>> the following is a cnbc original production. [ music ] >> it may be the most recognizable brand on the planet, "coca cola." >> the heritage of this company is equal to none. there's nothing as global, as "coca cola" in the world. it may be the most recognizable brand on the planet. coca-cola. >> there's nothing as global as coca-cola in the world. >> a $67 billion empire sold in 206 countries. enjoyed in every house. and we mean every house. found in the most remote corners of the globe, melissa lee reports on the brand with a buzz. >> there was a wee bit of cocaine in the original coca-cola. >> and it's more than just coke. >> zico is 100% coke and water. >> 500 different brands to

satisfy taste buds around the world. with tough competition. >> you're the first person i've interviewed who actually said pepsi. >> well, they exist. >> and blunders along the way. >> what ignoramous decided to change the form uhe laugh coke? >> a company that aims to win in every market but sometimes falls short. >> we lost our way. >> now in a fierce public health fight -- >> there's nothing bad in this bottle. >> more than 123 years in the making. coca-cola is steeped in history. >> this was more than a consumer product to them. it was a part of their lives. >> and poised for another century of worldwide domination. and now, coca-cola, the real story behind the real thing. here's correspondent melissa lee.

>> this is a shrine to the influence one company has had on our culture and yet coke's main product is actually just water, sugar, a few secret flavors and some bubbles. so its dominance may really be based on something else. brilliant marketing. the company has always believed that to succeed, its products had to be more than just benches. they had to be reminders of good times and warm feelings. so each of us would buy those drinks again and again. and we do. almost 100 million balances worth he have day. once the world was divided in to two kinds of people, coke fans and pepsi fans. today it's not so simple walk into your local supermarket and you're bombarded. sodas, juices, energy drinks, all crying out for your

attention. so koecoke coal larks the large bench company in the world know it is has to catch your eye. and fast. its research shows that half of all shoppers' decision to buy are an impulse that hits in the first pif seconds in the aisle. >> i think we look at it as an opportunity. >> joe is coca-cola's chief marketing officer. >> we're spending a lot of time trying to understand shopping and shopping psychology and then using that information to help improve our overall presence in stores and how we engage shopping? stores. >> to understand the mysterious science of the purchase, coke has built a secret research pa silt. it's a lab that can him pick anyplace shoppers buy coke products.

so during the day they might be stopping at the gas station and filling up on their way to work. they might run in to either pay for their gas or get a beverage. we want to make sure we're making that connection again, reminding consumers if they're hungry, a coke and a hot dog, they were just made to go together. >> in those precious few seconds of decision making, coke relies on the instant association a shopper makes to a memory, like the coca-cola logo on a home team stadium. or a hero's triumph with the product in hand. >> that's something that is built up in a memory bank over decades. what you're trying to do when you engage with consumers is you're trying to continue to build that memory bank of positive associations between your brand and what it stands for and these moments of happiness. >> to the outside observer, it seems a little touchy-feely. you can't throw your arms around that moment of joy, and yet that's a big part of how you're marketing this beverage. >> you really can't explain it. >> branding expert michelle berry can. she says coke is one of those brands that inspires emotions.

>> they're one of the best success stories of all times in terms of who has done a great job of marketing. there is a reason they're most recognizable brand, and it's not just because they have a beautiful label. >> so when a company like coke talks about a memory bank that has been established of memories, of pleasant times, a celebration, and that helps them sell their product, that's true? that's not just marketing mumbo jumbo. that actually works? >> when you talk to consumers about what ads do you remember or what sort of jingles do you remember, et cetera, there's very few. and coke's got some of those iconic ones. ♪ i'd like to teach the world to sing, sing with me, in perfect harmony ♪ >> like its famous hilltop commercial. that decades later is still etched in popular memory. ♪ that's the real thing >> what was it about that commercial? >> you know, a lot of it's the jingle. ♪ perfect harmony there is something very playful,

very contemporary. you see it all over youtube. people want to sing it. they want to put their own twist on it. that sort of energy, that sort of momentum, that is what makes people remember. >> hey kid. >> many remember when a bottle of coke turned mean joe greene into a softy. >> thanks, mean joe! ♪ have a coke and a smile >> i think some more of the playful humor, emotional campaigns they have done help when you're talking about a highly commodified product like a soda. >> for a decade soda sales have been dropping as americans have increasingly turned to energy drinks, juices and teas. coke executives blame their own arrogance. for too long they let the brand rest on its laurels. >> we were slow. we were not innovating, and we lost our way. >> gary fayard is coca-cola's chief executive officer. it almost sounds like you're at an aa meeting, admitting what went wrong. is there an element of truth to that?

