Fizz Page 11
For Coca-Cola this was a serious problem. Coke was now one of the biggest consumers of sugar in the world, gobbling up nearly one hundred million pounds of the sweet stuff every year. Soon Coca-Cola profits were being sucked into a sugar price black hole that threatened to ruin the company. By early May 1920, with sugar prices hitting twenty-eight cents a pound, Candler decided Coca-Cola needed to protect itself against further increases and ordered the company to buy half a year’s supply of sugar for an eye-watering sum. To pay for all this sugar, Coca-Cola borrowed millions from Wall Street banks. As collateral for the loan, the company handed over the sole copy of its secret formula, which was promptly locked inside a New York City bank vault. Coca-Cola wasn’t the only soda company thinking this way. As the crisis deepened, Pepsi-Cola, Chero-Cola, and Moxie all started buying up sugar in large quantities.
Then in early August 1920 sugar prices collapsed, the speculative bubble bursting as eastern Europe’s sugar beet producers got back on their feet. Within days the price of sugar had slumped to ten cents a pound. The soft drink giants that had bet on further price rises had miscalculated and were now saddled with mountains of overpriced sugar. For Moxie it was the beginning of the end of its days as a national force. In 1920 the company was still ahead of Coca-Cola in sales and riding high on its successful “What this country needs is plenty of Moxie” wartime ads, which turned the soda’s name into a byword for a can-do attitude. Moxie had also scored a hit with its off-the-wall Horsemobiles. These attention-grabbing promotional vehicles consisted of model horses welded onto automobile chassis that Moxie salesmen could drive while riding the horses. These strange motor vehicles became a regular sight in New England and attracted huge crowds wherever they went. But the sugar crisis caused Moxie to slash its advertising budget, a move that destroyed its sales momentum. By 1925 sales of the Massachusetts soda had peaked.
Compared to Pepsi-Cola, Moxie got off lightly. Bradham’s sugar-buying spree brought his company to its knees. Desperate, he tried selling his business to Coca-Cola without success. In 1922 he found himself with little choice but to file for bankruptcy. Pepsi-Cola was dead. Chero-Cola was also badly wounded by its sugar-buying error and received a further blow when Coca-Cola’s lawyers won a trademark suit that forced it to drop the word cola from its name. Within a few years Chero, as it would now be called, was fading fast.
But over at Coca-Cola, the sugar crisis became a means for Woodruff to tighten his control over the business. Relations between Woodruff and Dobbs had deteriorated rapidly since the takeover. Dobbs resented Woodruff’s constant interference, and Woodruff had became increasingly fed up with Dobbs’s objections to his plans. The sugar crisis brought these tensions to the fore. They clashed over how to handle the company’s network of bottlers, who were rebelling over increases in the price of Coca-Cola syrup due to the spike in the value of sugar. Woodruff wanted the company to impose a price and the bottlers to lump it. Dobbs wanted a compromise that would split the burden of high-price sugar between the company and its bottlers. Dobbs got his way, but when the cost of sugar plunged, Coca-Cola still had large stockpiles of the sweetener that it had bought at the peak of the price bubble and so couldn’t reduce the price it charged bottlers for its syrup. The bottlers responded by suing the company.
The pair also fought over advertising. Dobbs wanted a bigger promotional budget so that he could keep advertising Coca-Cola during the winter when sales of the drink would fall off. Woodruff wanted larger dividends and opposed Dobbs’s high-spending ad plan. Dobbs regarded Woodruff as a man ignorant of the power of advertising; Woodruff regarded Dobbs as a man out to waste his money. The disagreements came to a head in September 1920 when Woodruff and his boardroom allies showed Dobbs who was the real boss of Coca-Cola by blocking his request for more advertising funds. The following month Dobbs resigned.
With Dobbs gone, Woodruff reinstated Howard Candler as president. After all, Coca-Cola was in trouble, and Candler already had experience running the business. Candler wasn’t keen on the job but took it, in part, out of a sense of duty toward the business that his father had built. Candler successfully steered Coca-Cola out of the sugar crisis. Unlike Moxie, Coca-Cola kept advertising its product, which helped sales continue to rise. More sales not only meant more money for repaying the loans the company had taken out but also caused its expensive sugar mountain to erode faster. By summer 1921 most of Coca-Cola’s sugar stockpiles were gone and the company had reached an out-of-court settlement with its bottlers.
