Monday, December 28, 2009

New Coke not a conspiracy?....I think not

I was just watching that CNBC profile of Coke and they brought up the "New Coke Fiasco". I can't help but document my view on what happened.

I've always had a food intolerance to high fructose corn syrup. My favorite soft drink growing up was always Coca-Cola. I never liked Pepsi. That's because they made it with sucrose, always, everywhere. Until 1985. That's when the biggest, most effective marketing organization the world had seen (other than the tobacco companies, granted) made a "stupid mistake". They brought out "New Coke", which was just Old Coke with corn syrup.

They pitched it to compete with Pepsi, but not in the way you might think.

I firmly believe this was no mistake. I think it was calculated to move away from the original formula. I believe that management wanted (or needed) some extra latitude with cost control in their supply chain, but didn't want to alienate any customers by pulling a fast one. So they came out with New Coke - while retiring "Old Coke". If successful, they achieved their goal. But I also believe they had "Classic Coke" in the can, ready to go as a contingency (do you really believe marketeers of this caliper are gonna make a move like this without a backup plan?). Classic Coke came out too fast after New Coke "failed". But Classic Coke wasn't Old Coke. If you read the can, it says "Sucrose and/or High Fructose Corn Syrup".

I'd have to go run the numbers, but I'd be willing to bet the amount of money they "lost" in the New Coke "fiasco" was made back many times over in the first year of buying corn syrup. Remember, those were the Reagan years, the ADM price fixing years. I'm sure Coke was tired of sitting on the sidelines, dealing with the Cubans or Jamaicans and the beet farmers. There was no way to compete on a cost basis with Pepsi (always a corn syrup product).

What do you think?

Tuesday, December 23, 2008

Stupid Banks!

I heard yesterday that none of the banks that are sittin' on the nearly $350B (that's gigabucks) have no inclination to share with those of us givin' 'em the money exactly what they're doing with it. I ask the bank for 50K for my house and they're telling me all sorts of things I can't do with the money, or the house, for that matter. But give the banks 350B and its all "nooo, we can't tell you where it went" and "we're too busy to count the dollars" and "you're not worthy to know such important things".

I got pissed. I called my senator....I encourage you to as well.

Monday, December 22, 2008

Loving the Global Financial Crisis (GFC)

There's upsides to this faux creation of crisis capitalism. You just gotta look at the upside.

1. The price of gas.
Everybody complained endlessly abou the price of gasoline. The sheiks were rollin' in the dough, and we're getting the shake down. I bought a hybrid in early 2004, so I've riden the price rise with a bit of a smirk. But now, I can fill my tank for 18 bucks! I'm loving this GFC!

2. Customer service in the airlines makes a comeback
I took a filght not too long ago. I miscalculated my travel time to the airport and hit the front door with 10 minutes before my flight's scheduled departure. We all know that the smug airlines have been locking the door somewhere between 10 and 15 minutes before "departure" (which I never understood). So I'm thinking I'm on standby and I'm gonna be late. But my instinct says "Do an OJ!", so I run...and thru security and get to the gate (at the furthest end of concourse, of course) with 3 minutes before "departure". The gate agent (who was incredibly still there) says "Oh, we can get you on the plane, let me rebook your reservation". Wow...I'm _loving_ this GFC!!!

3. Bad earnings that aren't so bad are actually good
My company warned on our Q4 results the other day. The bean counters figure revenues are somewhere between 10 and 20 percent off the numbers we gave as outlook at the beginning of the quarter. In a real economic environment, this would result in a market blood bath the next day. Not so. Our stock went UP 17% the next day. Bad news that ain't so bad becomes good news....I am absolutely Loving this GFC!!!!