Dunn is no ordinary whistleblower. He doesn’t look back on his time at Coke with bitterness, nor does he view his former colleagues as evil. Rather, he said, they are blinded by the desire to win.
“At Coke, I do
think they believe they are doing the right things,” he said. “If you really think you are doing the wrong thing and covering it up, it’s hard to deal with that emotionally. I’ve still got friends there, and I suggest to them, ‘It’s just very hard to see yourself from the inside.’ ”

“But the obesity trend is an epidemic,” Dunn continued. “And there is no question its roots are directly tied to the expansion of fast food, junk food, and soft drink consumption. Whether you can identify any one of those things is probably a fair question. Soft drink guys prospect on that all the time. But you can look at the obesity rates, and you can look at per capita consumption of sugary soft drinks and overlay those on a map, and I promise you: They correlate about .99999 percent. As they say, you can run but you can’t hide.”

J
effrey Dunn can’t quite pinpoint the moment when he first knew he would work for Coca-Cola. He guesses he was seven or eight. And he probably wasn’t the only kid in his family who felt that way. He grew up in the San Fernando Valley with four older brothers. The Dunn boys played baseball. They surfed. They tangled with one another, and—this being the 1960s—they grew their hair long. Their mother had been a cartoonist at the Disney studios, but she traded that career to wrangle her boys full-time or, as Dunn likes to say, “to keep us out of jail.” In the evenings, when Jeffrey and his brothers would tumble through the door, the day’s real entertainment would begin: Their father would come home and transfix them with stories of his job.

Walter Dunn worked for Coca-Cola, but he could have passed for a U.S. senator. Tall and handsome with a big head of white hair, the elder Dunn also had the gift of speech. The five boys would sit, rapt, as he spun his latest war stories, which invariably involved the competition, Pepsi. “When other kids were coming home and talking about how school was, Walter would come home and tell stories about Pepsi making a challenge, here and there,” Dunn said. “He worked in the fountain department of
Coke’s offices in Los Angeles, and one time when 7-Eleven decided to put Pepsi into their stores alongside Coke, Walter was called in over the Christmas holiday to help stop it.”

In 1970, Walter Dunn moved his family to Atlanta, where Coke is headquartered, to take a much bigger job.
He was put in charge of the prestige accounts, the company’s most valued relationships—and, at this point, the stories around the dinner table got even more colorful. It was during these years that Walter Dunn developed—invented, really—the enterprise known as sports and entertainment marketing. Under chairman Woodruff’s direction, Walter Dunn’s job was to put Coke’s logo into stadiums, movie theaters, amusement parks, fair grounds, and every other venue in the country where people had fun. He cut endorsement deals with athletes and teams and stadiums, which for Jeffrey, now a teenager, was a dream come true.
“He took his job very seriously,” Dunn said. “Coke had about an 80 percent share of what you would define as prestige accounts, so every one of these that came up, Pepsi would try to take them away. Walter took this personally. He was maintaining the integrity of the Coke brand. I was always hearing about the Buffalo Bills or the Dodgers or the Yankees, and if you’re a kid growing up, all those names
meant
something to you.”

Listening to his father, Jeffrey Dunn knew that he had the work ethic needed to succeed at Coke. But it wasn’t until one day in high school that he knew he could do more than work hard—that he, too, could lead and inspire others to give themselves over to something larger. He was the captain of the basketball team, and early in one heated game his coach pulled him off the court after he committed a foul. Dunn, feeling that the coach was being too timid, picked up a chair and threw it eight rows into the stands—at which point, the coach promptly sent him to the locker room. His teammates, however, who thrived with Dunn as their captain, had other ideas. They confronted the coach at halftime and insisted he put Dunn back in the game. Which is just what the coach did.

In deciding he wanted to work for Coke, Dunn faced one small hurdle. The company had a strict rule against nepotism, and his father had
not been just any Coke employee. The riches Walter had brought to the company had made him a star, making it all the more difficult to overlook when Jeffrey came knocking on the door, résumé in hand. The twenty-seven-year-old Jeffrey had already earned his stripes through a stint with E. & J. Gallo Winery, selling door to door to liquor stores in Mississippi, where he picked up some tricks in handling store owners, merchandising, and working the competition. He also worked for Seagram, where, in the course of less than two years, he rose to the company’s director of sales for seventeen western states. Still, getting into Coke, where he had always wanted to work, was an ordeal.

In early 1985, he tried in vain for weeks to land an interview with a Coke executive, Charlie Frenette, who wouldn’t return his calls. Undeterred, he got a sympathetic secretary to tell him when Frenette was traveling next, and Dunn flew to Atlanta and boarded the same flight.
“He was up in first class,” Dunn said. “I was in coach. When they turned the seat belt lights off, I walked up and said, ‘Hi Charlie, how are you doing? I’ve been having a hard time getting in to see you, so I thought the best thing would be for us to spend a few minutes on the plane.’ And he looked at with me this kind of look—oh, really—and said, ‘I’m kind of busy. I have a big call. I’ll see if I have any time at the end of the flight.’ ” Dunn still didn’t get an interview, but he did get a test. Just before landing, Frenette had him come up to first class, where he asked him to critique a presentation he’d prepared for the Denny’s restaurant chain. “Next thing I know, he had hired me,” Dunn said. “And what’s funny about that, we got to be good friends, and he would tell that story to sales people all the time. ‘Let me tell you about somebody who figured out how you get to see somebody. You just don’t accept no for an answer.’ ”

