Coke Shares Its Secret Formula (Sort Of)
Dec 20th 2011 3:00PM
Updated Dec 22nd 2011 9:52PM
Coca-Cola (KO) is finally giving consumers a glimpse of its secret formula -- but just a glimpse.
Earlier this month, Coca-Cola moved its secret formula to a vault to be displayed in its World of Coca-Cola museum in downtown Atlanta as part of the company's 125th anniversary celebrations. The formula was previously stored in a bank vault at SunTrust Bank (STI), where it had resided since 1925.
Although the formula for Coca-Cola was created in 1886, when Dr. John Pemberton invented the concoction and founded the company, it was not written down on paper until 1919, when a group of investors, led by Ernest Woodruff, made plans to purchase the business.
Woodruff asked for the formula to be documented as collateral for his initial investment. At that point, the formula was stored in a vault at the Guaranty Bank in New York until it was moved to Atlanta's Trust Company (which later became SunTrust) in 1925.
What's Really on Display
Coke's Chairman and CEO Muhtar Kent claims that the display of the formula will allow customers to "celebrate both the rich history of the brand's beginnings and the moments of refreshment and happiness to come for future generations."
Actual sharing -- as in laying eyes on the formula -- will have to be left to the imagination, since the formula itself remains hidden from customers. Standing between safe-crackers and the secret formula is a keypad and hand-imprint scanner attached to the vault.
But even if you could get your hands on the formula, it probably wouldn't be of much use anyway: Given the increasing use of high-fructose corn syrup due to cost cutting, the current recipe is likely very different from the original formula passed down from Pemberton.
Besides, the real secret to Coca-Cola's worldwide success isn't what's behind the lock.
Coke's Real Trade Secret (Hint: It's Not the Flavor)
The highly orchestrated pageantry is more of a reflection of Coke's marketing genius than the importance of its "trade secret."
Coca-Cola knows how to sell an image, and that's clearly on display in this display -- billowing "smoke" welcomes museumgoers into the exhibit that leads into a red-carpeted cylinder-shaped room (mimicking the shape of a can) displaying the vault.
It's the company's marketing genius that has made Coca-Cola the largest beverage company, beating out rival PepsiCo (PEP) and much smaller peers such as Dr Pepper Snapple (DPS). In fact, the company's production expenses pale in comparison to marketing expenses. Coke is the most recognizable brand in the world, and has customers in over 200 countries consuming 1.7 servings of Coke products daily.
By displaying the mysterious formula locked away in a vault hidden from view, Coke communicates to its customers that Coke is the "real thing," with a formula created 125 years ago, and guarded so carefully that competitors cannot access and copy it. The funny thing is that how the beverage itself is made is almost inconsequential.
Jim Royal, Ph.D., does not own shares of any company mentioned here. The Motley Fool owns shares of Coca-Cola. Motley Fool newsletter services have recommended buying shares of Coca-Cola.