Goizueta, Roberto

(1931-1997)
Coca-Cola Company

Overview

A refugee from Cuba, Roberto Crispulo Goizueta rose through the ranks to become chairman and chief executive officer of the Coca-Cola Company. Credited with transforming the global soft drink manufacturer into one of America's most admired companies, he became a legend of business management and a very wealthy man.

Personal Life

Roberto Crispulo Goizueta was born on November 18, 1931, in Havana, Cuba, the only son of Crispulo D. and Aida (Cantera) Goizueta. Goizueta's father worked as an architect and owned a construction and hardware business. His mother was the heir to a large sugar plantation in Cuba which she inherited from her father. Goizueta and his sisters grew up amid aristocratic splendor in the mansion built by his maternal grandfather, Marcello Cantero, who had immigrated to Cuba from Spain during the early 1900s.

Goizueta was educated at Belen, a private Jesuit-run school in Havana, before spending a year at the prestigious Cheshire Academy, a prepatory school in New Haven, Connecticut. At the Cheshire Academy, the young Goizueta learned to speak English and did well enough in his studies to earn admittance to Yale University in New Haven in 1948. While at Yale, he participated in the school's soccer and squash program before graduating with a bachelor's degree in chemical engineering in 1953.

Goizueta married Olga Casteleiro on June 14, 1953 following his graduation from Yale. They had three children; Roberto S., Olga, M. and Javier C. In 1969, Goizueta and his wife became naturalized United States citizens.

Goizueta was a lifelong heavy cigarette smoker and lived only one month after being diagnosed with lung cancer in September of 1997. When he died on October 18, 1997, at the age of 65, Coca-Cola plants and offices were closed worldwide and thousands attended his memorial service in Atlanta.

Goizueta served on the board of Suntrust Banks, the Ford Motor Company, Sonat, and Eastman Kodak. He is credited with reviving several important Atlanta civic and cultural institutions. In 1994, Emory University, whose endowments have been enriched with Coca-Cola stock, named its business school in his honor.

Career Details

In 1954, Goizueta moved back to his native Cuba after graduating from Yale and began to think about what he wanted to do with his life. His father had offered him a job within his business, but Goizueta wanted to strike out on his own in a different career. He answered a newspaper advertisement that had been placed by an unidentified company for a bilingual chemical engineer or chemist, and was offered the job. Goizueta's father allowed him to accept the position only if he also worked for the family's business on Saturdays. The company turned out to be the Coca-Cola Company, and Goizueta accepted the job and its $500 per month salary on July 4, 1954.

"My friends thought I was absolutely crazy," he told Fortune in 1995. But, within a few years, Goizueta had quickly moved up the corporate ladder to claim the position of chief technical director for Coca-Cola's five bottling plants in Cuba.

Goizueta's career in Cuba seemed secure, but it soon took an unexpected turn. In January of 1959, communist rebel Fidel Castro led a revolution against the Cuban government, and declared himself premier a month later. Castro threatened to take over all private businesses in Cuba and make them the property of the new communist government. In the midst of this political turmoil, Goizueta and his wife sent their three children to stay with relatives in the United States. Three months later, with both Coca-Cola and his parent's sugar plantation about to be seized by the new Cuban government, Goizueta and his wife made hasty plans for their own escape. They decided to use the vacation they had planned earlier to Miami, Florida, as an excuse to leave the country in August of 1960. They then stayed on in Florida and were reunited with their children. The Cuban government seized all Coca-Cola's assets in Cuba two months later.

Like thousands of others, Goizueta left family wealth and security behind when he fled Cuba. The family had only about $40 and 100 shares of Coca-Cola stock with them when they fled. Goizueta never sold these shares and today, according to Fortune, they are worth $3 million.

The family took shelter in a small motel room where a curtain divided the parent's bed from the children's sleeping area. "You cannot explain that experience to any person," Goizueta told Fortune in 1995. "That was ten times more important than anything else in my life. All of a sudden you don't own anything, except the stock . . . It brings a sense of humility. It builds a feeling of not much regard for material things."

