Coke Mulls New Direction After CEO Daft Departs

Coca-Cola Co.’s iconic bottle, its image of Santa Claus and its advertising as “the real thing” have helped to define a century of Americana. But it was recent events in Japan and Brazil that hastened the retirement of chairman and CEO Doug Daft and delayed the ascension of his heir apparent, company president and COO Steve Heyer, sources said.

Since his arrival three years ago, The Coca-Cola Co. fast-tracked Heyer, a former head of sales at Turner Broadcasting, in preparation for Daft’s retirement. Now, with Daft’s year-end departure official, Coke has decided to look outside the company as well. Its hesitation raises two questions: Who will lead the company, and if not Heyer, how long will he remain?

“This is a pivotal moment in Coke’s existence,” said Manny Goldman, a beverage consultant. “It’s not like things were going well with Daft.”

There is speculation that Coke is waiting for an investigation of anti-trust allegations in Brazil—which Heyer oversees—to be cleared up, according to sources. Coke also has been under a microscope recently because of fudged test results for a Frozen Coke product at Burger King and allegations of fraud in Japan in the 1990s, when Daft was leading the Asian unit.

“Company boards want moats of deniability” around their CEOs, one source said. “They want a break from that crap in Japan,” the source said, referring to the timing of Daft’s announcement. “And they didn’t just name Heyer because they want a break from that crap in Brazil.”

“The events in both countries are completely unrelated to Doug and Steve’s announcements,” said Sonya Soutus, a Coke rep.

Described as a “reluctant CEO,” Daft replaced Doug Ivester in 2000. An aborted alliance with Procter & Gamble and a thwarted attempt to acquire Quaker Oats were his biggest failures. Shares have fallen 2.5 percent during his tenure.

Longtime Coke power broker Don Keough officially returned to the company’s board of directors last week, in a move viewed by many as a means to appease investors and Coke’s bottling community. Sources said Coke will tap Chicago-based search firm Heidrick & Struggles to line up CEO candidates because Keough, 77, is close to that firm. H&S did not return calls. Coke declined comment.

If Heyer, 50, does ascend, it will be the first time the 118-year-old company will be led by an executive with a marketing background. Known as “aggressive, driven and no-nonsense,” according to one observer, he is credited with bringing a global brand strategy to Coke after Daft’s failed “Think local, act local” mandate.

Coke’s current “Real” campaign, out of Berlin Cameron/Red Cell, New York, is its most successful in a decade.