Zymman’s exit heralds new era at Coca-Cola

Writing a text book on marketing does not sit well with the flamboyant image of Sergio Zyman, who resigned from his position as Coca-Cola’s chief marketing officer last week. Especially when he has previously said that there are no rules in marketing.

But according to a Coke spokes-man, that is what Zyman is about to do. But there may be more truth in the other suggestions doing the rounds. Some say Zyman will move to Microsoft, others that he is going to Nike, even more claim he will remain as a consultant to the company he has served for a total 11 years in two different stints.

So, what made Zyman quit as Coke’s top marketer? Industry sources say he was frustrated with not being made president – a position left vacant by Douglas Ivester when he was made chairman and chief executive following the death of Roberto Goizueta last year.

Although the pair are said to be like “chalk and cheese”, it was Ivester who coaxed Zyman back to Coca-Cola in 1993 to overhaul its marketing strategy in the face of a more focused Pepsi. During his first stint at Coca-Cola, from 1979 to 1986, Zyman played an instrumental role in the launch of Diet Coke. He was also involved in one of Coca-Cola’s greatest failures – New Coke.

“Coca-Cola is not naturally a marketing company but a distribution, bottling and finance one – that is what has made it successful,” says a source who has previously worked with Coke. “So its power will not be damaged by the loss of Zyman. But in the years before Zyman rejoined Coca-Cola it was being out-marketed by PepsiCo.

“Zyman got away from the Fifties-style marketing and while his agency restructure was bloody it has improved the advertising massively. He was the catalyst for that cultural change but perhaps his job had come to an end.”

Ivester has turned to Charles Frenette – president of Coca-Cola’s South Africa division to replace Zyman. Ivester’s internal memo explaining the job changes hints at a greater focus on local markets. “It is clear that more and more of our marketing initiatives will be conducted at local level, using the great strength of our bottler system to execute those programmes with us,” says Ivester in the memo. Significantly, Frenette is from a bottling background – his father was a bottler.

David Wheldon, president of Omnicom-owned BBDO Europe, the network which handles advertising for Coca-Cola’s rival PepsiCo, doubts whether there will be a significant change in marketing strategy. He speaks from experience. As Zyman’s number two, he was Coca-Cola’s global advertising director for three years to 1996. He resigned shortly after being made chief marketing officer of Europe to take up his present post.

“They have global strategies agreed to suit local requirements worldwide,” he says.

Following Coca-Cola’s “think global, act local” approach, Wheldon was briefed by Zyman to decentralise the company’s ad agency roster. Dominated by McCann-Erickson for more than 30 years, the roster was extended to include local agencies around the world and a multitude of different ads followed under the strapline: “Always Coca-Cola.”

In the UK alone Coke agencies now include Publicis, Mother, Leagas Delaney, Lowe Howard-Spink, EURO RSCG Wnek Gosper, and Universal McCann for media buying. As part of Zyman’s strategy, Wheldon also recruited talented marketing teams located around the world.

Unlike Zyman, who had worked for PepsiCo in the late Seventies, his successor Frenette is a Coca Cola man through and through, having spent 20 years with the company. The 45-year-old led Coca Cola Fountain from 1986-92 and then oversaw Coca-Cola Operations, the company’s bottle and can unit, until 1996.

He has been credited with making Coca-Cola the dominant “fountain brand” in the US and has overseen a joint investment with local bottlers in the South African market. “Frenette will bring structure and discipline to the process of marketing,” says Wheldon. But will he reverse the Zyman strategy and cut the roster of advertising agencies which now numbers more than 20?

Industry sources say that some agencies are disillusioned with the lack of credit given to their work. Wheldon feels it might be time to filter out those which have not performed.

“Coca-Cola’s agencies have served them well, some better than others,” he says. “I would imagine that the ones which haven’t suited them will come under a rigorous spotlight.

“Sergio is a genius, but like every genius he has his flaws,” says Wheldon. “But the shareholders of the company will be eternally grateful to him for overseeing one of the most dynamic changes in the company driven by marketing.” Coca-Cola’s stock price rose during Zyman’s reign.

“Sergio put in place a good marketing strategy which has a depth of talent,” says Wheldon. “all that Frenette has to do is give it direction and manage it.”

The market appears to agree as the share price has not moved since the announcement of Zyman’s departure and replacement.

Close attention will be paid to changes at Coca-Cola in the coming months – not least by Pepsi and other rivals. It should be a smooth transition. But with his departure, Coke may have lost more than just the flamboyant 52-year-old Zyman – it may also have lost some of the momentum he has given its marketing in the past five years.

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