(FORTUNE Magazine) – It's a Saturday afternoon on the eerily quiet 25th floor of Coca-Cola's headquarters in Atlanta. CEO Doug Ivester, who has just flown home from a tempest in Europe--and will fly back into it the next day--appears surprisingly relaxed. "I don't feel a lot of stress," he says, dressed casually in an open-necked shirt and a blue blazer. "I just don't know what it's like to feel a lot of stress."

Lucky man--because he's probably the only Coke executive who doesn't. As the whole cola-buying world surely knows, Ivester has been engulfed by a product-safety fiasco in Europe and has been fending off public criticism that he reacted belatedly. His management of the crisis would seem to be his defining moment as CEO. But in fact, it is just the latest in a series of defining moments--most of them bad--since Ivester became Coke's boss in the fall of 1997: declining profits in key foreign markets; share losses to Pepsi at home; troubled acquisitions; a messy racial discrimination suit; even tensions with Disney, one of Coke's biggest customers. Whew! At the least, Ivester must be losing some sleep. Nope, not a bit, he says, and then, like a logician explaining his calm, adds, "I have a very strong ability to compartmentalize."

Warren Buffett, a Coke director and the company's largest shareowner, casts Coke's multitudinous troubles as a "spate of bad luck." He's right, but only partly so. Some of Coke's wounds have been self-inflicted by its super-rational CEO, an accountant by training, who sees his business (and the world) as a place where everything adds up. Sometimes, of course, things don't add up. Coke's world, in particular, has become a lot less rational in the face of unpredictable foreign economies, extremist regulators, and Europe's paranoia about food safety. Many investors, quite rationally, are questioning the company's aggressive strategies, criticizing Ivester's bulldog leadership and longing for the kinder, gentler days when CEO Roberto Goizueta guided the business so smoothly.

To be fair, Ivester is a victim of bad timing. Goizueta, who was viewed as a god--and certainly had God watching over him--ran Coke during an extraordinary time for a company that earns 73% of its profits overseas: The economy at home was strong, while the U.S. dollar was weak. In 16 years Goizueta transformed a laggard into America's most admired company. He died of lung cancer in October 1997, with the dollar strengthening and economic plague just striking Asia. Ivester, a Georgia factory foreman's son, was Goizueta's immensely clever financial engineer and later his chief operating officer. Wall Street barely twitched when he became CEO. At the moment of transition, Ivester recalls, he had a "gnawing feeling" about the global economic outlook. But he never fathomed that major markets outside Asia--Russia, then Brazil--would collapse so quickly.

Now, as Ivester confronts inevitable criticism that Coke overinvested abroad and should cut back to pump up earnings, he is adamant about standing firm. "We have two guiding principles: We're everywhere. And we stay forever." Retreat is not an option, even in Russia, where Coke plants are running at just 50% of capacity. Ivester's gospel echoes Goizueta's, though he preaches it more brusquely. "We never look at one-year returns," he says. "If we did, we'd still be selling fountain drinks at Jacobs' Pharmacy. And if we ever do, you should sell the stock." Speaking of Coke stock, it's up a mere 5% since Ivester took over (see chart). "In these times, I think that's pretty terrific," he says. "I don't look at the stock in the short term. I look at it when I retire."

Ivester is clearly driven by a sense of mission. "This is the most noble business on earth," he proclaims (unlike Steve Jobs, who recruited Pepsi's John Sculley to Apple in 1983 with the now legendary question, "Do you want to spend the rest of your life selling sugar water or come with me and change the world?"). "We bring so many good things to so many people. Our customers are prospering." He is not bothered by his critics. "When I took this job, I read the press that Roberto got during his first 24 months," he says. "They just tore him apart. I'll take my press over his any day." His biggest weakness: "Not relying more on other people. I've always been hands on, really into the details," he says, adding that he's getting better at delegating.