that a big part of it is just sort of admitting that we, coca-cola, missed it? >> we did miss it. and we did lose our way. we let others take the dialogue away from us. and the category started being portrayed as one of these bad for you kinds of things. and you should drink something else. >> in the diet of a nation, where one in four adults is overweight, soda is one of the greatest sources of empty calories, more than 250 calories in a 20-ounce bottle of coke. >> americans are getting fatter and fatter. >> 15% of the children in the u.s. are considered obese. >> sugary soft drinks as some of the main culprits in childhood obesity. >> coke has been on the receiving end of an anti-soda backlash, which it fights to this day. >> there is nothing bad in this bottle. pretty much all natural. it's very refreshing.

it's the original energy drink. i wouldn't suggest you drink 20 of them a day. but in moderation. you know, everything in balance. >> coke points out that it's not just soda anymore. the company sells almost 70 different brands in the u.s. nearly 500 around the world. though ceo muhtar kent makes it clear that sodas, or sparkling beverages, are at the heart of coke's business. >> 70% or more of our total volume is still in sparkling beverages. organic growth from our sparkling beverage business is the oxygen of our business. because unless we can do that, our numbers don't work. >> to breathe life into soda sales, coca-cola thinks it needs a new marketing boost. and today it's counting on another of its icons, its unmistakable bottle shape.

>> coke owns that, and nobody else owns anything even like that. and they don't have that resonance and this deep history. >> coke marketers think the curvaceous shape itself has a certain magic, and they're changing their standard two liter bottle as a result. >> we're in the process of rolling out in the two liter in north america now to restore kind of the majesty of our brand through that contour. because there is something magical about the look and feel of the contour bottle. >> this is operating at a subtle level. it's not something i think many people will come up to the shelf and say wow, look at that new bottle, i can't believe it. it's not that dramatic. >> not dramatic to the buyer, but to coke's ceo, it's already paying off. >> this bottle alone is giving us a million incremental transactions per week in the united states that we didn't have before. >> those sales may not be enough to pull coke out of its north

american slump, but it may be evidence that something as simple as a label and a look can trigger an impulse. >> people want to be refreshed, and they want to have a little moment of joy. we're not claiming we're solving world peace or anything, but a little moment of joy in an overall difficult day. >> coming up -- >> we have a new formula for coke. >> turning a bottle of gold into a can of worms. >> some call it the marketing goof of the century. >> bursting the bubbles. next, when "the real story behind the real thing" returns.

[ music ] >> introducing, the new taste of "coca-cola." >> it was supposed to take off like a rocket... but from the moment "new coke" was launched in april, 1985, it was a disaster. introducing the new taste of coca-cola. >> it was supposed to take off like a rocket. but from the moment new coke was launched in april 1985, it was a disaster. outraged coke drinkers flooded

the company with calls and letters, and executives in atlanta were stunned by the reaction. >> quote, what ignoramus decided to change the formula of coke? the new formula is unexciting, and it's as bad as pepsi. burn it. >> i think that what we didn't understand when we introduced new coke was the depths to which coca-cola belonged to the american people. >> bill mooney is the company's official historian. >> this was more than a consumer product to them. it was a part of their lives. it was a part of their personal memory bank. >> perhaps no product is more embedded in the history of american culture than coca-cola. that history has been cultivated, protected, and curated here in an unmarked basement room at company headquarters, a repository that has been off limits to tv cameras until now. >> artwork is incredible. >> mooney has been the keeper of the memorabilia since 1977.

a trip with him through the archives is a lesson in how powerful marketing can turn something as simple as soda into an icon. so how many pieces do you think you have down here? >> there are hundreds of thousands of pieces in this collection. start thinking about things like print ads, individual bottles and cans, thousands of items all by themselves. >> how much it is worth? >> well, we have it on our books for about $60 million. >> $60 million. to get its name in front of everyone, coke put its name on everything, from illustrated calendars and pens to pocket mirrors. well-known artists of the day, including norman rockwell, were commissioned to paint its ads. and a campaign featuring santa claus in his trademark red and white costume, coincidentally coke's colors, led to a common question. >> one of the questions we get every christmas season is the question about is it true that coca-cola invented santa claus. >> is it?

