Original Recipes - How Big Corporations Protect Trade Secrets

Somewhere in a hidden vault in Louisville, Kentucky lies a secret that less than a handful of people know. Each is sworn to absolute secrecy. Not even the head of the FBI or the president knows the formula that lies in that safe -- but you know it as the 11 herbs and spices used to make KFC's Original Recipe fried chicken.

The elaborate measures used to protect corporate recipes rival something you'd find in a James Bond movie. But, with billions of dollars on the line, protecting the mystique and the unique taste that feeds millions of consumers a year is big business. To understand the lengths some companies go through to guard these trade secrets provides a fascinating look at the lengths major corporations go through to compete for your dollar.

Coca-Cola
No one outside the company knows for sure, but the slip of paper containing the recipe for Coca-Cola is thought to lie deep within the vault in a branch of the Trust Company Bank in Atlanta. It is known that the recipe contains 17 to 18 ingredients that go into Coca-Cola syrup, the exact proportion of each and the conditions necessary to make the world's most popular carbonated beverage.

The original formula for Coca-Cola was formulated by Atlanta pharmacist, John Pemberton in the spring of 1886. This formula has changed over the years. In 1935 the formula was altered with the help of Rabbi Tobias Geffen to allow the drink to be certified as kosher. At some point the cane sugar from the original formula was changed to corn syrup, but aside from the New Coke disaster in 1985, the recipe remains pretty much the same as the original formulation (minus the cocaine of course.) The formula was sold by Pemberton to Asa Candler in 1887 for $2,300, and is now one of the most closely guarded secrets in corporate America.

To protect the formula only a few corporate executives know the exact recipe, and each is bound by oath not to reveal its contents. When one of these individuals die, the others approve a successor. These keepers of the recipe travel separately to ensure that a single accident won't eliminate all of them. As additional protection for the secret formula, the recipe was never registered with the government as a patent, which would make it a matter of public record after 20 years. Copyrights also expire after about a century. Coca-Cola in the late 1800s never filed a patent on the recipe in order to ensure it would forever remain a secret.

Although the security measures used to protect Coca-cola's trade secrets are elaborate, they are not perfect. Joya Williams was convicted earlier this year of attempting to sell Coca-Cola trade secrets to Pepsi. Although the original formula was not one of the secrets Williams was able to obtain, the case represents the big stakes involved with corporate trade secrets.

The Colonel's Big Secret
Back in the early days of Kentucky Fried Chicken, Harland Sanders carried the secret recipe of "11 herbs and spices" around in his car. Today the security surrounding the secret recipe is considerably more elaborate.

The recipe itself lies in an undisclosed vault in a Louisville bank. As with the Coca-Cola recipe, only a select handful of individuals know the exact recipe, and these individuals are contractually obligated to secrecy. To protect the recipe, no single company is allowed to mix all the ingredients. The herbs and spices that go into the recipe are mixed by two different companies in two different locations and then combined elsewhere in a third, separate location. To mix the final formula, a computer processing system is used to blend the mixtures together and ensure that no one outside KFC has the complete recipe that Colonel Sanders and his wife used to mix on their back porch in Corbin, Kentucky.

Sometimes The Security is Too Good
Considering the means that companies go through to ensure secrecy, sometimes they get a little carried away. Consider the plight McDonalds found themselves in. In 2004 they acknowledged that they had lost the recipe for the special sauce used on Big Macs. You know the one - two all beef patties, special sauce, lettuce, cheese.... As it turns out, McDonalds changed the original special sauce recipe to cut costs and lost the original.

In part of a corporate reshuffle to reenergize the McDonald's brand, the company brought back Fred Turner, who had worked with company founder Ray Kroc. He wanted to return to the original special sauce, but no one could find the recipe. Turner remembered the name of the California company that supplied special sauce 36 years ago. They still had the sauce in their record books, and McDonalds was able to recover the recipe and their corporate mission.

The Psychology of Secret Recipes
Considering the basic ingredients and their amounts can be scientifically determined, what are the benefits of keeping these recipes so top secret? Much of it is hype. A secret formula implies that you are getting something that no other product has. Indeed the success of Coke lies not so much in its taste, but in its marketing, and its secret formula is a big part of creating a mystique around a product.

Another aspect is perceived value. Something that is kept secret and hidden away in a vault MUST be valuable. I suppose whether it is or not is simply a matter of taste.

Sources: www.kfc.com, www.coca-cola.com, Chicago Tribune