Other than gourmet coffee, my favorite beverage in the world is an ice cold glass of Coca-Cola. Of course, not only is the product great, but my love for business causes me to appreciate the nectar of the gods in far more ways than the average person could appreciate.
When I look at a bottle of Coke, I see the company going public in 1919 at $40 per share before crashing to $19 per share. I also see that today, with dividends reinvested, a single share of Coca-Cola has grown into more than $10,000,000 in wealth. Oh yeah, and you’d collect roughly $300,000 in cash dividends on your shares. So, if great-grandma or grandpa had just splurged for a single certificate, you’d be very well off today.
Despite my extraordinary respect for Roberto Goizueta, which I spelled out in 9 Lessons You Can Learn from Roberto Goizueta on my About.com site, he made one key decision that was horrific. It was a case of (I believe) lower quality justified by an increased profit per serving. What was this shocking betrayal, you ask? In an effort to cut costs, the Coca-Cola network, during Goizueta’s tenure as CEO, substituted cheaper high fructose corn syrup for real sugar cane. The taste difference is substantial. (The company, of course, swears up and down its non-existent but we held blind taste tests with our friends and family and about 80% of people preferred the real, sugar-based Coke without knowing why we were having them try two different varieties, both out of a paper cup, with their eyes covered.)Why Mexican Coke Is Better
The good folks in Mexico refused to go along with this trend and the bottlers maintained the original sugar cane formula. Thus, today you’ll find that Mexican Coke is far superior to the domestic version to the point that a mini-black market has opened up in restaurants and grocery stores. In fact, one of my local grocery stores has a secret cache of Mexican Cokes that it manages to get its hands on for those of us who love it, and we pay as much as 500% more than the retail value of the stuff due to scarcity.
Now, there are some rumblings that Costco is providing cases of imported Mexican Coke to its customers, especially in areas with a lot of immigrants such as California and Texas. This has ticked off the domestic bottlers who, instead of examining why people are willing to pay more for a better product, insist on litigating against those who attempt to provide the tastier version of Coke. Apparently they are too stupid to realize that some of us are willing to pay far higher prices for a far better product. There are enough of us that it is beginning to get noticed.
The Taste of Mexican Coke vs. American Coke
A few people really can’t tell the difference between Mexican Coke and American Coke. For those of us who can, the difference seems to be that the sugar cane version – this is going to sound weird and I’m not sure how to describe it – hits further back on the tongue, almost across the ridge in the mid-section, and the flavor is vertical; that is, you can actually taste a light aftertaste vertically in your mouth after you swallow. The American corn-sweetened based Coke, on the other hand, hits the front of the tongue, across the first third and tends to concentrate toward the front corners. It’s just a less pleasant experience and tastes more chemical.
Coca-Cola Should Focus on the Opportunity
I think Coca-Cola should focus on the opportunity of sugar cane based Coke and not the challenge of bottler disputes, which are misguided at best (comparable to domestic car companies complaining that the problem with their sales comes from foreign competition when it was really an inferior product). There are a sizable amount of citizens willing to pay higher prices for a better product. On a daily basis, I would willingly pay 40% more for sugar cane Coke that was identical in taste to the Mexican Coke I’ve been drinking for the past few years. The product is worth it to me. There is always a market for cheap goods and there is always an opportunity to make more money from people who want quality. Give us quality.