>> no, it is not true. >> you hesitate a little bit. >> well, only because i think what we can get credit for is sort of creating the modern image of santa claus. we were trying to create an advertising campaign that would get coca-cola associated with the holidays. and we started thinking about santa claus. well, here is a guy. he is going to go all over the world in 24 hours. he's got to be thirsty in the course of that evening. so let him have a coca-cola. >> when pharmacist john pemberton invented coke in 1886, it was the original energy drink, marketed as having restorative powers because of its main ingredients, extract from kola nuts and the coca leaf, the key source of cocaine. and the buzz about the buzz from early coke hasn't stopped since, as author rick allen pointed out in his book, "secret formula." >> fluid extract of the coca leaf is part of the original formula.

and fluid extract of the coca leaf is cocaine. so there was a wee bit of cocaine in the original coca-cola for the first five years of its existence. >> the exact ingredients that make coca-cola today remain a closely guarded secret. in fact, about the only thing you won't find in the archives here is the original formula. that's kept locked in a vault at this bank in atlanta. is this actually coca-cola? >> that is actually coca-cola. >> from the time it was bottled. that secrecy didn't prevent scores of imitators. in the early 1900s, it was hard to know what was the real thing and what wasn't. >> then you have these guys with the paper labels, and you have others that look pretty much like beer bottles. >> right. >> and then you even get competitors sneaking in here like this one from coca nola. >> coca nola. the company needed a way to distinguish its product.

>> a design challenge to glass manufacturers. we said we need a bottle that is so unique that you will be able to identify by its shape, by feeling it in the dark. >> is that coca-cola? >> yes, sir. and that's the brand-new bottle for coca-cola. the hobble skirt bottle. they patterned it after the hobble skirt betty wears. >> before long, coke's contour bottle became the world's most recognized product, due in large part to this man, robert woodruff. for nearly 60 years, starting in 1923, woodruff was head of coca-cola. regarded by most as the company's greatest leader. it's woodruff who gets the credit for such innovations as the six-pack, the standardized cooler, and product tie-ins with the olympics. >> he had this vision that if you could put coca-cola with people coming to global events, they will enjoy this product, and they'll want to have it in

their home markets, wherever they happen to be. >> even on the battlefield. with the outbreak of world war ii, most ceos put global expansion on hold. not robert woodruff. >> he made a commitment. he said i will get coca-cola to american troops for a nickel, regardless of what it costs the company. he ultimately sent 64 portable bottling plants with american troops that went all across western europe, into the south pacific, into north africa, even into parts of south america. >> the net result of it is that 11 million gis came back with a keen loyalty to coke. it had really been like letters from home or a pack of cigarettes. it was to them a symbol of something that they were fighting for. >> but coke soon faced more combat against a new enemy, pepsi. an epic battle that began not with a bang, but with a jingle. ♪ pepsi cola hits the spot, twice as much that's the cola to drink for you ♪

>> by offering twice as much cola for the same price, pepsi hit coke right in its soft spot. coke believed one size fits all. >> we were reluctant to get into king-sized packaging at first. beginning in 1960, we started to expand our product diversity. >> wow, have you seen coca-cola? now in king-sized too! ♪ coca-cola puts you at your sparkling best ♪ >> but it wasn't enough. by 1983, coke's market share plunged to less than 24%. the pepsi challenge was all too real. >> in side by side blind taste tests, nationwide, more people prefer the taste of pepsi over coca-cola. >> what was your choice? >> pepsi-cola. >> after coke did its own taste tests with similar results, the new ceo roberto goizueta gave the order to change the 99-year-old formula. >> we have a new formula for coke.

