Charles Guth
Charles Godfrey Guth | |
|---|---|
| Born | Template:Birth date Baltimore, Maryland, U.S. |
| Died | May 24, 1948 (aged 70) Baltimore, Maryland, U.S. |
| Occupation(s) | Entrepreneur, business executive |
| Years active | 1910s–1940s |
| Known for | President of Loft Candy Company (1930–1935), President of Pepsi-Cola Company (1931–1939) |
Charles Godfrey Guth (June 3, 1877 – May 24, 1948) was an American entrepreneur who, as an executive at the Loft Candy Company, acquired the trademark and syrup formula of the twice-bankrupt Pepsi-Cola Company. He held the position of President at Loft Candy Company from 1930 until 1935 and led Pepsi-Cola Company as President from 1931 to 1939.
Biography
Charles Guth was born on June 3, 1877, in Baltimore, Maryland, to Emil Guth, who originated from Dresden, Germany.
Murder of George A. Murphy
In September 1913, while residing in Baltimore, Guth faced arrest for the killing of George A. Murphy, his African American chauffeur. Guth claimed that after terminating Murphy due to a conflict over milk delivery scheduling, Murphy allegedly attacked him with an axe, which led Guth to fatally shoot him in self-defense. Both a coroner's jury and a grand jury subsequently acquitted Guth. The NAACP condemned the acquittal as a miscarriage of justice.
Loft Candy Company
In April 1929, Charles Guth was appointed Vice-President of the Loft Candy Company following Loft's acquisition of Mavis Candies, where Guth had served as president. By 1930, he ascended to the presidency of Loft amid considerable shareholder dissatisfaction. He maintained this role until 1935, resigning after shareholders revolted against his use of Loft’s assets to support his other business interest, the Pepsi-Cola Company.
Pepsi-Cola
Guth owned Grace Company, a Baltimore-based syrup manufacturer. After Coca-Cola refused to grant him favorable terms for selling their cola in his drugstore, Guth switched to distributing Pepsi. When Pepsi-Cola declared bankruptcy in 1931, Guth purchased the company for $10,500 from Roy Megargel, who retained one-third of the shares and expected annual royalty payments—obligations Guth never fulfilled. The ensuing legal dispute concluded with Guth paying $35,000 and acquiring Megargel’s remaining shares.
Despite initial difficulties and nearing personal insolvency, Guth attempted to sell Pepsi-Cola to Coca-Cola, which declined the offer. In 1935, he moved the company’s operations to Long Island City, New York. Collaborating with Loft chemists, he reformulated the syrup and introduced Pepsi in a six-ounce bottle; when sales were slow, he launched a twelve-ounce bottle at the same price point. By 1933, Pepsi was available in 313 stores across the U.S. and exported to 83 countries. By 1936, Pepsi-Cola had earned $2 million in profits and ranked as the second-largest soda company in the U.S., with half a billion bottles consumed that year.
Lawsuit
In 1935, Loft initiated legal action against Guth for violating his duty of loyalty by withholding the syrup formula from Loft and instead appropriating it for his own benefit. The company contended that Guth exploited Loft’s resources—including assets, credit lines, finances, facilities, and personnel—to develop Pepsi-Cola. Guth defended himself by asserting that this business opportunity was personal and unrelated to Loft’s core operations. Loft sought control over the 237,500 shares owned by Guth—constituting 91% of Pepsi-Cola’s total stock. Throughout the lawsuit, Guth remained president. In 1939, the Delaware Supreme Court ruled in favor of Loft.
Following this decision, Guth was removed from the board and succeeded by Walter Mack. He was ordered to pay Loft $475,000 but continued as general manager while appealing the verdict. He departed from Pepsi shortly before his appeal was denied. In 1941, Loft merged with Pepsi but retained the Pepsi-Cola brand name.
The Guth rule established in American corporate law now prevents corporate officers from seizing business opportunities for themselves if the corporation has financial capacity, interest, or if such opportunities fall within its line of business.
Noxie-Kola
Following his departure from Pepsi, Guth was employed by Noxie-Kola.
Death
Charles G. Guth passed away on May 24, 1948, in Baltimore, Maryland.