Sign up FAST! Login

Why Coke Cost A Nickel For 70 Years


Why Coke Cost A Nickel For 70 Years

Source: WEKU

Stashed in: Brands!, Marketing!

To save this post, select a stash from drop-down menu or type in a new one:

Lawyers captured the bottling rights for Coca Cola in 1899:

In 1899, two lawyers paid a visit to the president of Coca-Cola. At the time, Coke was sold at soda fountains. But the lawyers were interested in this new idea: selling drinks in bottles. The lawyers wanted to buy the bottling rights for Coca-Cola.

The president of Coca-Cola didn't think much of the whole bottle thing. So he made a deal with the lawyers: He'd let them sell Coke in bottles, and he'd sell them the syrup to do it. According to the terms of the deal, the lawyers would be able to buy the syrup at a fixed price. Forever.

Bottled drinks, of course, took off. And Coca-Cola was in a bind. If the bottlers or a corner store decided to raise the price of a bottle of Coke, Coca-Cola wouldn't get any extra money. So, if you're Coca-Cola, you want to somehow keep the price down at 5 cents so you can sell as much syrup as possible to the bottlers. What do you do?

"One thing you do is blanket the entire nation with Coca-Cola advertising that basically has '5 cents' prominently featured," Young says.

The company couldn't actually put price tags on the bottles of Coke saying "5 cents." But it could paint a giant ad on the side of a building right next to the store that says, "Drink Coca-Cola, 5 Cents."

Brilliant!

In the end, inflation killed the nickel Coke:

The price of the ingredients rose. In the late 1940s, some stores sold Cokes for 6 cents. The last nickel Coke seems to have been in 1959. The nickel price had lasted over 70 years. And in retrospect, Andrew Young says, it wasn't a bad thing for the company. It's one reason Coke is everywhere today. The company couldn't raise the price. So it did the only thing it could: It sold as many Cokes as possible.

In doing so, Coca Cola built one of the most valuable brands in the world.

See also Hacker News comments.

You May Also Like: