Since taking over as CEO (chief executive officer) of the Coca-Cola Company in 1981, Roberto Goizueta (1931-1997) brought market value of his company's stock from $4 billion to over $150 billion. During his tenure, Coca-Cola became the world's biggest trademark, dominating the international soft drink market.
Roberto Crispulo Goizueta
Apatrician-looking but gentle-ruling capitalist, Roberto Goizueta was admired by both business competitors and his own company's shareholders (whom he referred to as "shareowners.") He made it his only priority to pull the Coca-Cola ("Coke") Company out of its 20-year decline and into global stardom. His success was tracked around the world. Diversifying internal investments while pushing for overseas expansion, Goizueta and his hand-picked management team quickly gained dominance for Coke in the world market, and enhanced the company's share value by more than $148 billion. In 1996 alone, shareholders realized a remarkable 43 percent return on their investments. Goizueta's own personal wealth, starting with 100 shares of company stock, multiplied by the millions. However, he believed that big business had a responsibility to the community in which it thrived (whether local or global), and he donated most of his personal wealth to major charities.
An Unlikely Candidate
Born in Havana, Cuba, Goizueta was the son of Crispulo and Aida Goizueta. His mother was an heiress to a sugar fortune and his father was an architect who had attended the University of Pennsylvania. As a teenager, he was sent to New England to attend school. A shy intellectual educated at Yale University in chemical engineering, Goizueta made a pivotal decision in 1954 to join Coke's technical subsidiary in Havana, Cuba, rather than return to his family's sugar plantations. The job offer followed Goizueta's response to Coke's newspaper advertisement for employment opportunities. After joining the company as a technician, he borrowed money from his father to purchase 100 shares of company stock.
Fleeing Fidel Castro's revolution, Goizueta brought his family to the United States in 1961 with $40 in his pocket and the 100 shares of Coke stock. He continued with Coca-Cola, first in Miami, Florida, then at corporate headquarters in Atlanta, Georgia. After several career promotions, he entered executive management in 1974 as senior vice-president of Coke's technical division.
Goizueta did not fit the historical profile of corporate executive ranks. The Coca-Cola Company was founded and headquartered in the southern United States, and its management was top-heavy with Southern gentry. Conversely, the cigar/cigarette-smoking Goizueta spoke English as a second language, though he became an United States citizen in 1969. Nonetheless, he was well-bred, well-educated, and well-thought-of. Most of all, he had drive and integrity, and his style caught the attention of Robert Wood-ruff, then-head of the Coca-Cola Company. He offered Goizueta the CEO position in 1981, an offer which was modestly but enthusiastically accepted. Although Goizueta had virtually no experience in marketing, a necessary skill to lead a major company, he did hold one advantage over other vice presidents who were considered. From his years in the technical division, Goizueta had "the knowledge." He was reportedly only one of two people in the company who knew Coke's secret formula.
Formula For Success
Even before Goizueta was offered the CEO job, he had outlined his perception of its duties in a two-page paper, along with another outlining his vision for the company's future and his objectives for making such vision a reality. He kept that mission statement in his top desk drawer for his entire tenure as CEO, periodically updating it as needed. Goizueta also knew that his greatest strength was that of a think-tank, therefore, he would need a strong team to put his ideas into action. His only request upon being offered the CEO job was that he could choose his team. Given full reign to do so, he then named his colleague, Don Keough, as president and chief operating officer (COO), giving him comprehensive authority across the organizational structure. Keough, an extroverted, strong-willed, charismatic leader, was the perfect compliment to Goizueta's quiet management style. Together, they forged ahead to turn around the company's fate: Goizueta up in his Atlanta office, brainstorming new markets, products and strategies-and Keough out in the field, making it all happen.
At the time Goizueta took over Coke in 1981, the company had been declining in growth and profit, and was fighting to keep its market share away from the new cola on the block, "Pepsi Cola." Coke's holdings at that time also included many businesses which had strayed outside the parameters of the soft drink market, including a shrimp farming business. The company was considered conservative in its spending, forecasting, and growth potential.
Goizueta made it known immediately that he intended to change all that. He had a singular objective: to increase investor wealth/earnings. And his plan for achieving his objective was equally focused. As he told Fortune interviewers, "You borrow money at a certain rate and invest it at a higher rate and pocket the difference. It's simple."