>> the backlash was immediate. >> some call it the marketing goof of the century. >> donald kea was coke's president at the time. decades later, the bad taste still lingers. in particular, one phone call. >> the lady said -- she was crying. and i said, "what are you crying about?" and she said, "you've taken away my coca-cola." i said, "honey, when is the last time you had a coca-cola?" and she said "35, 40 years ago." i said "why are you upset?" and she said "because you're playing around with my youth." >> we're bringing it back. >> less than three months after the introduction of new coke, the company officially surrendered. >> coca-cola has caved in. the old taste of coke is coming back, this time called coca-cola classic. >> and so ended one of the greatest blunders in the annals

of american business. >> it was a frank copra script. a big company does something, people react. the company backs down, people win. and then our business went crazy. >> by 1986, coke classic was outselling pepsi, which got some people wondering. >> a lot of people believed you planned this. and i think this will go on my gravestone. i said "we're not that smart and we're not that dumb." up next, quenching a universal thirst. >> you can find the product in the most remote possible continent. >> that's next. when "the real story behind the real thing" continues.

[ music ] >> if you work for a company determined to get it's product to everyone, everywhere in the world, you better start your day before dawn. if you work for a company determined to get its product to everyone, everywhere in the world, you better start your day before dawn. five days a week, david and scores of truckers leave this bottling plant, pulling rigs loaded with cases of coke products. almost 1,000 bottles on each truck. for david, progress is good, until he nears his first stop. then the pavement ends, and it's as if he is entering a different world. his truck navigates chaotic traffic and muddy, uneven roads before pulling into this

coca-cola depot in diepsloot, south africa. here in diepsloot about 20 kilometers outside of johannesburg, trucks like this pull into this depot every day. by the end of this week, 15 trucks will deliver more than 85,000 two-liter of coke bottles, and that's just half of this township. getting bottles to the final point of sale entails some primitive means. on the day we visit, this shop owner picks up his load with a wheelbarrow and makes his way through ruts and raw sewage. to his store, which is his front porch. ♪ diepsloot may not seem like a burgeoning market for global consumer brand, its residents, about 150,000 of them, live amid poverty and violent crime.

still, it's a place where on payday, people will treat themselves and their families to a coca-cola. >> if you grow up in an environment where there is many challenges as africans face every day, you need an extra dose of optimism to be able to drive yourself every day. >> bill egby is president of coca-cola's south africa business unit. does everybody, every step of the way, do they make money? >> absolutely. you can find the product in the most remote parts of the continent. it's because everybody who touches the product makes money. that's how they survive. >> and their survival has helped coke prosper in africa, across 56 countries and territories. to make it work, coke bottles its drinks as close to the consumer as possible, with 160 plants across the continent. ♪ just as it does in markets

around the world, coke hones in on south africa's vast and emerging middle class. a group which earns the equivalent between $3,000 and $5,000 u.s. a year. amanda manchia is director of marketing for africa and india. >> as people become more middle class, they want more things. they have more choice. we need to keep up with those needs. the good thing about the emerging middle class, is that they emerge. and once they have those kind of habits and desires in place, you know, we continue to talk to them and make things available to them. >> success in africa is critical because of the company's growing dependence on overseas markets. they make up about 80% of coke's global sales. >> in every single market which we've invested in africa, we've never had to retreat or pull out of any of these markets. >> you stay? >> we stay. >> when a number of american companies, including pepsi,

pulled out of the country during apartheid, coca-cola maintained a presence. it sold its bottling operations to a multiracial group of investors, and won the hearts of south africans. >> it was not an easy choice. coca-cola decided to take that stand because it was the right position to take. >> cyril ramaphosa is one of the founding fathers of modern south africa. >> coca-cola was already seen as a progressive company that was on the side of change, and that endeared it to many, many people in our country. >> a former political activist and friend of nelson mandela, ramaphosa is still pushing for change as chairman of shanduka, a company that owns the country's only coke bottler managed by blacks. >> we're changing from a horrible past to a promising and prosperous future. and coca-cola is part of the journey with us. >> part of the journey and part