Coca-Cola had continued to employ Goizueta and even provided him with an airport hotel in Miami that he used as an office. He soon set to work and began the climb back up the corporate ladder. In 1961, Coca-Cola moved him to Nassau, Bahamas, to work as area chemist for Coca-Cola's operations in the Caribbean. In 1963, he became the staff assistant to the senior vice-president for Latin America. In 1964, he was transferred to Coca-Cola's headquarters in Atlanta, Georgia, where he received a promotion in 1966 to the job of vice-president in charge of technical research and development for all of Coca-Cola. This promotion made him the youngest person to ever reach that position within Coca-Cola.

In Atlanta, Goizueta performed so well that he caught the eye of 91-year-old Robert W. Woodruff, who had been Coca-Cola's chairman. Although Woodruff had retired in 1965, he still maintained great presence and influence within the company as its major stockholder and chairman of Coca-Cola's finance committee. Woodruff and Goizueta became close friends and ate lunch regularly together, and Woodruff began to regard Goizueta as his protégé. Largely because of Woodruff's influence, Goizueta was given a promotion to the post of senior vice-president in the technical division in 1974. A year later, he was promoted again to the post of executive vice-president in the technical division. In the following years, Goizueta worked supervisory responsibilities for the company's legal, technical, and external-affairs divisions.

When Coca-Cola's president, J. Lucian Smith, resigned in 1979, Goizueta was chosen as one of six vice-chairmen who reported directly to Coca-Cola's chairman of the board of directors, J. Paul Austin. All of the six were potential successors to the then-current chairman and chief executive. Less than a year later, this system of management came to an end when four of the vice-chairmen were made executive vice-presidents. Under this new system, Goizueta became Coca-Cola's director, company president, and chief operating officer.

Goizueta immediately began to make changes within the company. Perhaps his biggest change was to allow Coca-Cola bottlers to use high-fructose corn syrup in their soft drinks rather than natural sugar. The price of natural sugar had risen dramatically and corn syrup cost about 40 percent less. This decision led to him being considered for his next promotion.

After Coca-Cola's chairman of the board of directors, J. Paul Austin, retired in 1981, Goizueta became chairman of the board of directors and chief executive. He was termed by Fortune as the "consummate long-term strategist" and from the beginning, he set about building a group of first and second-level executives well prepared to take over the company at his death.

When Goizueta took over the helm at Coca-Cola, the company was, according to The New York Times, very conservatively managed and headed for trouble. Coca-Cola was also experiencing a "flat growth" rate that saw only minimal increases in sales from year to year. Goizueta immediately set out to change this.

While some of the lack in sales could be attributed to the slow pace of total soft drink sales during these years, a more important reason was Coca-Cola's largest and most serious competitor, Pepsi-Cola. Pepsi had been posing a serious threat to Coke for over three decades and while Coca-Cola still outsold Pepsi-Cola at soda fountain outlets, Pepsi had been outselling Coke in food-store sales since 1979.

Within a month of taking over at Coca-Cola, Goizueta called a meeting of the company's top 50 officers and laid out his new plan, explained in the booklet "Strategy For The 80's." The plan's main point called for the reinvestment of a larger portion of Coca-Cola profits to promote growth. True to his long-term planning reputation, Goizueta said in 1982 that "There will be changes, but slow changes, evolutionary, not revolutionary."

Goizueta's comment to the Times indicated his vision for Coca-Cola: "We're going to take risks. What always has been will not necessarily always be forever." First, Goizueta transformed the company by purchasing under-performing bottlers, replacing their management and increasing volume, and then spinning the companies off to a subsidiary. He also revised Coke's financial strategy, focusing more attention on stockholder returns. According to Fortune, he borrowed billions to buy independent bottlers around the world and then upgraded their distribution systems.

Chronology: Roberto Goizueta

1931: Born.

1953: Graduated from Yale University.

1954: Began work for the Coca-Cola Company in Havana,Cuba.

1960: Fled Cuba.

1963: Became staff assistant to senior vice-president for Latin America.

1964: Transferred to Coca-Cola's headquarters in Atlanta, Georgia.

1966: Named vice-president of technical research and development for Coca-Cola.

1979: Became one of six vice-chairmen in charge of Coca-Cola.

