“Yes, most people know that Coca-Cola’s first president Asa Candler became concerned about cocaine in the early 1900s and decided to remove any trace of the drug in the company’s famous drink, but few people know that Coke continued to use what is called “decocainized coca leaf extract” in its signature beverage.” - Bartow Elmore
It’s common knowledge that when John Stith Pemberton invented Coca Cola in 1886 it contained cocaine. It was sold in a slightly different variation to the formula that we are used to today. In those days, it was more in line with what we would term a tonic, rather than the fizzy soft-drink that is ubiquitous today. It was sold as a medicinal remedy in pharmacies, over the counter to people that were feeling poorly as a pick me up, and it worked, for obvious reasons. However, over time the addictive nature of the cocaine as well as the detrimental health effects it was having on the general public, meant that it was eventually pulled from shelves and replaced with what ended up being its current iteration. However, its derivation to the bright red coke can that we are familiar with today, is not quite as linear a progression as that and is marred along the way, by controversy, pretty sketchy deals and special laws created solely for Coca Cola that allow them to import the Coca leaf, the main component of cocaine. It is subversive and often sinister and has led to what is known as the Alakea Project, Coca Cola’s attempt to illegally grow its own Coca plants in Hawaii as well as a secret ingredient known as ‘Merchandise #5’ that they don’t want you to know about.
Coke’s historical link to cocaine and its efforts to secure a reliable supply of coca leaves offer a fascinating glimpse into the company's complex operations. The transition from a cocaine-laced beverage to a modern soft drink involved significant changes in formulation, supply chain management, and regulatory compliance. Central to this evolution is the mysterious ingredient known as Merchandise Number 5. When Coca-Cola was first introduced by Pemberton in 1886, the formula included both coca leaf extract, containing cocaine, and caffeine from kola nuts. At that time, cocaine was legal and widely perceived as a beneficial stimulant. The drink was marketed as a tonic for various ailments, taking advantage of cocaine’s supposed medicinal properties. However, as the adverse effects of cocaine became better understood, public sentiment shifted. By the early 1900s, regulatory pressures, such as the Pure Food and Drug Act of 1906, and increasing public concern over cocaine addiction led Coca-Cola to alter its formula. By 1904, Coca-Cola began using coca leaves that had already been processed. These leaves had most of the cocaine removed. By 1929, a complete process was developed to remove all cocaine alkaloid while preserving the coca flavour
To maintain a legal and secure supply of coca leaves, Coca-Cola partnered with the Stepan Company. Based in New Jersey, Stepan is the only U.S. company authorized by the Drug Enforcement Administration (DEA) to import coca leaves. These leaves are primarily sourced from Peru and Bolivia. Stepan’s role involves processing the leaves to remove cocaine, which is then sold for medicinal purposes. The residual extract, devoid of cocaine, is used exclusively by Coca-Cola and is known as Merchandise Number 5.
Stepan functions almost as a shell company in this context, providing a legal cover for Coca-Cola’s continued use of coca leaves. This exclusive arrangement is sometimes referred to as the “Coca-Cola Laws,” highlighting the unique regulatory exemptions that allow the company to import and use coca leaves while other companies cannot. Meaning Coke has a monopoly and the importation and sale of Coca Leaves in the entire United States of America, allowing them to achieve profits of 10 billion dollars annually. Merchandise Number 5 is the term Coca-Cola uses for the decocainized coca leaf extract that is crucial to its flavour profile. The production of Merchandise Number 5 involves a highly secretive process managed by the Stepan Company, ensuring that Coca-Cola retains a proprietary hold on this ingredient. The extract is critical because it provides the unique taste that differentiates Coke from other soft drinks.
The secrecy surrounding Merchandise Number 5 is integral to Coca-Cola’s strategy. By keeping the specifics of this ingredient under wraps, Coca-Cola protects its formula from competitors and maintains its market dominance. The exact composition and processing methods of Merchandise Number 5 are closely guarded trade secrets, known only to a few within the company and Stepan. In the 1960s, to reduce reliance on South American coca leaf suppliers, Coca-Cola initiated the Alakea Project in Hawaii. This secretive venture, in collaboration with the University of Hawaii and the Stepan Company, aimed to cultivate coca plants domestically. The goal was to create a sustainable and controlled supply of coca leaves within the United States. Despite early successes, the project faced significant challenges. The coca plants were eventually devastated by a fungal blight that caused root rot, leading to widespread crop failure. Additional setbacks, including a hurricane in 1982, further hindered progress, and the project was abandoned two years later. This clandestine initiative underscored the lengths Coca-Cola would go to secure its formula and supply chain, highlighting its willingness to engage in subversive practices.
The cocaine extracted during the processing of coca leaves by the Stepan Company is sold for medicinal purposes. This cocaine is used in various medical applications, primarily as a local anaesthetic in surgeries. This legal sale of cocaine underscores the dual nature of the coca leaf, while its alkaloid is a controlled substance, its decocainised extract is a valuable flavouring agent for Coca-Cola. Coke’s commitment to secrecy regarding Merchandise Number 5 and its formula is not just about protecting trade secrets; it also involves navigating complex legal and regulatory landscapes. The company’s monopoly on coca leaf imports, facilitated by the Stepan Company, ensures that no other beverage can replicate its distinctive taste. Coca-Cola’s historical connection to cocaine and its efforts to secure coca leaf supplies illustrate a complex and often controversial relationship with this potent plant. From its origins as a medicinal tonic containing cocaine to its current status as a global beverage giant, Coca-Cola has navigated regulatory challenges and public scrutiny to maintain its unique formula. The story of Merchandise Number 5 and the company’s monopoly on coca leaf imports highlights the intricate balance between innovation, secrecy, and compliance that has defined Coca-Cola’s enduring success. Next time, you see that famous red can on the supermarket shelf, think about this article, 'Merchandise Number 5' and all the shady deals it took to get it there.