Despite his success in pulling Coca-Cola out of the crisis, Woodruff and the company’s board were unhappy with Candler. They felt he lacked the fire needed to take Coca-Cola forward, and they hadn’t forgotten that it was Candler who bought all that sugar in the first place. The board wanted a more go-getting boss, and there was an obvious choice: Woodruff’s son Robert, the vice president of the Cleveland-based White Motor Company. Robert accepted the offer to become Coca-Cola’s president but on one condition: that he would be free to run the business as he saw fit and that his father would butt out. Ernest agreed and in April 1923 the thirty-three-year-old replaced Candler as the president of Coca-Cola.
By then the mess caused by the sugar crisis had been cleaned up and Coca-Cola had weathered the storm. In fact all of the company’s problems seemed to have been solved. All of its competitors were in retreat. The overpriced sugar mountain was gone and the debts incurred from buying it had been repaid. Even the Wiley case that had dogged the company for years had been settled, after Coca-Cola agreed to reduce the amount of caffeine in its drink and the government agreed not to challenge its trademark. Finally, the cola king was ready to cash in on the soda boom that the introduction of Prohibition had just kickstarted.
5
The Bar Is Dead, Soda Is King!
On January 17, 1920, America ran dry. Years of vigorous campaigning by the temperance movement had ended in victory; the demon liquor had been slain and was now banned throughout the United States.
For the triumphant prohibitionists, the Eighteenth Amendment that introduced the ban and the Volstead Act that enforced it marked the dawning of a new era. No longer would drunken American men beat their wives or blow their pay in smoky saloons. Instead the new American male would be a model citizen. He would hold down a job, save his money for his family, and go to church. Firebrand temperance campaigner Reverend Billy Sunday envisaged the birth of dry America as an express elevator to utopia. “The slums soon will be only a memory,” he proclaimed as the nation headed for last orders. “We will turn our prisons into factories and our jails into storehouses and corncribs.”
Prohibition’s puritan supporters believed their “noble experiment” would banish every social ill, but not every American greeted the ban with joy. As wet America’s final hours approached, the New York Evening Post wrote of “liquor stampedes” as New Yorkers scrambled to stockpile alcohol to see them through the dry days ahead. For the nation’s breweries, Prohibition threatened nothing less than ruin. With their core business abolished, they started hunting for new sources of profit to mine. Some reinvented themselves as car part manufacturers, hoping to cash in on the fast-growing automobile market. A few took to smoking hams. Others retooled to become ice cream producers, among them Budweiser brewer Anheuser-Busch.
Many sought salvation in near beer, the super-low-alcohol beer permitted under Prohibition since its alcohol content was under 0.5%. The trouble was that near beer verged on tasteless since the boiling process that removed the alcohol also destroyed the chemicals that gave beer its flavor. The resulting liquid was a bland, buzz-free beer substitute that food critic Waverley Root described as a beverage that “might have been dreamed up by a puritan Machiavelli with the intent of disgusting drinkers.” Despite these shortcomings, near beers such as Miller’s Vivo and Anheuser-Busch’s Bevo sold briskly at first, although their appeal was short-lived. Near beer sales peaked at three hundred million gallons in 1921 but come 1929 annual sales had dwindled t
o one hundred million gallons.
Another business lifesaver the breweries clung to was carbonated soft drinks. Many breweries became bottling plants for existing soda brands; a few went a step further and invented fizzy drinks of their own. The Independent Breweries Company syndicate of St. Louis came up with IBC Root Beer, only to collapse in 1923. Green River was another, more successful brewery soda. Developed in 1919 by the Schoenhofen Edelweiss Brewing Company of Chicago, Green River was a lurid green, lime-flavored soda that became a sensation in the Midwest. To draw attention to its drink, the brewery commissioned Eddie Cantor of Broadway’s famous Ziegfeld Follies revues to compose a promo tune that is one of the earliest examples of popular music being used to promote soda pop. Cantor’s song, “Green River,” pitched the emerald liquid as the only soft drink suitable for despondent drinkers facing life under Prohibition. “Since the country’s turned prohibitin’, I’ve been in a bad condition,” the lyric went. “Every soft drink that I try, just makes me want to cry. Take it back from whence it came, all your drinks are much the same. I tried one here today, and believe me when I say: For a drink that’s fine without a kick, oh, Green River!”
