Coca-Cola's Berlin Wall blitz: Lessons in leadership 20 years laterNovember 9, 2009: 2:22 PM ET
I was not in Germany for the fall of the Berlin Wall 20 years ago today. But I got a front seat to business history-in-the-making three months later, when I went to East Germany to report a story about Coca-Cola's (KO) aggressive ramp-up in Europe following the Communist collapse.
It seems like yesterday.
Talk about a capitalist invasion. I remember how euphoric--genuinely euphoric--East German consumers and shop-owners were to suddenly have access to not only Coca-Cola but "luxuries" like bananas. Bananas! East Germans were, until the Wall came down, practically as unfamiliar with bananas as they were with Fortune magazine.
The visit was surreal, in so many ways. I flew on the Coke plane (no shame in corporate jets back then) on a glorious sunny Sunday from Weimar, a gray city in East Germany, to Nice, in France. Polly Howes, the young and eager Coke PR woman, and I then helicoptered over the deep-blue Mediterranean to Monte Carlo. Coke's top brass was convening its senior managers and bottlers at Monaco's elegant Hotel de Paris.
Walking into the bustling lobby, I ran into Don Keough, Coke's president and Roberto Goizueta, the company's CEO, who was wearing canary-colored trousers. What a scene! It was stranger still since Goizueta, whom I had come to know, was a quiet, cerebral chemical engineer. Not the yellow pants type of guy. But he was celebrating that day. Here was a man who grew up in Havana and fled Cuba in 1960--now navigating Coca-Cola, the icon of global capitalism, into new markets, now free and open.
Coke's "speed and seat-of-the-pants decision-making," as I called it in my 1990 Fortune story, seemed to be just right at the time. Now, 20 years later, we can see how right Coke's aggressive response really was. Coke's market share of carbonated soft drinks in Germany stands at 39%. Pepsi's (PEP) share is 6%, according to Beverage Digest. Consumption of Coke products has risen significantly. And one fellow who was, back when the Wall fell, key to Coke's European expansion, has risen as well. He is Muhtar Kent, now Coke's chairman and CEO.
Here's an excerpt from my 1990 story, "Coke Gets Off its Can in Europe":
[Coke's bottling plan in] Dunkirk increased production in a flash after the Berlin Wall fell last November. ''If it hadn't been for this plant, we wouldn't have been able to move into East Germany so quickly,'' says Goizueta. Coca-Cola has left competitors in the dust in East Germany, and the chairman predicts that annual sales there should reach 100 million cases -- around $1 billion at retail -- in two years or so.
Coke's success in East Germany shows the increasing importance of speed and seat-of-the-pants decision-making. Heinz Wiezorek, 51, president of the German division, was traveling in Rochester, New York, last November when he saw the Wall fall on TV. He called his West Berlin bottler and said, ''Get Coke out there!'' Border crossers in their sputtering Wartburg and Trabant automobiles received free cases of Coke, while East Germans on foot got six-packs and single cans. At one checkpoint, delivery trucks dispensed over 70,000 cans in a few hours. To Wiezorek, diving in fast was crucial. ''There won't be two colas in restaurants and small outlets,'' he says. ''They'll choose the one that's first in the market.''
One day in January while strolling East Berlin's Alexanderplatz, Wiezorek and Coca-Cola senior vice president Doug Ivester (since promoted to head Coca-Cola USA) made a quick, risky decision to accept East German currency, even though they then couldn't convert it into Western money. Coke and other companies selling in soft-currency markets instead have almost always countertraded, exchanging their goods for local ones, then selling the local products in the West for hard cash. Coca-Cola plans to invest $140 million in East German bottlers, which will package and sell Coke locally.
Ivester, by the way, went onto great success, as Goizueta's No. 2. After Goizueta died of lung cancer in 1997, Ivester moved up to CEO--and lasted just two years before the board pushed him out. After a couple of poor CEOs and years of disappointing results, Coke finally got back on track under chief Neville Isdell. And now Kent is steering Coke aggressively again.