RC Cola - Why It Failed

[Music] rc cola the joke of the soda industry that's the perception right coke and pepsi are the two pro ball players engaged in this intense one-on-one and rc is the kid shooting at the hoop thinking he's part of it it's not completely off but i think rc deserves a little more admiration rc is not a kid shooting hoops they're more like a pro ball player that tore their acl years ago and has never been the same oh rc is the derrick rose of the cola industry you know what i fear my metaphor is getting too deep here it'll make more sense in a minute the beginning of rc cola takes place in the early 1900s and is centered around this very busy guy named claude hatcher he had two jobs he was a qualified pharmacist and at the same time co-owned a grocery wholesale business the other owner was his father they started it with two other guys but bought them out of their shares after only a couple years so claude had a lot going on as a wholesaler of groceries they were basically the middleman between the manufacturers and the stores so they made a lot of deals with both ends well one day claude was talking to a representative from the coca-cola company named columbus roberts the mission that day was to buy a large amount of coca-cola from him and then sell it to the various grocery stores that they dealt with as i'm sure we've all experienced when you buy a large amount of something you usually get a discount that's part of what makes this business model work so well for whatever reason i would guess because coke was so popular this representative was not budging and would not give claude any kind of discount on this large amount that he was looking to buy the argument got pretty heated and at the end of it he vowed that he would never buy anything from coca-cola ever again he said from this point forward he would make his own let's face it this sounds like an empty threat what's he gonna do put everything on hold lock himself in his basement and create his own competing soda that somehow had a chance against such a ridiculously strong brand i shouldn't laugh because that's exactly what happened he emerged with this formula for a ginger ale that must have been pretty tasty because a lot of people were buying them it was so successful that after a couple years claude and his father made the decision to abandon their wholesale business in favor of producing this ginger ale full-time that was their business for the next few years and things were good but i think there was a very obvious way to continue growing this business and take things to that next level let me ask you in the soda market today or a hundred plus years ago what's the better selling product is it cola or is it ginger ale i hope everyone said cola but then my second question is which is more competitive my point here is cola is where the real money's at but because of that it's more competitive so they gave it a try in a smart way even in 1910 you couldn't just compete directly with coca-cola you had to have an angle their angle was offering cherry cola they called it cherro cola to my knowledge cherry coke didn't exist yet i know for sure they didn't start selling it officially until 1985 so i think they found their angle here cherro cola soon became their core product it quickly surpassed their ginger ale sales and they actually renamed the company after it over the next decade they had some unlucky issues with sugar world war one made it expensive and scarce so they made their own refinery to ensure they'd have a bunch of it but then soon after the war the sugar prices dropped and now they had all this sugar that was almost worthless despite their issues in making it they had no trouble selling it they were starting to be a bit of a threat to coca-cola so i don't know how i feel about this and what i can only see as an attempt to hinder the competition coca-cola sued cherokola claiming the names were too similar and they shouldn't be able to use the word cola in their name since you know that was their thing coca-cola won the lawsuit and in 1923 cherukola was forced to drop the cola from their name they would now simply go by cherro and that was not good it's not the name people recognized and it didn't have the same ring to it the name change caused sales to plummet since they were now having issues making it and selling it they decided it wasn't worth it anymore and soon discontinued it all together i might have given up at this point so i have to admire the resilience they had already built their business around a ginger ale and then around a cola and now they needed a third product to see that level of success and they did it this time with a fruit flavored drink called knee-high now that became the core of their business in the new name of the company it got them through the next decade and then things got tough again two main things the great depression and sadly the death of claude hatcher who's just the backbone of the company founder innovator leader but there's a silver lining to it the guy who replaced him hillary mott rose to the occasion he was promoted from vp of sales and figured out which product should be discontinued and the ones they kept he started producing them more efficiently he not only got them through it the company was now better than ever and looking to expand it's kind of funny because after everything that happened they found themselves in the exact same position they were in over 20 years earlier successful in making a non-cola product but trying to find their way into that potentially lucrative cola market in 1934 they tried it again when they introduced royal crown their plan this time was to use all of their knee-high earnings to promote royal crown they were the first to do taste test and they would advertise the results evidently they came back saying that people preferred them over coke or pepsi they paid for endorsements from some of the biggest celebrities of the time their big break came in 1944 when it was ruled that they could now use the word cola so