A Turn at Coke

Guard change in Atlanta

The real-life corporate drama in Atlanta may not have given much competition to TV's Dallas, but it was intriguing nonetheless. The story began a year ago with an unexpected exit at the Coca-Cola Co., the world's largest soft drink maker (1979 sales: nearly $5 billion). Though he was five years away from retirement age, the company's popular president J. Lucian Smith abruptly quit. A genial Mississippian who died in July at 61 from a heart attack, Smith had reportedly told friends that his job "just wasn't fun any more." Some insiders said that he was forced out as a result of a personality conflict with the firm's aloof chairman and chief executive officer, J. Paul Austin.

In late May the company's 15 directors were summoned by Austin to a special meeting. There they elected a new president: Roberto C. Goizueta, 48, a Cuban-born and Yale-educated chemical engineer who has worked for the company, mainly in technical and administrative jobs, since 1954. Most Coca-Cola watchers assumed that it would be a while before he would be declared the successor of Austin. At 65, Austin had been Coke's chief for 14 years and had already had his retirement postponed for a year, evidently to allow time to groom a successor. But last week Austin sprang a surprise: much earlier than expected, he announced that when his retirement came at the end of February, his job would go to Goizueta, who will be the first Coca-Cola chief to rise to the top from the technical side of the company.

The early announcement seemed designed to quell speculation about the future management of the company. Goizueta's elevation reflects a compromise between the strong-willed Austin and a powerful shareholder, Robert W. Woodruff, 90, who bossed Coke from 1923 to 1955. Woodruff, who remains chairman of the finance committee, had apparently become disturbed by the company, which remains strong but faces some problems. These include a sluggish profit performance (sales were up by nearly 19% in the first half of 1980, but net income rose by only 7.1%) and a challenge in the domestic market from archcompetitor Pepsi-Cola; Pepsi now outsells Coke in supermarkets, although Coke leads in vending machine and fountain sales.

The son of an architect, Goizueta started out as a chemist in Coca-Cola's Havana bottling plant; Fidel Castro's 1959 takeover drove him to a job with Coke in the Bahamas. In 1964 he went to the U.S. and began making his way up the company's managerial ranks. Among the tasks he will face in his new job are strengthening the somewhat strained relations Coke has with some of its 550 domestic bottlers and boosting the company's domestic earnings, which now account for only a third of overall profits. "I don't expect anything dramatic," Goizueta says. "Life is just a bunch of little turns to the left and little turns to the right."

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