STUDY BRANDS

“Have you ever heard David that Coke tastes better when you get it from McDonald's? The thing that is definitely true is Coca-Cola ships the formula to McDonald's in stainless steel tanks, instead of being delivered in bags. McDonald's does some stuff. They pre-chill the water and they make sure that the hoses are chilled all the way up in the dispenser. McDonald's apparently actually has a different syrup to water ratio that accounts for ice melt. They add a little bit more syrup than the standard recipe, which sounds like it would be heresy.”

“This couponing strategy aligns incentives for everybody in the value chain in a way that had never been done before. Consumers, they love it. They get free drinks of this great tasting beverage. Drugstores and soda fountains, they super love it, because now they're getting more foot traffic. And then once consumers come back and start buying their second, third, fourth, you know, four hundredth drinks, is a highly profitable drink for them to sell.”

“Dr. John Pemberton, a Confederate war veteran who had not only been stabbed, he had also been shot during the war and got army disease just like all these other soldiers and was addicted to morphine for the rest of his life. So after the war, he moves to Atlanta and as part of his entrepreneurial aspirations in this new patent medicine consumer economy, and also to probably solve his own problem, he starts casting about for other drugs that could cure him and others of army disease. And that is how in the mid-1880s, he learns about a new miracle drug, sweeping America, promising to cure all ill including army disease, cocaine.”

“Ferrari has the highest ratio of people who know about their products to people who actually own their products of any company in human history. I would argue that over a billion people know what a Ferrari is, even though only about 180,000 people globally actually own one. It is the only ultra luxury brand that has reached mass cultural awareness.”

“In 1934, Pepsi, in almost a last ditch effort to try and just do something to stay alive and save the company, tests using recycled beer bottles, which are 12 ounce bottles, to sell Pepsi, also for a nickel. The amount of liquid in the bottle is approximately free. Whether you're serving six ounces of liquid per bottle or 12 ounces of liquid per bottle, not going to impact your margins that much. Pepsi starts selling 12-ounce bottles also for a nickel. Twice as much cola for the same price.”

“Mercedes does an estimated 200 million in operating income from Formula One now. 25% operating income. And on top of being phenomenally profitable, TotalWolf estimated in 2021 that Mercedes, that he thinks Mercedes gets a billion dollars of advertising equivalent value for being involved in the sport. So on $600 million of total spend last year, Mercedes generated a double bottom line of over a billion dollars in marketing equivalent value plus $200 million in actual profit.”

“In 1931, Coke commissions the artist Haddon Sunbloom to create Christmas ad imagery for Coca-Cola featuring Santa Claus. So this being a Coke ad, Sunbloom is like, well, I'm going to make Santa as red as possible in Coca-Cola red, and then I'm going to make him as big as possible to get as much Coca-Cola red in the picture. Before this point in time, you couldn't really get mass-produced color images out to the public. So Santa didn't have a color. Nobody really thought about what color Santa was.”

“Ferrari ships very, very few cars, around 14,000 per year. That is approximately the number of Toyotas that are sold every 10 hours. There are 10 times more Birkin and Kelly bags made each year over at Hermes than there are Ferraris, and there are 70 times more Rolexes made each year than there are Ferraris.”

“Ford makes 160 times the number of cars that Ferrari does, yet Ferrari has a higher market capitalization. They're worth more than the Ford Motor Company, and Volkswagen, and Honda, and Stellantis, and Mercedes-Benz. This company is worth so much more than most giant manufacturers while making cars mostly by hand.”

“New Coke. The company immediately starts getting thousands of letters and phone calls every single day. One of my favorites is a letter that reads, My dearest Coke, you have betrayed me. We went out just last week as we had so often. And when we kissed, I knew our love affair was over. But last week, I tasted betrayal on your lips. You had the smooth, seductive, sweet taste of a lie. You have become corrupted by money, denying your ideals.”

“So they create this design brief and they send it around to 10 different glass companies around the country that says, we want to develop a bottle so distinct that you would recognize it by feel in the dark or lying broken on the ground. The Root Glass Company of Terry Hote, Indiana, designs the bottle that goes on to win the contest. Something got lost in translation and the bottle was designed to look like the cocoa plant. The cocoa pod that you smash open to get out cocoa beans. This is a whole different thing called the coca plant, not the cocoa plant.”

“By the time America enters World War II in 1941, the military and the US government realize, hey, Coke may actually be one of America's best weapons in this war. The military under Eisenhower grants Coca-Cola employees quote unquote, technical observer status, meaning that they can participate in the supply and infrastructure build out of the military around the world just the same as military infrastructure people. As the American military is advancing in the global theater all around the world, Coca-Cola is right there with them setting up bottling plants and production lines to supply the troops.”

“Red Bull dumps Sauber and makes the radical decision that rather than sponsoring another team, they are going to directly get into the business. And Mateschitz and Red Bull buy the failing Jaguar racing team, which was at this point in time owned by Ford. Things are so bad for the team that Ford is willing to sell the whole team to Red Bull for one British pound. The purchase price that Red Bull paid was one British pound to establish Red Bull racing.”

“His father runs a successful metalworking shop and is kind of like a fairly well-to-do middle-class entrepreneur about town. His dad says something to him which sticks with Enzo for the rest of his life: A company is perfect when the number of partners in it is odd and less than three. IE don't take on partners. Always be self-sufficient.”