1980: Became Coca-Cola's director, company president, and chief operating officer.

1981: Became chairman and chief executive at Coca-Cola.

1982: Introduced Diet Coke.

1996: Helped bring Olympic Games to Atlanta.

1997: Died.

In 1982, Goizueta changed Coca-Cola's slogan from "Have a Coke and a Smile" to the more aggressive "Coke Is It!" He also diversified Coca-Cola's holdings in a controversial move when he had Coca-Cola purchase Columbia Pictures for $690 million. Goizueta explained the move into the entertainment business by telling the NewYork Times, "Like soft drinks, entertainment is a business where the social dynamics are on your side." After the studio produced the blockbusters Tootsie and Ghandi in 1982, no one was doubting his move. Coca-Cola later sold Columbia Pictures for $1.55 billion to the Sony Corporation in the late 1980s.

Goizueta's biggest move was his introduction of Diet Coke. For years, Coca-Cola's low-calorie product had been Tab, but Goizueta was eager to put the Coca-Cola name and trademark on a diet soft drink. His decision was a wise one; just a year after its introduction, Diet Coke rose to the top of the diet soft drink market and its sales even eclipsed the popular Diet Pepsi. Diet Coke became the most successful consumer-product launch of the 1980s. In 1983, Goizueta supervised the introduction of Coca-Cola's popular caffeine-free versions of its soft drinks.

There was one significant exception, though, to Goizueta's long list of successful innovations: New Coke. This smoother and sweeter version of the time-tested beverage bombed almost as soon as it was introduced in 1985. But, immediately recognizing a major marketing mistake and moving swiftly to reduce the damage, Coca-Cola executives brought back the old secret formula as "Classic Coke." After the New Coke debacle, Coca-Cola overhauled its marketing efforts and has gained market share against rival Pepsi ever since.

Social and Economic Contributions

Reviewing his 16-year-tenure as chairman, Fortune credited Goizueta with reformulating "a business that was actually floundering—organizationally, culturally, and financially." Goizueta was widely acknowledged to have led what many considered an unexpected company comeback to world preeminence in its field.

Between 1981 and 1997, the total value of the company's stock increased from $4.3 billion to more than $152 billion. Shareholders who bought $1,000 worth of Coke stock when Goizueta was named president would have accumulated more than $65,000 from that investment by the time of his death. Goizueta himself benefited hugely from the increased value of the company's stock. In 1991, he received a bonus of nearly $83 million in stock. During his final year on the job, his compensation included $4.88 million in salary and bonuses, plus options, restricted stock, and performance and incentive units. Forbes tallied Goizueta's worth at $1.3 billion-making him "the wealthiest Hispanic in the United States," as stated in Newsweek.

Coca-Cola also used its clout in aggressive public relations campaigns. The company spent millions of dollars to ensure the 1996 Olympic games would be hosted in Atlanta. This continued a relationship between Coca-Cola and the Olympic Games that dated back to 1928.

Goizueta was considered a courtly gentleman with elegant manners and a cerebral management style. He brought Coca-Cola to the top of the world of soft drink manufacturers and the jobs and economic advantages that this provided are immeasurable. But Goizueta, ever humble, described his life in a 1997 U.S. News & World Report interview as simple: "My story boils down to a single, inspiring reality . . . the reality that a young immigrant could come to this company, be given a chance to work hard and apply his skills, and ultimately earn the opportunity to lead not only a large corporation but an institution that actually symbolizes the very essence of America and American ideals."

Sources of Information

Bibliography

Kaplan, David and Daniel McGinn. "The End of an Era: A Management Legend, Coca-Cola's Remarkable Roberto Goizueta Succumbs to Lung Cancer." Newsweek, 27 October, 1997.

"Last Thanks from Coke." Business Week, 3 November, 1997.

Morris, Betsy. "The Brand's the Thing." Fortune, 4 March, 1996.

"One-On-One with Roberto Goizueta." Goizueta Business Magazine, Spring 1995.

Schwartz, Jerry. "Roberto C. Goizueta." New York Times, 19 October 1997.

Sellers, Patricia. "Where Coke Goes From Here." Fortune, 13 October 1997.