And that's exactly what Goizueta did. First, he analyzed the existing corporate holdings and got out of the shrimp business, putting the money back into what the company knew best: soft drinks. Within the first twelve months in office, he had put his new product, Diet Coke, on the market, and money into his investors' hands. Next came an updated version of the old Coca-Cola formula, which was marketed as "New Coke." Although technically a failed product, New Coke only made things better for the staged marketing return of the "Coke Classic, " using the original 100-year old fountain-drink recipe concocted by an Atlanta, Georgia, pharmacist. As of 1997, Coke Classic remained the company's biggest seller. Then came "Cherry Coke, " another nostalgic money-maker. Eventually, Goizueta brought the bottling companies in-house. He was putting money into his investors' hands, year after year. Coke gained an unequivocal market advantage over Pepsi.
Next, Goizueta and Keough planned their global expansion. Goizueta viewed the United States market as representing about five percent of the potential world market. The world's taste for Coke actually began during World War II when, during Woodruff's reign, Coke was provided to American G.I.s overseas. Early on, Goizueta realized the strength of Coke's trademark in foreign markets. Coke's team forged into Europe, Australia and Japan. After Russia came China and India. According to Fortune, as of 1997, clearly 80 percent of Coke's profits came from overseas markets.
Only once did Goizueta stray outside the soft drink market entirely. In 1982, he purchased Columbia Pictures. Unfortunately, shortly after the purchase, Columbia released Ishtar, a movie hardly even remembered by persons outside the film industry. However, during Coke's ownership of Columbia Pictures, the movie, Ghostbusters was also released, and when Goizueta sold Columbia to Sony in 1989, he had pocketed over $800 million in profits for his "shareowners."
Husband, Father and Dog-Lover
Goizueta married Olga Casteleiro in 1953, with whom he had three children, Roberto, Olga, and Javier. He lived in Atlanta, Georgia, close to company headquarters. Very fond of his prize Welsh Corgi, "Just Enuff of the Real Thing, " Goizueta's idea of a nice afternoon was to attend a dog show with his wife. He vacationed at the same rental place on Sea Island for 20 years. Although a heavy cigarette-smoker, Goizueta was otherwise formal and conservative in his manner and appearance, seldom, if ever, seen in public in casual attire. He often engaged in public speaking at colleges and universities, where he proudly shared his formula for success.
Having been greatly influenced by the thinking of his maternal grandfather, Marcelo Cantera, a self-made businessman, Goizueta would often inject into his speeches little Spanish proverbs used by his grandfather. He believed that big business was responsible for creating a "civil society, " and he encouraged his audiences, as well as fellow CEOs around the world to be active in charities and nonprofit organizations which addressed social problems. An article in Newsweek noted that in 1997, Goizueta donated $38 million of Coca-Cola stock to an anonymous Atlanta, Georgia foundation.
Preparing For the Future
To Goizueta, there was no end in sight on the horizon of new markets. The quintessential planner and strategist, he constantly reviewed demographic and geographic market research data to streamline his products or direct their entry into the most promising areas. His advertising campaigns often focused upon a youthful market, targeting countries with huge younger populations, such as China. He also considered warm climates like that in the Pacific as potentially better markets, although in the mid-1990s, Iceland remained one of Coke's highest consumption countries. Additionally, Goizueta often referred to the untapped market within the human body itself, remarking that Coke consumption was a mere fraction of the total fluid intake per person per day, leaving plenty of room for increase. He constantly tested the price of his products in the marketplace, preferring lower prices with high volume business over more exclusive or higher-priced products.
Goizueta believed in rich rewards for company performers. He had little turnover in his hand-picked top management, and he made them millionaires. He also traded his company's Triple-A debt rating for more market adventure and risk, borrowing more money than any other CEO, but likewise, making more profit than any other. He never lost focus of his objectives to bring his shareowners great returns on their investments, and he was described as "monomaniacal" in that regard. Importantly, he also made sure that at least three or four others were trained and capable to take over his job at any time. Thus, he had secured perpetuity in the character and personality of his company, although, in actuality, he remained as CEO until his sudden death from lung cancer on October 28, 1997, at the age of 65.
Further Reading on Roberto Crispulo Goizueta
Economist, October 25, 1997, p. 97.
Financial World, April 5, 1988, p. 89; April 4, 1989, p. 74.
Forbes, January 11, 1988, p. 86.
Fortune, May 31, 1993, p. 44; May 30, 1994, p. 123; December 11, 1995, p. 80 and p. 96; October 13, 1997, p. 88.
Newsweek, September 29, 1997, p. 31.
New York Times, September 9, 1997; October 19, 1997.
U.S. News & World Report, June 9, 1997, p. 50.