aTypical Joe: a gay New Yorker living in the rural South

Sunday, May 27, 2007

Coke’s Pepsi challenge

The opening of the new Coke museum in Atlanta last week is the backdrop for a 5,000 word piece in the Business section of the NYTimes today. Visitors pay $15 (for adults, $9 for children) to walk through a building full of slickly displayed interactive Coke ads; the company anticipates 1 million of us will come each year.

Still, Coke’s apparently having a rough time, loosing half its stock value since 1998 while watching young people turn away from soda, preferring instead bottled water, sports drinks, green teas and juice.

Pepsi’s done better. It controls half the non-soda beverages in the US, having bought Gatorade and SoBe after Coke missed the opportunity. Coke has 23% of the non-soda market. The story says Coke’s road out of its doldrums is that Coke Zero is “a hit,” that they’re “pumping up the brand” and that the new Coke commercials are fun.

I’m unconvinced.

What stuck with me was how parochial this global giant is. Their first non-Georgian CEO was hired in 1981. And while 70 percent of their sales are overseas, this is what we learn about their board:

Of the 11 current members of the board, eight have served 10 years or longer, and four of those have logged 25 years or more. The average tenure for board members is 16.6 years, nearly double the average of Fortune 500 companies, according to an analysis by the Corporate Library, which tracks corporate governance issues and compensation for executives and board members. Coke has the 10th-longest-serving board among Fortune 500 companies, the analysis found.

The average age of the 11 directors is 68. Except for Mr. Isdell, all of the board members are American. One is African-American and one is a woman.

(By comparison, the average tenure of PepsiCo’s board is six years, and the average age of its members is 59. Of the 10 members, there are 7 men and 3 women; five of the members were born outside the United States, including the chief executive Indra K. Nooyi, 51, who was born in India.) [...]

Mr. McHenry [on the board since 1981] says the board has given Mr. Isdell leeway to run the company as he sees fit; Mr. Isdell does not dispute that. As for the age and tenure of the board, Herbert Allen, a director since 1982, says it has the benefit of experience. Asked about the lack of diversity, he says: “When we are sitting in the room, the opinions are certainly diverse.”

They can’t see what they can’t see. My money’s on Pepsi.