Dunn started off in the fountain business at a regional office in Irvine, California, where his first big account was the Carl’s Jr. hamburger restaurant chain. This was also his first experience with the supersize craze that would sweep through the fast food industry and move into the grocery stores with ever larger cups and bottles of soda. “It was bigger, better,”
Dunn said. “We had a whole marketing division within fountain that looked for opportunities. Coke went to its customers, starting with McDonald’s, with the idea of bundled meals that included a Coke. At the time, the restaurant chains didn’t do combos—like hamburgers with fries—but we figured out that if they did this, we’d get a lot more people to buy Coke. From 1980 through 2000 at least, that was the predominant marketing strategy of Coke to build consumption within fast food outlets. At Carl’s Jr., when I was running that account, we not only put Coke into their equivalent of combo meals. We actually had all-you-could-drink beverage bars added, too—you know, buy a drink and get as many refills as you want. All of that was about instilling more value into the fast food experience and ensuring that people bought a soft drink along the way.”

By the early 1990s, Dunn was in charge of his own battalion in Coke’s army—a force of eight hundred people who handled fountain sales to convenience stores, restaurants, and cafeterias, with annual sales of $3 billion. And like any beloved leader, Dunn was given a nickname by the people who worked for him. It happened one day when he had assembled his staff for a pep talk. “Sales people, by definition, like to keep score,” he told me. “You generally don’t make it in sales unless you are good with people and you like to keep score. It’s just the nature of the beast. So here was this big army of sales people and I was giving a speech about Pepsi. Coke has about a 70 to 80 percent market share of the fountain side of the business, and every five years, Pepsi would make a run and decide they were going to take fountain. So I gave this speech about winning and I said, ‘It’s like we’re at war. And the way you keep score in war is how many body bags get carried off the field. The key is to have more of their body bags carried off the field than our body bags. I want you all to go out and ramp up our scorecard. I want to see a lot of body bags.’

“I said it a little more intensely than that,” he told me. “The body bags were the Pepsi sales people who were going to get fired as a result of not getting our accounts. So my nickname for the next ten years was Body Bag.”

I
t would be difficult to overstate the animosity between Coke and Pepsi or the extent to which they looked upon one another with suspicion. But things reached a low point in 1984, after
PepsiCo pulled off a stunning coup by signing the world’s biggest star, Michael Jackson, to film a commercial for them, a move that appeared to seize them the high ground. Relations deteriorated even further the following year when Coke, perhaps feeling some pressure from the Jackson endorsement, prepared to introduce New Coke—and watched helplessly as PepsiCo pulled off yet another publicity coup. A day before Coke’s announcement, PepsiCo ran ads in newspapers around the country, presenting Coca-Coca’s move as a triumph for Pepsi. For years, PepsiCo had been claiming that its sweeter soda was better liked than Coke, and here was Coke, practically admitting to the world that it agreed. New Coke, by PepsiCo’s analysis,
was 4 percent sweeter than regular Coke. And to celebrate the reformulation, PepsiCo gave its employees a day off.

From Wall Street to the mass media, this rivalry between the two soda titans became known as the Great Cola War. The companies, however, weren’t fighting each other as much as they were pulling together to drive up consumption overall.
Coke crushed Pepsi in the 1960s, and Pepsi won the 1980s, and Coke came back strong in the 1990s. But what few outside the companies realized was that winning or losing was immaterial: In each of those decades, the sales of Coke and Pepsi
both
went up. Roger Enrico, the CEO of PepsiCo, was the first to let slip that, in reality, the Great Soda War caused neither company to shed much blood.

“If the Coca-Cola Company didn’t exist, we’d pray for someone to invent it,” he wrote in his 1986 autobiography,
The Other Guy Blinked
. “You see, when the public gets interested in the Pepsi-Coke competition, often Pepsi doesn’t win at Coke’s expense and Coke doesn’t win at Pepsi’s. Everybody in the business wins. Consumer interest swells the market. The more fun we provide, the more people buy our products—
all
our products.”

To be sure, much of the “fun” they provided came from the product itself, and in this matter, sugar was key. It is the largest ingredient, after water, with caffeine not far behind. From time to time, other elements of the company’s well-guarded recipe would leak into the media, and these reportedly include extracts of coca, lime, and vanilla.

As Dunn would learn, however, what makes Coke’s formula so addictive goes beyond sugar or any secret flavorings. The precise nature of this allure was not even known to Coke until the late 1990s, when Charlie Frenette, the man who had hired Dunn and was now the chief marketing officer, decided to dig deeper into Coke’s formula. With the utter secrecy that shields all matters relating to Coke’s recipe, he hired a famous Swiss manufacturer of flavors and fragrances, Givaudan, to divine the fundamental aspects of Coke’s appeal. Reporting back to Frenette, Givaudan pointed out that the bubbles in the soda themselves are quite enticing, which a sip of flat Coke will demonstrate. But Givaudan found something else as well, and it stems from a quirk of our biology—one that the entire processed food industry has, of course, learned to exploit. Its premise is this: We like foods that have an identifiable strong flavor, but we tire of them very quickly.