they did they changed the soda's name to rc cola and 15 years later it became the new name of the company the 1960s was the best decade they ever had and the only time it looked like they had a real chance in ever catching up to coke or pepsi do you know diet right it's a diet soda that i would call insignificant to the industry today but it used to be big it was introduced by rc cola in 1962 making it the first ever diet soda to be mass produced i think we can say due to its head start it was the best-selling diet soda throughout the 1960s and the fourth best-selling soda overall behind coke pepsi and rc cola so let's think about that coke and pepsi are one and two obviously but three and four were both from rc cola and diet sodas were getting huge so you can only expect that to grow in october of 1969 it all came to an end when the u.s government banned the use of the artificial sweetener called cyclamate which is what they used in diet right and basically every diet soda at the time now just to be clear i'm not a scientist in any way so don't rely on what i say here but it appears that this stuff was banned under strange circumstances the main reason was a study concluding that when given to rats it causes bladder cancer that study has since been criticized i guess they gave them ridiculously high doses of it and there's been studies since saying it's perfectly fine for humans sugar companies may have been involved the general consensus is that this stuff seems to be harmless it is still banned in the us but it's allowed in most of the rest of the world including all of europe again i don't know seems sketchy but of course don't rely on me when it comes to forming your stance on cyclamate either way it doesn't matter when it comes to diet right the fact is the government banded they couldn't produce their successful product anymore and even when they tried to alter it using different sweeteners the public is freaked out they don't want anything to do with diet sodas right now not only was that exact product not allowed the whole industry was effectively gone and they were scared two times now they put too many eggs in one basket and look what happened they put everything toward cheryl cola and then it was taken from them then they put a lot toward diet right and again completely taken from them they had a very human response when they chose to diversify but this was bad too it was too much diversity they started acquiring some juice companies tile companies like the tiles you install on the floor picture frames lamps arby's they bought arby's they were no longer a soft drink company by the 1980s that part of their business was only about half of their revenue in my mind if you want to catch up to coke or pepsi the only way you have a chance is if you put every single possible dollar into doing it advertising market research product innovation but now half their attention was elsewhere and it just made things impossible i think we can say that it was this decision that took them out of the race coke and pepsi pulled so far ahead it was just over i don't view anything from this point is being too significant in the rivalry between coke and rc because let's face it rc gave up but here's the highlights of what followed in 1984 after 80 years of existing as their own company they were acquired by the shady character named victor posner he was known for his hostile takeovers and had this reputation for sucking the life out of companies for his own personal gain he cut costs everywhere he could and it resulted in rc falling even further if anyone had any hopes of them ever catching up to coca-cola this would have crushed them in 1993 posner had a whole mess of legal troubles it resulted in him giving up the company that owned rc the company was now called tri-arc and the new owners did put more attention toward the cola but what can you do at this point triarch bought snapple and grouped it together with rc and a few other beverages and then in 2000 sold all those beverages to cadbury schweppes they quickly sold rc's international rights to a canadian company called cot there were a few more changes that led to the u.s rights of rc cola being held by dr pepper so today if you buy it in the u.s it comes from dr pepper otherwise it comes from cot i think we can agree today not many people care about rc cola and that's fine but i also feel like it gets a lot of disrespect and i don't agree with it a dr pepper machine yes well i can taste it now it was a mirage an rc cola machine yes coca-cola won the feud anybody would agree with that but i would argue they had a lot of luck along the way in the 1920s i don't know what was up with that court decision that made cerro cola change their name but 20 years later there was a different decision so i'd say coke was pretty lucky to get that ruling in the first place could you imagine if rc hadn't had that setback in the 1960s the government banning cyclamate that was a controversial decision that again killed their most promising product and scared them away from the industry what if that hadn't happened in the 1980s the company was hostilely taken over by an owner that ignored the brand what if that hadn't happened what if all three hadn't happened most of that was bad luck and out of their control i would argue that if they had a little better luck we would probably have three main colas today or maybe they would have knocked out one of them who knows my point is rc put up a good fight let's show them a little respect let me know in the comments do you have a little more respect for rc cola because that was my mission also have you ever tried it it's been so insignificant for the past 40 50 years you may have just passed it right up finally does my derrick rose metaphor make a little more sense now i'd like to hear what you have to say thank you for watching [Music]

Channel: Company Man

Views: 1,966,531

Keywords: RC Cola, Royal Crown, Soda, Coke, Pepsi, Company

Id: VCcnOmagbE0

Length: 11min 11sec (671 seconds)

Published: Wed May 25 2022