Bonehead Reason Coca-Cola Was Only A Nickel For Over 70 Years

Bonehead Reason Coca-Cola Was Only A Nickel For Over 70 Years

Talk to any old-timer, and they'll love to lament how expensive things have gotten. In their day, everything seemed to only cost a nickel (or 'bumblebee,' which was the style at the time). A loaf of bread? That'd be a nickel. A shoeshine? A nickel. A small Inuit child brought back by North Atlantic whalers? A nickel. And of course, there was the most American symbol of stability, the nickel Coke.

nagualdesign, Wikimedia Commons
Or as they used to call it: Atlanta swamp syrup.

Not that calling it a nickel Coke narrows the timeframe down much because, for over 70 years, Coca-Cola bottles cost exactly five cents, the same price as when the drink came out in 1886. How could America go through a Prohibition, a Great Depression, two World Wars, and the start of The Tonight Show with a bottle of Coke not changing its price by a single cent? The reason for it has to do with one of the most bone-headed business decisions in history.

In 1899, Coca-Cola President Asa Candler was approached by two Chattanooga lawyers wanting to buy the drink's bottling rights. Convinced that no one would ever buy Coke in bottles and that the old-timey soda stream would remain popular until the skies were lined with flying cars, Candler quickly agreed to sell them the rights. For a dollar. For forever. At a fixed syrup purchase price of 90 cents per gallon, which is a ridiculously cheap deal for anything laced with actual cocaine

As a result, this meant that the Coca-Cola company would only get paid two cents per every 6.5-ounce bottle made until the end of time. And since, to no one's surprise but Candler's, Coke bottles soon became more popular than soda streams, this put the company under financial duress. The only way out was to sell as much cola as possible -- and the most profitable way to do that was to keep the end product dirt cheap. Of course, the Coca-Cola company couldn't tell vendors how to price their bottles. But they sure could tell customers how much they should be paying for them.

In the 1900s, Coca-Cola launched a massive ad-campaign that proclaimed that their drink was "always" going to cost five cents and not a cent more. This locked down the nickel price since vendors were too afraid to be seen as gougers by their customers if they sold Coke for more than it said on the massive billboards right outside their shops. Seeing their profits dwindle, the bottlers eventually called uncle and allowed Coca-Cola to negotiate their bottling contract in 1921, getting rid of the fixed rate.

Wikimedia Commons
Who are you going to trust, your local grocer or the giant poster lady?

Except that by trying to fix their fixed rate, Coca-Cola had put themselves into an even bigger fix. Now, as keen as everyone else to inflate prices (by 1921, the dollar had lost about half of its purchasing power compared to 1886), they found themselves unable to do so. What they hadn't accounted for was that, since vendors had been bullied into maintaining low prices, they had cheaply built their Coca-Cola vending machines, letting them only accept single coins (the nickel) while unable to give change. So not only would a price hike require them to replace every single piece of nickel advertising, that hike would require going from five cents to the next coin, ten cents, or else they'd have to replace every single vending machine in the country as well. And with an entire customer base now brainwashed to pay five cents for a Coke and not a cent more, Coca-Cola just couldn't twist off the price cap on their bottles.

For decades, the Coca-Cola company tried to figure out creative loopholes out of their nickel and dime situation. They begged President Eisenhower (who kinda owed them for getting Russia's greatest general hooked on sugary capitalism) to put a seven-and-a-half cent coin into circulation. They also tried turning their vending machines into slot machines. For every eight bottles, Coca-Cola stocked an empty one. That way, every ninth customer got an "official blank" and was forced to buy a second bottle.

Billy Hathorn, Wikimedia Commons
Still better than accidentally getting a New Coke

Of course, none of those schemes panned out. Coca-Cola had to wait for the billboards to fade and vending machines to become smart enough to make change before they quietly started to raise its prices by a few cents. The final nickel Coke was sold in 1959, a time when a nickel couldn't even get you a pair of cheap X-Ray specs from the back of a comic book. Ah, now those were the days.

For more forcibly cheap puns, do follow Cedric on Twitter.

Top Image: Coca-Cola, Billy Hathorn/Wikimedia Commons

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