The soda pop giant’s numbers men were right. The Roaring Twenties had been a decade of speculation, excess, and a widespread belief that share prices would keep going up and up and up. But this party came to a screeching halt in October 1929 when the stock market crashed. In the space of a week millions were wiped off the value of stocks, erasing personal and business fortunes. To recover from the losses U.S. banks began refusing to lend money to Germany to help it rebuild, prompting the German economy to collapse, which frightened American shareholders even more. Soon there were runs on the struggling banks, and businesses across America started going bust, leaving millions out of work. The Great Depression had begun.
As the economic crisis deepened, people stopped buying soda as they tried to make ends meet. Soon the soda fountains and retailers that the fizzy drink industry relied on were going under in the thousands. “There has been a tremendous loss in outlets,” Coke’s vice president of sales Harrison Jones told Woodruff in a 1932 memo. “We have found that practically all bottlers are experiencing an inability on the part of many of their small outlets to buy more than one case and pay cash. In many cases, when the truck calls in the morning, the dealers are required to ask them to come back later in the day, until such time as they can get enough money to pay the cash for a case of Coca-Cola.”
Coca-Cola responded with more advertising. While Moxie and others slashed back their advertising budget, Woodruff kept spending big—a move that made Coca-Cola even more visible than ever. “In the last four years there has been less advertising of every kind and character than at any time in fifteen years,” wrote Jones. “Since we maintained our advertising showings in all media we have stuck out as a sore thumb, and have been more dominant unquestionably than at any time before in our history.” The company’s ad budget went further too. Billboard owners didn't have enough advertisers to fill their boards, so instead of leaving their poster sites vacant, they gave Coca-Cola space for free, enabling the company to blanket America in Lee’s visions of a happier America.
Lee fulfilled his end of the bargain by finally producing a campaign good enough to convince people that Coca-Cola was an all-year-round drink rather than a summer treat with a series of Christmas ads painted by Haddon Sundblom. Born in Muskegon, Michigan, in 1899, the Swedish American artist had already made his name in advertising with his work for Maxwell House and Palmolive by the time Lee asked him to illustrate Coca-Cola’s 1931 Christmas ad. Lee wanted an illustration of Santa Claus having a refreshing pause with a Coca-Cola, and Sundblom was happy to oblige for the appropriate fee. Partially inspired by Clement C. Moore’s poem “A Visit from St. Nicholas,” Sundblom painted a smiling, ruddy-faced Santa toasting the audience with a glass of Coca-Cola. He modeled the character on his retired friend Lou Prentiss. “He embodied all the features and spirit of Santa Claus,” Sundblom explained. “The wrinkles in his face were happy wrinkles.” The advertisement proved so successful that Coca-Cola made its Santa advertisement an annual event, with Sundblom illustrating every one of them until 1964.
It is often claimed that Sundblom’s ad created the look of the modern-day Santa Claus with his red suit, black leather belt, white beard, and bobble hat. But the reality was that Sundblom simply latched onto the emerging consensus about how Santa looked. Traditionally Santa and his European forerunners had come in all shapes and sizes. Sometimes he was tall and skinny; at other times he was the squat, pipe-puffing elf from Moore’s poem. Santa’s garb also varied from the bishop’s clothing of the Dutch Sinterklaas, who would kidnap naughty children, to Britain’s Father Christmas, who wore green robes, to the present-day red-and-white outfit. Despite Santa’s mixed-up origins in folklore, paganism, and Christianity, by the time Coca-Cola hired Sundblom, the idea of St. Nick as a fat man with a big white beard dressed in red was already becoming the archetype of the Yuletide gift giver.
In fact, not only was Sundblom’s depiction simply tapping into a wider trend, but this popular vision of Santa had even been used to promote soda pop before. The Santa in White Rock’s 1915 Christmas ads looked much like Coca-Cola’s Santa, although he preferred to make his festive deliveries of the Wisconsin soda firm’s drinks by automobile or biplane rather than by sleigh and magic reindeer. A few years later in 1923, White Rock was running Christmas ads in color magazines showing a Santa almost indistinguishable from Sundblom’s enjoying a whiskey and a White Rock ginger ale while catching up on his mail. Luckily for Santa, Prohibition didn't apply in Lapland. But while Coca-Cola’s Santa was not by any stretch of the imagination the origin of the modern-day St Nick, it probably sealed the deal once and for all with its ubiquitous year-in, year-out Christmas advertising muscle.
Not that all its extra advertising, Coke-guzzling Santas, and statistical wizardry worked miracles. Coca-Cola sales flat-lined in the Depression, the growth of the 1920s replaced with stagnation. Compared to most of its rivals, though, this was a good result. Charles Hires watched sales of his root beer fall off a cliff, dropping 60 percent between 1930 and 1935. Nor were sales of Hires’ temperance drink helped by the end of Prohibition in April 1933. The noble experiment had proved little more than the naivete of the temperance campaign. In the hope that the return of the liquor industry could help the moribund economy, the federal government consigned the Volstead Act and Eighteenth Amendment to the trash can of history.
The return of alcohol worried the soda industry. In the first six months of Prohibition, soda sales leaped by 200 percent and kept rising all the way up to the Great Depression. The question now haunting the industry was whether the repeal of Prohibition would reverse all of that. Would people still want a Coke when beer was readily available? Would they still need ginger ale in their drink when distilled liquor didn't taste like gasoline? The breweries hoped not. Schoenhofen Edelweiss greeted the end of Prohibition by sidelining Green River, the soda that saw it through the dry years, and refocusing on beer. Soon the breweries that survived by making smoked ham and ice cream were poised for a glorious return.
At Coke, vice president of sales Harrison Jones was particularly twitchy. He wrote to Woodruff warning that the brewers would be a serious threat to Coca-Cola. They were buying ads like crazy, he noted in one memo. In another he urged Woodruff to launch a Coca-Cola beer to grab a share of the expected post-prohibition liquor boom. Woodruff dismissed the proposal. Coca-Cola made Coca-Cola, nothing else. At first it looked as if Jones was right. After several years of flat sales, 1934 saw Coca-Cola’s revenues dip by about 25 percent to $31.2 million. But the hit was short-lived, and in 1938 the company’s annual sales reached a new high of $75.8 million. Coca-Cola had survived once again.