The Hindu Business Line : Cola, Cadillac and colour bookmark

Warriors waging market battles steadily focus on the bottom-line, lest it slip into the red. Walter S. Mack, Jr., who led Pepsi-Cola from 1938 to 1950, thought of a different idea to keep his company in the black: he brought the black into the company.

The experiment began in March 1940, when the cola player hired Herman T. Smith, a 28-year-old African-American newspaper adman, “to launch a campaign to pump up sales of Pepsi in black communities,” as Stephanie Capparell narrates in The Real Pepsi Challenge ( www.crosswordbookstores.com).

“To the black press, the hiring was big news. Reporters from those papers crowded into Pepsi’s offices at the company’s Long Island City headquarters and plant in Queens to hear the announcement.”

Chicago Defender noted the company had “shown a great deal of respect and confidence in the Race,” and The Pittsburgh Courier termed Smith’s position as “one of the most important held by a Negro in private i ndustry.” Another story in Courier that day was about how “there were just 4,316 black soldiers versus 2,23,000 white, and only four commissioned black officers compared with 13,996 white officers.” The army should be 10 per cent black, the article argued, “because 10 per cent of the population was black and paying taxes, too.”

What was thrilling to the black press about Pepsi’s venture? It was that a black man was being hired “for a national campaign to sell a common product to the general public,” explains Capparell. “African-American salesmen had been relegated mostly to peddling ‘vice’ products such as alcohol and cigarettes – and even then mostly to local and regional markets.”

Those were days when “few Americans had ever seen a young black man with a corporate business card.” The staff of the new department, whose mandate was to expand the consumption of Pepsi-Cola among African-American customers, had to face many obstacles “in the segregated America of the day,” recounts the author. “They were travelling salesmen who had to sit in the backs of buses, ride in separate train compartments, and eat behind closed curtains in dining cars. Because many restaurants and hotels across the country didn’t want their business, they often had to rely on a network of families willing to give them food and lodging in their homes while on the road …”

Appalling conditions. But businesses were aware of the importance of the blacks’ market. The Depression had forced desperate manufacturers, despite their prejudices, to seek new buyers for their products, as in the Cadillac case that Peter F. Drucker documented in his 1979 book, Adventures of a Bystander.

“General Motors was on the verge of shutting down the division when Nick Dreystadt, the German-born service manager at Cadillac, persuaded the company to try promoting its cars to Negroes …” But there was a problem: “It was company policy not to sell Cadillacs to Negroes,” who were not perceived to be ‘prestige’ buyers. Affluent white customers were, however, disappearing, with the economy sinking.

“Dreystadt knew the car was already doing well among wealthy Negroes, mostly entertainers, boxers, doctors, or realtors, who often had to have a white friend or manager to buy the car for them, and persuaded his bosses to actively court the African-American consumer.” Drucker would chronicle how the company ended up selling enough cars “to make the Cadillac division break even by 1934.”

A story of how “business can thrive only where diversity thrives.”

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D. Murali