Between 1886 and 1959, the price of a glass or bottle of

Coca-Cola Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...

was set at five cents, or one

nickel Nickel is a chemical element with symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel is a hard and ductile transition metal. Pure nickel is chemically reactive but large pieces are slow to ...

, and remained fixed with very little local fluctuation.

The Coca-Cola Company The Coca-Cola Company is an American multinational beverage corporation founded in 1892, best known as the producer of Coca-Cola. The Coca-Cola Company also manufactures, sells, and markets other non-alcoholic beverage concentrates and syrups, ...

was able to maintain this price for several reasons, including bottling contracts the company signed in 1899, advertising, vending machine technology, and a relatively low rate of inflation. The fact that the price of the drink was able to remain the same for over seventy years is especially significant considering the events that occurred during that period, including the founding of

Pepsi Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in 1893 by Caleb Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola in 1898, and then shortened to Pepsi in 1961. History Pepsi was ...

World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...

Prohibition Prohibition is the act or practice of forbidding something by law; more particularly the term refers to the banning of the manufacture, storage (whether in barrels or in bottles), transportation, sale, possession, and consumption of alcoholic ...

The Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

, changing taxes, a

caffeine Caffeine is a central nervous system (CNS) stimulant of the methylxanthine class. It is mainly used recreationally as a cognitive enhancer, increasing alertness and attentional performance. Caffeine acts by blocking binding of adenosine t ...

and

caramel Caramel ( or ) is an orange-brown confectionery product made by heating a range of sugars. It can be used as a flavoring in puddings and desserts, as a filling in bonbons, or as a topping for ice cream and custard. The process of caramelizatio ...

shortage,

World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...

, and the company's desire to raise its prices.

The beginning

In 1886, Dr.

John Stith Pemberton John Stith Pemberton (July 8, 1831 – August 16, 1888) was an American pharmacist and Confederate States Army veteran who is best known as the inventor of Coca-Cola. In May 1886, he developed an early version of a beverage that would later bec ...

, a pharmacist and former confederate soldier, produced the first Coca-Cola syrup. On May 8, 1886, he brought a jug of his syrup to a local pharmacy on Peachtree road in

Atlanta Atlanta ( ) is the capital and most populous city of the U.S. state of Georgia. It is the seat of Fulton County, the most populous county in Georgia, but its territory falls in both Fulton and DeKalb counties. With a population of 498,715 ...

Georgia Georgia most commonly refers to: * Georgia (country), a country in the Caucasus region of Eurasia * Georgia (U.S. state), a state in the Southeast United States Georgia may also refer to: Places Historical states and entities * Related to the ...

. According to the chronicle of Coca-Cola, "It was pronounced 'excellent' and placed on sale for five cents a glass" (). Although most soda fountain drinks cost seven or eight cents at the time (for a 6.5 oz glass), Coca-Cola chose five cents and specifically marketed itself as an affordable option. Pemberton sold his remaining stake in Coca-Cola to

Asa Candler Asa Griggs Candler (December 30, 1851 – March 12, 1929) was an American business tycoon and politician who in 1888 purchased the Coca-Cola recipe for $238.98 from chemist John Stith Pemberton in Atlanta, Georgia. Candler founded The Coca-C ...

in 1888.

Bottling contracts

In 1899, Benjamin Thomas and Joseph Whitehead, two lawyers from Chattanooga, Tennessee, approached Coca-Cola President Asa Candler about buying Coca-Cola bottling rights. At the time,

soda fountain A soda fountain is a device that dispenses carbonated soft drinks, called fountain drinks. They can be found in restaurants, concession stands and other locations such as convenience stores. The device combines flavored syrup or syrup concentra ...

s were the predominant way of consuming carbonated beverages in the United States. Candler sold the rights to the two lawyers for one dollar, which he never ended up collecting. It is speculated that Candler sold the bottling rights so cheaply because he (a) truthfully thought bottling would never take off, and (b) was granted the ability in the contract to "pull their franchise if they ever sold an inferior product". However, the contract at the agreed-upon price had no expiration date, so he had essentially agreed to sell Coca-Cola at the same price forever.

Advertising

Although Candler predicted differently, bottling did indeed become popular (surpassing fountain sales in 1928), and the non-expiring contract meant that Coca-Cola had to sell their syrup for a fixed price. That meant Coca-Cola's profits could be maximized only by maximizing the amount of product sold and that meant minimizing the price to the consumer. Toward this end, Coca-Cola began an aggressive marketing campaign to associate their product with the five-cent price tag, providing incentive for retailers to sell at that price even though a higher price at a lower volume might have made them more profit otherwise. The campaign proved successful, and bottlers did not increase prices. Coca-Cola was able to renegotiate the bottling contract in 1921. However, in part because of the costs of rebranding (changing all of their advertisements as well as the psychological associations among consumers) the price of Coca-Cola remained at five cents until the late 1950s ().

Vending machines

Another reason the price of Coca-Cola remained fixed at five cents, even after 1921, was the prevalence of vending machines. In 1950, Coca-Cola owned over 85% of the 460,000 vending machines in the United States. Based on vending machine prices at the time, Levy and Young estimate the value (in 1992 dollars) of these vending machines at between $286 million and $900 million. Because existing Coca-Cola vending machines could not reliably make change, customers needed to have exact change. The Coca-Cola company feared that requiring multiple coins (e.g., six pennies or one nickel and one penny for six-cent Coke) would reduce sales and cost money to implement, among other things. Reluctant to double the price to a dimethe next price achievable with a single cointhey were forced to keep the price of Coca-Cola at five cents, or seek more creative methods. This constraint played a role into the 1950s, when vending machines began to reliably make change.

Attempts to raise prices

The Coca-Cola Company sought ways to increase the five cent price, even approaching the

U.S. Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and t ...

Department in 1953 to ask that they mint a 7.5 cent coin. The Treasury was unsympathetic. In another attempt,

briefly implemented a strategy where one in every nine vending machine bottles was empty. The empty bottle was called an "official blank". This meant that, while most nickels inserted in a vending machine would yield cold drinks, one in nine patrons would have to insert two nickels in order to get a bottle. This effectively raised the price to 5.625 cents. Coca-Cola never implemented this strategy on a national scale.

The end of the practice

Throughout its history, the price of Coca-Cola had been especially

sticky Sticky may refer to: People *Sticky (musician), alias of UK garage producer Richard Forbes * Sticky Fingaz or Sticky (born 1973), nickname of the US rapper and actor Kirk Jones Adhesion *Adhesion Adhesion is the tendency of dissimilar ...

, but in the 1940s, inflation in the United States had begun to accelerate, making nickel Coke unsustainable. As early as 1950, ''Time'' reported Coca-Cola prices went up to six cents. In 1951, Coca-Cola stopped placing "five cents" on new advertising material, and ''

Forbes Magazine ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also rep ...

'' reported on the "groggy" price of Coca-Cola. After Coca-Cola president Robert Woodruff's plan to mint a 7.5 cent coin failed, ''Business Weekly'' reported Coke prices as high as 6, 7, and 10 cents, around the country. By 1959, the last of the nickel Cokes had been sold.

References

External links

Chronicle of Coca-Cola

Image of 5 cent advertisement

Image of Coca-Cola vending machine

Image of "as always 5 cent" advertisement
{{DEFAULTSORT:fixed price of Coca-Cola from 1886-1959 Coca-Cola Pricing 19th-century economic history 20th-century economic history