This ditty wasn’t the last song Green River would inspire. In 1969 the rock band Creedence Clearwater Revival scored one of its biggest hits with “Green River,” a song partly inspired by singer John Fogerty’s childhood love of the drink. “In my neighborhood, if you went to the soda fountain at the pharmacy, you could order different fizz drinks,” he recalled in Hank Bordowitz’s biography of the group Bad Moon Rising. “One of the drinks was a Green River, a bottle of syrup that fit into the dispenser upside down. The drink was a green, lime drink on ice with fizz water, a soggy green snow cone. That’s what I would order and it made me the happiest.”
But while Prohibition forced breweries into the soda business against their will, the companies that built the industry could barely conceal their delight. Soda makers had never knowingly missed an opportunity to align themselves with the temperance movement, and just like the Reverend Sunday they saw a bright future ahead—one where the greenbacks that once filled bar tills flowed into their coffers instead. The soda trade papers danced gleefully on the grave of the liquor business. The Ice Cream Journal described the soda fountain as “the new American bar” while Drug Topics boldly proclaimed, “The bar is dead, the fountain lives, and soda is king!”
This attitude wasn’t hubris. Prohibition forced the saloons and bars out of business. Restaurants that relied on liquor sales for their profits increased their food prices to compensate, only to watch their diners drift away to the soda fountains that were now offering cheap snacks to complement their staples of sodas, shakes, and sundaes. To welcome the refugees from the bars, fountain operators concocted soda recipes designed to appeal to those more used to the punch of rum than the sweet bubbles of cola. They added dashes of pepper, pinches of salt, even cayenne chili pepper extract to give their drinks an added kick. And as the barflies moved to the soda fountains, so did the newly unemployed barkeeps. The teenage and medically trained soda jerks of old were out. In their place were professional bartenders who had honed their skills and chat in the saloons. The new breed of soda jerk was exemplified by the kind of acrobatic fountain wizardry that Buster Keaton’s character tried, disastrously, to imitate in the 1927 movie College.
Within months of Prohibition’s introduction, drugstore soda fountains had replaced bars and taverns as the social epicenters of Main Street America. But it wasn’t just soda drawing in the customers. Under the Volstead Act, drugstores became the only place where alcohol could be purchased legally, provided it was for medicinal purposes. Strangely, the need for medicinal alcohol grew rapidly after Prohibition. In 1921 alone, pharmacists withdrew more than eight million gallons of medicinal whiskey from federal warehouses, twenty times the amount they dispensed before Prohibition. Soda fountains also did a roaring trade serving their regulars with drinks that were anything but soft. The J-Bar at the Hotel Jermone in Aspen, Colorado, reinvented itself as a soda fountain but spent most of its time whipping up Aspen Crud, a cocktail of vanilla ice cream soda laced with bourbon that became an illicit favorite with the Sunday after-church crowd.
The authorities weren’t dumb, however. Soon drugstores were playing cat and mouse with the law enforcement agencies that began raiding pharmacies and seizing barrels of suspect medicine. In one 1929 raid federal agents busted a soda fountain liquor ring in Meridian, Mississippi, after receiving reports that young men and women were “getting hilarious” on their Coca-Colas. The fountains had been offering customers a mix of Coca-Cola and Jake, the most notorious black market liquor of all. Bootleg booze had a reputation for harshness and dubious ingredients, but Jake took the danger of illicit liquor to a whole new level. Formed from fermented Jamaican ginger, this perilous beverage contained an adulterant that was supposed to fool the feds but proved highly toxic. Within weeks of going on sale, the vicious drink had left an estimated 15,000 to 100,000 people impotent or partially paralyzed for life. The hobbling walk of those crippled by the drink became known as “Jake leg.”
But for the hip young things of the Jazz Age, the illegality and danger of moonshine were all part of the thrill and romance of Prohibition drinking. Alcohol was never far away from the rebellious bobbed-haired flappers and their male counterparts, the sheiks, as they swung their way through the Roaring Twenties. To counter the harsh burn of bootleg liquor they turned to soda-based cocktails or mixed drinks, which had been uncommon in the days before Prohibition, when soda was more often used as a chaser than as a mixer for alcohol. In speakeasies they would order “set ups” of cracked ice and ginger ale or club soda into which they could discreetly slip a measure of bathtub spirit from their handy and oh-so-chichi hip flasks. Cola may have overtaken ginger ale as America’s favorite fizz by the dawn of the Jazz Age, but the appeal of the latter as a mixer drove its sales to new highs in the 1920s.
