Coca-Cola Magic: Business Lessons



Basically, the idea of an economic moat refers to how likely companies are to keep competitors at bay for an extended period. All businesses that earn excess economic profits attract competition, and the bigger those profits are, the more capital will pour into those areas of the economy to compete with existing firms. That's the basic nature of any (reasonably) free market. One of the keys to finding superior long-term investments is buying companies that will be able to stay one step ahead of their competitors, and it's this characteristic — think of it as the strength and sustainability of a firm's competitive advantage — that we're trying to capture with the economic moat rating

Pat Dorsey, Digging an Economic Moat: Sorting great companies from the rest with our new rating

The Thirty Commandments

Coke has a product which no one needs, but many want, and which many display a strong preference for


Mark Pendergrast distillers the convoluted Coca-Cola history's essential parables into thirty commandments in his book For God, Country and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company That Makes It:

  1. Sell a good product
  2. Believe in your product
  3. Develop a mystique
  4. Sell a cheaply produced item
  5. Everyone who touches your product before it reaches the consumer should make substantial amounts of money
  6. Make your product affordable to everyone
  7. Make your product widely available
  8. Market your product wisely
  9. Advertise an image, not a product
  10. Welcome an arch-rival
  11. Use celebrity endorsements wisely—but sparingly
  12. Appeal to universal human desires
  13. Get 'em young
  14. Develop cultural sensitivity
  15. Hire aggressive lawyers
  16. Don't break the law
  17. Become masters of influence
  18. Be patient but implacable: plan for the long haul
  19. Adhere to simple commandments
  20. Be flexible enough to change
  21. Don't use defencive, negative advertising
  22. Diversify only when necessary
  23. Pay attention to the bottom line
  24. Terrify your employees
  25. Promote from within
  26. All publicity is good publicity
  27. Use cash wisely
  28. Form joint ventures
  29. Think globally, but act locally
  30. Pursue the halo effect


The book then explains these lessons as follows:

  • Sell a good product

And if it contains a small dose of an additive drug or two, all the better. The product doesn't have to talk or fly, but it does have to perform some useful, universally appreciated function

  • Believe in your product

Make your product an icon and your job a religious vocation

  • Develope a mystique

An air of mystery, with a touch of sin, sells

  • Sell a cheaply produced item

Coca-Cola has always cost only a fraction of a cent per drink to produce

  • Everyone who touches your product before it reaches the consumer should make substantial amounts of money

(S)uch success fostered gratitude and devotion

  • Make your product affordable to everyone

Coke has usually survived and even thrived during hard economic times

  • Make your product widely available

Let's make it impossible to ever escape Coca-Cola

  • Market your product wisely

(H)ow, when, and where you market and advertise your product will ultimately determine its success

  • Advertise an image, not a product

It isn't what a product is, (…) but what it does

  • Welcome an arch-rival

(Competition) keeps us, and them, on our toes and keeps us lean. (… P)ublicity fostered by fierce competition is good for sales

  • Use celebrity endorsements wisely—but sparingly

(…T)here are dangers, however, in relying too heavily on celebrity endorsements. For one thing, viewers may remember more about the star than the product. Coca-Colas has always remained the real star of its commercials

  • Appeal to universal human desires

The Coke message has universal appeal—by drinking this product, you will be self-assured, happy, popular, sexy, youthful, and well coordinated

  • Get 'em young

(I)f you can achieve loyalty among youthful consumers, you're possibly fostered lifelong consumption

  • Develop cultural sensitivity

The company signed bottling contracts with prominent natives and encouraged the development of a soft drink infrastructure so that the trucks, bottles, pallets, and signs were all produced by local firms. (…) Thus, the company could proudly and accurately point out how much it contributed to local economies

  • Hire aggresive lawyers

If you succeed, you will undoubtedly need lawyers to protect your trademark, defend your good name, and scare off potential competitors

  • Don't break the law

There is no percentage in illegal activities which could besmirch the company's good name

