Tuesday, August 04, 2015
The man who made Pepsi "Pepsi-Cola"
Walter S. Mack Jr. turned around struggling corporations that had suffered in the Great Depression. He cut costs and retrofitted marketing plans. Toward the end of the 1930s, he took on Loft Inc., which had been the nation's largest candy maker in the 1910s.
The candy did not interest him as much as the soda drink company the company owned, an off-brand called Pepsi. He would re-brand it as Pepsi-Cola and begin a rivalry that continues 75 years later -- a competition that serves both well as it pushes all the other competitors off the shelves, a lesson Mack would discover when he was in his 80s.
Born on October 19, 1895, in New York City, Mack graduated from Harvard in 1917 and served in the Navy during World War I. He returned home and emerged in Republican politics and Wall Street finances, foolishly seeking a state Senate seat. Pepsi was the reason he acquired Loft in 1938, selling off the candy company in 1941.
Pepsi had gone bankrupt twice before and in 1933 introduced a 12-ounce bottle selling it for a nickel, the same price as a 6 1/2-ounce Coke. One of Mack's first moves was to brand Pepsi as Pepsi-Cola, its original name. Coke sued claiming trademark on thee name "cola." Pepsi won.
Mack's second bold move was reducing its 60-second radio commercial to the 15-second jingle inside: ''Pepsi-Cola hits the spot/ Twelve full ounces, that's a lot/ Twice as much for a nickel, too/ Pepsi-Cola is the drink for you.''
Upon hearing the jingle in the commercial, he ordered the talking part removed, saying, "Cut the spinach."
His next innovation was marketing to black people. Pepsi was headquartered in Queens, Coke in Atlanta in the Jim Crow South. He hired black salesmen and women at a time when black college graduates could expect manual labor. He paid his black sales staff less than his white sales staff, but he got more out of his black crew. For example, after working black neighborhoods in Louisville, sales rose 13 percent. They hit the South hard, enduring racial discrimination laws. Grace Elizabeth Hale later wrote in the New York Times "Coke studiously ignored the African-American market. Promotional material appeared in segregated locations that served both races, but rarely in those that catered to African-Americans alone."
Allen McKellar recalled being hired by Pepsi right out of college in the 1940s: "I didn't know at the time that we were the first blacks to enter the corporate world. We learned that when we got out into the marketplace."
Mack hired Duke Ellington as a spokesman, which gave him a rare commercial endorsement. Mack also took out ads in black publication, which helped finance them. His ads showed middle-class black people, a sign of respect. The black salesmen he hired got an education in business and a job that did not involve a mop.
"After we were so successful, everywhere we went, we were headlined in the black newspapers and treated like celebrities, if you will," McKellar said. "Our main objective was to let the young black kids know that there appears to be a move in the right direction of opening up opportunities for blacks to come into the business world, as opposed to teaching school or those few who could become doctors."
To be sure, Mack's motives were not altruistic. He just wanted to sell soda. But his capitalism was solving a social problem that the government not only ignored but encouraged.
In 1945, Mack began selling Pepsi in cans.
Pepsi also financed 117 annual college scholarships to two students from each state plus 19 special grants to black students. He also began one-year on-the-job training for college graduates, annual national painting contests, three recreational clubs for New York City teen-agers and centers for military personnel in New York, Washington and San Francisco.
But after 13 years as president, the board axed Mack in 1951, hiring Alfred N. Steele, who had headed Coke's marketing division. Steele later married actress Joan Crawford, who succeeded him on the company's board of directors when he died on April 19, 1959.
Mack's association with Republican politics paid off when Vice President Nixon confronted Nikita Khrushchev in the Kitchen Debate at the opening of the American National Exhibition at Sokolniki Park in Moscow on July 24, 1959. Nixon showed the Pepsi bottle in the photos.
Just as there was life before Pepsi for Mack there was life afterward. Besides Pepsi, over the years, he was president of Bedford Mills, Phoenix Securities and Great American Minerals and a board chairman of United Cigar-Whelan Stores, Aminex Resources, and Aminex Petroleum.
He tried to re-enter the cola wars in 1978 at age 82 by founding King Cola. But problems getting shelf space in stores and distributors led to its failure. It was either Pepsi or Coke, or go home.
John W. Donlevy, who was president of the ill-fated King Cola, later said, ''When I joined Walter, I figured that at 60 I'd hang it up. He changed me completely. He's so alert and has so much fun, you forget his age. Now I can't imagine not being involved with some business as long as I'm healthy.''
Ditto his mentor. Mack, continued to work after King Cola's demise. He died on March 18, 1990, at 94. America got its nickel's worth out of him.
My first collection of "Exceptional Americans" is available here. And the Kindle version is here.