of society. here the global company is a local sponsor, supporting community events and small businesses by providing them with signs and refrigerators, with coke's name on them, of course. its return? brand loyalty. coke has a 90% share of the soda and water market, ensuring its logo is everywhere. as in other parts of the world, coke has managed to tap into what excites the locals, like soccer. >> welcome to coca-cola soccer zone. football on the coke side of life. >> it's committing hundreds of millions of dollars to sponsoring the world cup in 2010. >> it's probably half our budget at the moment i would imagine is spent on football. we certainly have used the event in every way we can. >> by plastering the world cup logo on billboards, bottles, and cans, to announcing itself where

spectators at the world cup finals won't be able to miss it. >> hello, africa! >> soccer frenzy inspired local film student mfundo mkhize to come up with this ad. how popular is soccer? >> wow. that's how popular it is. everybody loves soccer. if you go to any township, you'll find them playing in the streets. you'll find them in the dust everywhere. soccer is the sport. >> when coke invited filmmakers to compete for the opportunity to create a world cup-inspired commercial, mkhize pounced. the resulting minidrama in which he stars, presents a team of underdogs miraculously beating a squad of soccer giants. what was the message that you wanted to convey with this commercial? i mean obviously it wasn't just go out and buy coke. >> i think that it's about hope, that if we pull together we can do anything. at this time in south africa,

we've got, like, a lot of challenges to go over, you know. but, we know we can do it. we are a young democracy, but we can do it. >> that sentiment has struck a chord, as we found out walking the streets of johannesburg. >> aren't you the guy that made the coke ad? >> yeah. >> it was lovely. i couldn't believe he came up with that concept. it was lovely. >> associating itself with popular passions and historic moments will only pay off for coca-cola if people in emerging markets can get their hands on its drinks. and in remote parts of africa, there are still some 900 million potential customers in places where coke isn't yet for sale. >> there are so many more people who still have to get up and walk a certain distance to be able to reach our products. we're going to make sure that it's really within arm's reach of desire. and so we have a long way to go to achieving that.

coming up, bottling the secret formula. more than 200,000 times a day. >> yeah, this is the most fun you can have in a day is watching this. >> that's next on "the real story behind the real thing."

[ music ] >> cookie rice has been watching the bottles come off the line at "ozarks coca-cola bottling" since 1944, when he started as a bottle washer at age 14. cookie rice has been watching the bottles come off the line at ozark's coca-cola bottling since 1944, when he started as a bottle washer at age 14.

so how many bottles could move off of this conveyor belt? >> 120 bottles a minute. and it was lightning fast. >> rice is now the ceo of this springfield, missouri, company. >> hello. >> the 13th largest coke bottler and one of just 72 remaining independent coke bottlers in the u.s. >> yeah, this is the most fun you can have in a day is watching this. >> coca-cola is in rice's blood. after all, it changed the fate and fortunes of his family. >> we were named bottler of the year. >> it all started in 1920, when his father and uncle put their life savings into a company that bottled an array of sodas -- peach, ginger ale, and coca-cola. coca-cola was a relatively new beverage back then. so it seems like the family was making a big bet. >> it was a very big risk.

but i think they just had a flash of brilliance, if you don't mind me saying so, and they saw the future in it. >> the plant is like rice's home. many of the 300 employees have been with him for decades. and while they're happy to talk about any of their products, there is one drink that is never mentioned. is there a local pepsi bottler around here? >> well, there is a local pepsi distribution point. >> you're the first person i've interviewed who actually said "pepsi" to me. >> well, they exist. i'm not saying that i've ever tried one. i got it -- i got it very close. >> close like how close? you had the bottle open? >> i had it open, and when i smelled it, i couldn't drink it. >> did it occur to you perhaps if you did get it down that maybe there was a possibility that it might actually taste

okay? >> that never occurred to me. >> what rice and his staff do is something the coca-cola company, amazingly, doesn't do, make coca-cola. what coca-cola manufactures is this, the concentrate. the secret blend of ingredients that gives coke its flavor. coke sells the concentrate to bottlers in 55-gallon containers, and it's not something you would want to drink. >> oh, it tastes terrible. >> terrible? >> well, you know, by the nature of its name, it's concentrated. >> right. >> so all the flavor is concentrated, and it doesn't taste good at all. it smells pretty good, but it doesn't taste good. >> but once bottlers add purified carbonated water and liquid sweetener to the exact proportions mandated by the vaunted secret formula, every concentrate container is transformed into 2,300 gallons of coke, ready for delivery.