“Everyone talks about the technology and speed, but the under discussed component is the human side. An F1 driver is operating at fighter pilot like cognitive load for 90 minutes straight. Six Gs under pressure, which means their head weighs like 80 pounds at that moment. Their heart rate is 180 beats a minute or more, and they've lost 5% of their body weight during the course of the race. They're doing this making micro decisions of thousands of times with no timeouts, no commercial breaks, and I don't think there's another sport like it.”

“Drive to Survive worked. It's a human drama. When we said there's three concurrent competitions, there's a driving competition, there's the World Cup of Engineering, and there's the World Cup of Office Politics. It turns out the World Cup of Office Politics is an amazing, amazing thing for effectively a reality TV show. But the human story, that is the killer unlock of Drive to Survive.”

“There are 830 million global F1 fans for a league that does 3.4 billion and teams that generate another 2 billion or so on top of what the league pays them. So that's about $5.5 billion gross total revenue across the whole sport for 830 million fans. The NFL generates $23 billion of revenue across just 180 million fans. So that's 4 times the revenue on 1 fifth the number of fans. The NFL monetizes a fan at $127 per year and Formula One monetizes a fan at $7 per year.”

“Bernie, meanwhile, is just getting tons of money into his bank accounts. CVC and Bernie, for his portion, spend about $2 billion acquiring 100% ownership. They put $900 million of cash equity into the deal. Compared to, I believe, over $3 billion that Bernie and his trust had pulled out of the company through all the debt and equity machinations that we discussed earlier. There's a great quote from Eddie Jordan. He said that Bernie Ecclestone was someone who sold Formula One four times, has never bought it back, has never lost its control, and still owns it. And do you know the most important thing? He never effing owned it in the first place.”

“The whole corporate operation was run out of a building in London that was also his house. Seriously, like the bottom floor floors of the building were F1 offices. And then he had the floors above. And supposedly, he had all the rooms in the offices bugged. So he could listen to what everybody was saying at every point in time. And famously, he would kick everyone out at 6 p.m. He'd be like, all right, leave my house now. It's time for you all to go home.”

“Cost caps to institute a cost cap on manufacturing. Basically what they're proposing is the F1 equivalent of a salary cap. It instantly makes every team at least close to break even. The average revenue per team today in 2026 is about 430 million. 15 years ago, all four of those teams were operating at a loss. And 10 years ago, most of them were operating at a loss. Forbes estimates team valuations at about $3.6 billion on average.”

“Braun is scrambling. He just went from like top of the world at Ferrari to getting to be team principal at Honda and now he's out of a job. So in one year, this team and Ross Braun went from like new Honda team principal to nearly out of the sport to owner of his own team for one pound to world champion. Mercedes buys it a year later, or 75% of it, for 200 million pounds. Today, Mercedes is worth $6 billion under Toto.”

“Berkshire owns about 9.5% of Coca-Cola today. That stake is worth about $28 billion, which is a 22, 23x gross return on the $1.3 billion investment over the course of 40 years, which equates to only just over about an 8% IRR. But Coca-Cola stock kicks off, these days, about $1 billion a year in dividends to Berkshire. So a $40 billion total return on $1.3 billion invested. Including dividends over that same time period, the S&P 500 is up about 11% annually. So the famous Berkshire Hathaway Coca-Cola investment today is actually underperforming the market.”

“Of the very few cars that they do make, about 80% of them are earmarked specifically for people who already own a Ferrari. That means there's less than 3,000 new customers buying Ferraris in any given year. This funnel narrows pretty tight, and it is one of the most clever business model mechanics that we have ever studied.”

“There's a funny thing here where you might think, oh, Formula One, that's the big established series that legitimizes an automaker by being a part of it. It actually works the other way with Ferrari. Ferrari participating in Formula One legitimizes the series. Ferrari, if they ever decided to stop racing in Formula One, would make people go, oh, so what is the big racing series?”

“In 1899, two guys from Chattanooga, Tennessee, named Benjamin Thomas and Joseph Whitehead, come to Candler with a proposal. They want to bottle Coca-Cola. Candler thinks it over and he's like, that's a pretty good deal. I've got nothing to lose here. So in July of 1899, the three of them sign a contract that includes the following terms for a token contract price of $1, which Candler never collects. The Coca-Cola Company will sell syrup to Thomas and Whitehead at a volume discount price of $1 per gallon. There is no term length on the contract.”

“McCann does when it comes on board with the Coke account, is it starts conducting scientific market research. And one of the first things they do, is they run a blind taste test between Coke and Pepsi. Consumers, when presented with the two drinks, Coke and Pepsi, in a blind taste test, a statistically significant number of people prefer the taste of Pepsi. They come, they present it to Woodruff. They present the findings, and his response is, do not ever share this with anyone, and do not ever run this test again.”

“Bill Gates lets it slip on a panel with Warren and Roberto and Don Keough that Warren has always told Bill that Coca-Cola could be run by a ham sandwich. While Roberto is sitting right there. Roberto gets very offended and apparently never talks to Bill Gates again. Now, given what's about to happen here, it's actually highly debatable whether Roberto was a ham sandwich or not.”