  • Become masters of influence

Just because you don't break the law doesn't mean you must sit back and act like an angel. (…) Do not, however, abuse your influence by asking too much of politicians

  • Be patient but implacable: plan for the long haul

Do not be seduced into pursuing short-term gains at the expense of long-term vision

  • Adhere to simple commandments

(G)enious lay in looking at the big picture and in concentrating on a few elemental truths

  • Be flexible enough to change

The world belongs to the discontented. (…) We live nervous

  • Don't use defencive, negative advertising

Maybe for (others …), comparative ads make sense. Maybe. You're still giving your opponent free publicity, however

  • Diversify only when necessary

There's a perception in this country that you're better off if you're in two lousy business than if you're in one good one, that you're spreading your risk. (… T)hat's silly

  • Pay attention to the bottom line

Profits are more important than share-of-market

  • Terrify your employees

A certain degree of anxiety and tension has to exist for people to function at the highest level of their potential

  • Promote from within

The best (…) managers, almost without exception, have come up though the ranks, inculcated with the company mission. They have received the transfusion of Coke syrup

  • All publicity is good publicity

(E)ven negative publicity can ultimately help a well-stretched product

  • Use cash wisely

(I)t made sense to borrow money if you could then re-invest it at a substantially higher rate of return. One simple method: repurchase your own stock, thereby driving the price further up

  • Form joint ventures

(T)hou shalt not own bottling plants. (…) The bottlers, whose profit margin was narrower than the company, prospered on their own. (…) The conventional wisdom held that bottlers performed better as independent entrepreneurs. (…) The company never purchases more than a 49 percent interest, however, which keeps the bottlers off the company balance sheet

  • Think globally, but act locally

Different strategies must be applied to different locations

  • Pursue the halo effect

It also really does promote good causes, through philanthropy, support of minority programs, educational innovation, and relief aid in troubled countries. (…) It's the right thing to do, and it's very right for business, too

Coca-Cola Cake Recipe

This recipe makes a wonderfully rich cake, and when served with a scoop of vanilla ice cream, it makes a heavenly dessert for any occasion


This Cake uses Coca-Cola to create heavenly dessert. The Baltimore Sun Recipe Finder ran the following recipe for Coca-Cola Cake, in response to a reader's request for one like she had enjoyed at a Cracker Barrel restaurant. This one was sent in by a 94-year-old woman from Arkansas.

Coca-Cola Cake

  • 2 cups flour
  • 2 cups sugar
  • 2 tablespoons cocoa
  • 2 sticks (1 cup) margarine or butter
  • 1 cups Coca-Cola
  • 1/2 cups buttermilk
  • 1 teaspoons baking soda
  • 2 eggs
  • 1 teaspoons vanilla
  • 1 1/2 cups mini marshmallows


  • 1/2 cups Coca-Cola
  • 1 stick (1/2 cup) butter or margarine
  • 3 tablespoons cocoa
  • 1 box (1 lb.) confectioners' sugar
  • 1/2 teaspoon vanilla
  • 1 cup nuts (optional)

To make the cake:

  1. In a bowl, mix flour, sugar and cocoa.
  2. In a saucepan, melt margarine, then slowly add cola and bring to boil.
  3. Remove from heat and pour over flour mixture.
  4. In a separate bowl, mix buttermilk, baking soda, eggs, vanilla and marshmallows.
  5. Combine with first mixture. Blend.
  6. Pour into greased and floured 9-inch-by-13-inch pan.
  7. Bake at 350° for 30 to 40 minutes or until cake tests done.

To make the icing:

  1. Combine cola, butter and cocoa in saucepan.
  2. Bring to a boil. Remove from heat.
  3. Pour over sugar. Add vanilla. Blend and pour over hot cake.
  4. Sprinkle with chopped nuts if using.
  5. Cool completely before cutting.

Makes 12 to 16 servings. Per serving: 458 calories; 3 grams protein; 18 grams fat; 3 grams saturated fat; 73 grams carbohydrate; 1 gram fibre; 27 milligrams cholesterol; 300 milligrams sodium.


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