there are 3,456 cases here. that's 82,944 cans, and by the end of the day, every one of these cases will be loaded up onto a truck headed out to some 750,000 consumers in the area. not only do bottlers make the soda and deliver all those bottles and cans, they also distribute most of coke's entire line of beverages, and stock and maintain everything at each outlet. so basically, when a consumer walks into a store and picks up a bottle of coke, chances are that bottle has not been touched by anybody who does not work for you or coca-cola in some fashion. >> absolutely not, no. >> it comes from here and goes straight to the shelf into their hands? >> all the way to the shelf. >> it's called direct store delivery, and it's been the way ozarks coke and bottlers across the country have been getting coke out since the soda was first put in a bottle back in the 1890s.

at the time, coke's owner, asa candler, believed in fountain sales and had no idea that bottling the drink would mark the beginning of an empire. bill mooney is the company historian. >> at the turn of the century, asa candler, who was the owner of the company at that time, talked to two gentlemen from chattanooga, tennessee, about bottling coca-cola. well, candler didn't think a whole lot of the idea, so he basically gave them the rights to bottle coca-cola in the united states for the sum of $1. >> $1? >> $1. in many ways it was a brilliant marketing strategy, because to create a bottling system that will cover the entire united states was going to require immense capital. >> while the two men from chattanooga worked to build a network of franchised bottlers from coast-to-coast, all the company had to do was supply them with concentrate.

for coca-cola, it was a sweet deal, until bottled coke began outselling fountain coke. suddenly it looked as if asa candler had given away the store. but being a successful bottler was expensive. they constantly had to buy raw materials, new machinery, new trucks. by the 1970s, with interest rates skyrocketing, many were struggling to stay in business. >> at one time we were paying on a loan that was one point over prime, and prime was 21%. >> wow, 21%. >> 22 cents of every dollar we took in went to the bank. and it was very difficult. it put some of these hairs here. >> rice stayed the course. but in the 1980s, many bottlers put their businesses up for sale, giving coke the opportunity to buy them all and create one giant bottling company, coca-cola enterprises.

a separate firm in which it has about a 35% stake. over the years, coke and its bottlers have battled, even gone to court over prices, new products, and how to deliver them. but now the stakes involved in keeping the peace are higher than ever. in 2009, pepsi bought its two largest bottlers, with plans to buy even more. giving pepsi something coke never had -- total control over bottling. >> the coca-cola system can't sit back and watch when pepsi makes these dramatic changes. >> industry analyst bill pecoriello says pepsi's new efficiency could save it as much as $800 million, savings that may ultimately force coke and its bottlers to overhaul the relationship they've had for over 100 years. >> coke is going to need the cooperation of its bottlers, because if they don't cooperate

on cutting more costs and changing how they do business, they're both going to find themselves at a big disadvantage. >> but change is nothing new for cookie rice. over half a century at ozarks coke, he has seen lots of it, yet one thing remains the same. your loyalty to the brand hasn't changed. >> loyalty to the brand hasn't changed. >> as long as there is a store or restaurant that doesn't sell coke, that's your next opportunity? >> as long as there is a stomach that doesn't have some in it, yes. coming up, one machine, 104 flavors, and it's spying on you. >> the machine calls home to atlanta. >> coke's high-tech gamble, next on "the real story behind the real thing."