It is often claimed that ginger ale was first developed in Ireland by the American apothecary Dr. Thomas Cantrell around 1850, but drinks bearing the same name were being advertised as early as 1818. Regardless of its exact origin, ginger ale was a variation on ginger beer, the sweet, dark, yeast-fermented drink that had become popular in Britain during the early 1800s. Initially there was little difference between ginger ale and ginger beer, but over time ginger ales evolved into ginger-flavored drinks carbonated with soda water rather than yeast that were clear rather than cloudy.
Ginger ale lived in the shadow of ginger beer for several years until the introduction of Cantrell’s Belfast ginger ale turned the drink into an American favorite. Cantrell’s drink inspired a wave of what are now called golden ginger ales. One of the drinks inspired by Cantrell was Vernor’s, the 1866 creation of Detroit pharmacist James Vernor that gained a reputation for being so fizzy it caused people to sneeze. Vernor’s ginger ale became a regional favorite in Detroit and Michigan and stands today as America’s oldest surviving soda brand.
The next leap forward for ginger ale came in 1900 courtesy of Canadian pharmacist John McLaughlin, the reserved Presbyterian son of a carriage maker from Enniskillen, Ontario. McLaughlin entered the soft drinks business in 1890 using the dowry from his marriage to Maud, a haughty redhead from a wealthy New York family, to open a Toronto store where he sold bottles of sarsaparilla, lemon, and cream soda under the brand name Sanitary. In 1900 he added a ginger ale to the range, but his wife and customers found his drink too syrupy for their tastes, so he began work on a lighter colored and less sweet version. Four years later he launched McLaughlin’s Pale Dry Style Ginger Ale, a new form of ginger ale that offered a lighter, less pungent taste. A year later he renamed it Canada Dry and, at his wife’s suggestion, started promoting it as “the champagne of ginger ales.”
Canada Dry spread rapidly through the Canadian provinces, and while most people drank it straight, McLaughlin’s dry ginger ale also gained a reputation as a mixer thanks to its mellow taste. In 1923
the drink’s appeal as a mixer prompted two businessmen, Perry Saylor and James Mathes, to buy the business for a cool million dollars. The Canadian-born Saylor and his American partner took Canada Dry into the United States with a direct appeal to Prohibition drinkers. They billed it as a New York nightclub favorite, sold it in miniature champagne-style bottles and rode the speakeasy boom to enormous success. In just four years Canada Dry went from selling 1.7 million bottles a year to more than 50 million in 1926. Almost everyone who bought Canada Dry used it as a mixer, with surveys suggesting that as many as three-quarters of ginger ale drinkers used it to mask the taste of bootleg liquor.
Ginger ale became so big during Prohibition that even the notorious gangster Al Capone got in on the act, setting up ginger ale and club soda bottling plants so that he could monopolize the mixer market in Chicago. He and his older brother Ralph “Bottles” Capone, who was put in charge of the mobster’s soda operation, made millions from the business. The marriage of soda and alcohol established during Prohibition would prove to be one of the temperance movement’s most enduring legacies, prompting a change in American drinking habits that still lingers on today.
But while Canada Dry built an empire in the speakeasies, Coca-Cola was enjoying even greater success. By the time Robert Woodruff took charge in 1923 the company was in great shape, with the challenges of the late 1910s resolved. The 1920s lay before the company ready for the taking, and Woodruff used this rosy inheritance to turn Coca-Cola into the epitome of modern business. During the first twenty-five years of his leadership, Coca-Cola would not just dominate the fizzy drink industry but transform how all businesses operated and weave its product into the very soul of America. Woodruff’s Coca-Cola captured the spirit of the 1920s. It was an age of bold dreams, expansive plans, and modernist thinking in which synthetic plastics, refrigeration, cars, color advertising, radio, airplanes, and telephones fundamentally reshaped the world. One of the fruits of this push for the modern was a vision of the corporate boss as a decision-maker reliant on the expert knowledge of PR specialists, lawyers, researchers, salespeople, and advertising creatives to run their businesses. Woodruff was nothing if not a professional manager. Under his stewardship Coca-Cola became a firm at the cutting edge of modernist corporate management.