[ music ] >> it was designed by the people who brought you the ferrari. it's got the touch screen technology of an "i-phone," and power provided by the thirst of millions. it was designed by the people who brought you the ferrari. it's got the touch-screen technology of an iphone. and power provided by the thirst of millions. in an age when shoppers demand products tailored to their individual tastes, coca-cola has created a high-tech, souped-up soda fountain to satisfy every whim. it's the freestyle jet machine, and it puts buyers in the driver's seat, letting them create up to 104 variations of coca-cola's sodas, juices, teas,

and flavored waters. first, pick your favorite drink. next, you're offered an assortment of flavors you can add. >> i'll get my ice. select a beverage. let's try a vanilla coke. you push and hold it. >> gene farrell is project leader for the freestyle. >> consumers are actually driving across town to go to restaurants that have this machine. >> this isn't just coke's leap into the 21st century, it's part of its push to attract new drinkers and bring back old ones. for ten years, sales of soda, the heart of coke's business, have been falling in north america. >> we hear from consumers all the time that i haven't tried a regular coke in years. but they've gotten reintroduced to the brand because of this technology. and what we're seeing in our early testing is double-digit increases in sales for our

customers. >> the key is printer-style cartridges that release the ingredients in potent microdoses, using technology borrowed from precision medical equipment. still in test markets, crowds seem to love the freestyle. >> awesome! yeah. >> there is a lot more variety, and i like that a lot more. >> but the real payoff, getting inside the minds of those buyers. >> the machine calls home to atlanta. >> the machine calls home to atlanta, and it reports what they sold that day by brand, by day part. >> for coke, it's marketing gold. the cartridges track what people are putting in their cups, how much, and even when each drink combination is being poured. >> this is a great example of consumers buy almost every brand every day. so there you can see an example, brand coke is still far and away the most number of pours. but what we're finding with 104 brands is almost every brand sells at least once a day. >> that mountain of data about

what customers like could point to the next drink sensation, and that's critical. new soda flavors build excitement, which is what the company needs to revive a flagging market. in this industry, new is where the growth is. so in 2007, coke established an entire division whose mission is to create or discover coke's next billion dollar brands. >> how is business? >> good, good. >> hey, matt, good to see you again. >> derek van ransberg heads the veb, the ventures and emerging brands unit. >> we look for the beverages that are ahead of the game that are meeting needs that are not being met currently by an existing offering. and those interest beverages we're really interested in. >> like zico coconut water, started in 2004. >> zico is 100% pure coconut water, no sugar added. >> coke had it on its radar once it began to gain a following. >> that's what we're about is

trying to pick up the trends at an early stage, trying to see what's next. >> recent health trends are making it more popular in the u.s. so coke bought a stake in this company that you may not have heard of, yet. >> there's no fat, no cholesterol, naturally. >> everything starts small. even coca-cola was drunk one bottle at a time. so we think this category and this brand has within it the seeds of greatness. right now it's just small. and maybe you could call it niche. but we don't think it's niche forever. we think it has the potential to be a really big business. >> good to see you again. >> van ransberg believes it takes nine years to build a billion dollar brand. but getting there is no sure thing. coke gambles huge sums in the hopes of turning a niche product into a phenomenon.

>> that's quite a unique part of the veb strategy is we prepare to have the patience to build the brands the right way. >> and if patience isn't enough, coke has the money to acquire blockbusters. in 2007, coke paid a steep $4.2 billion for glaceau, maker of vitaminwater and smartwater. in the future, the company hopes to create the next big splash, or buy it before it's a hot commodity. how do you know what the consumer is going to want five years from now? >> we know the trend is around environment, social responsibility, health and wellness. it's not a big leap of the imagination to think five years from now could a 30 or even 50% of the growth of the industry come from categories that today barely exist. >> for 100 years, coke only offered one drink, classic coca-cola. it didn't have to offer more. but now coke isn't it. choice is it. and the company has to keep an eye on ever-changing tastes to find its next great success,

whether that's cherry, diet, sprite, or a coconut concoction. amazingly enough, even though the freestyle machine offers the chance to concoct any number of exotic drink combinations, the one shoppers chose more than any other wasn't a combination at all. it was classic coke. more than a century ago, coca-cola was just a drink. today it's a corporate empire, determined to bring its famous logo to every inhabited corner of the world. there are still a few places on the planet where you can't buy a coke, for now. for cnbc, i'm melissa lee. thanks for watching