People who know Ivester well say he believes that he can manage his way through any situation. And, in his mind, he is paid to do precisely that. He's "terribly rational," says Coca-Cola's chief financial officer, James Chestnut. "Doug believes everything should go through a logical sequence. He's fixed on where he wants the company to be." Jack Stahl, who heads Coca-Cola's North America group, has worked with Ivester for two decades. "Doug probably has 100 models for how to get through things," says Stahl, "whether it's a discussion with an employee, a review of a marketing program, an approach to a crisis, a talk with a government official, or remarks to a community group." These models, or templates for decision-making, are designed to help Ivester and his team move quickly. What if a situation doesn't play out as predicted? "Doug is flexible," says Stahl. "He asks, 'What's plan B?' "

Ivester's modeling tends to work when constituents and key decision-makers--shareholders and regulators, for example--see the world the way he does and play by the rules. When they don't, the modeling can backfire, as it has with Ivester's two major acquisition attempts: Orangina in France and Cadbury Schweppes' drinks abroad. Buying other companies' brands is a new strategy for Coca-Cola. It partly reflects where the company is in its evolution. "This is phase two," Ivester says, noting that the first (and ongoing) phase centered on Coke's restructuring of its worldwide bottling network. "If Roberto were still here, we'd be going into phase two," he says. "It's a phase that we agreed on." But the way Coke went about the acquisitions--arrogantly, urgently, intensely--absolutely reflects Ivester's personality. And it's not working.

The basic problem is that Ivester and his acquisition team see themselves as beneficent foreign investors ("We demonstrate how we're good for the economy"), while regulators abroad view them as ugly Americans bent on Coca-Cola-nizing the planet. Coke's deal to buy Orangina from Paris-based Pernod Ricard, announced in late 1997, has been rebuffed by French authorities--no surprise, considering that the government had fined Coke for anticompetitive practices earlier that year. Although the Schweppes buyout is a done deal in more than 100 countries, regulators in Mexico and Australia, where Coke's market shares exceed 50%, have blocked it. Australian antitrust chief Allan Fels says that if Coca-Cola had consulted local officials early on, "it would have been immediately apparent that a merger would have faced severe problems." Coke CFO Chestnut, the company's point man on Schweppes, recently met with Fels in Australia. Fels liked the modest Scot. Nevertheless, he says, "all proposals are rejected. End of story."

Ivester rarely backs down. He's offering revised plans--B, C, D--in France, Australia, and Mexico. But with Schweppes in Europe, he was routed. Coke had structured the acquisition in such a way that the company would be able to circumvent approval from the European Union, a strategy that seemed clever until it turned out to be stupid. At an April press conference in Brussels, the EU competition commissioner, Karel Van Miert, blasted Coke management: "They thought they could pull the wool over our eyes. They should learn to respect the rules along with everyone else." In May, facing likely vetoes from other antitrust officials, Ivester cut most of the European continent out of the Schweppes purchase agreement and reduced the price from $1.85 billion to $1.1 billion. "I could foresee a protracted dialogue," he says. "It didn't seem worth the effort." Van Miert doesn't hesitate to claim victory: "They thought we would be too naive or not determined enough to stop them," he crows. "They were overconfident and a bit arrogant."

In this context, consider Coke's recent product-quality and corporate-image crisis. Neither the devil (nor Pepsi) could have concocted a worse situation for Coke. For starters: strained relations between Coke and Belgium over the Schweppes deal. Next: a Belgian health minister, Luc Van den Bossche, who is an old pal of Van Miert's, the outspoken EU regulator. Finally: a health minister brand new to his post because Belgium's previous health minister and its prime minister lost their jobs when they failed to respond adequately--get this--to public fears about dioxin-contaminated Belgian beef. Hysteria over food safety is in the beef, in the air--and, all too soon, in the Coke.

Ivester, closing out three weeks of work in Europe, was sitting in Coke's Paris office when he heard that some Belgian schoolchildren had gotten sick after drinking Coca-Cola. He and Coke's technical experts determined that the problem with the Coke--a bad batch of carbon dioxide--was minor, and hardly a health hazard. So the next day he flew home to Atlanta, as planned. Wrong move.

When a totally unrelated problem--a fungicide on the bottom of Coke cans shipped from the company's plant in Dunkirk, France--came up, Ivester assumed the Europeans would think as logically as he does: "There is no health issue," he told his own managers and French officials. Independent lab testing supported him. Ivester concedes that when he tasted the problem products, "I noticed a mild off-taste and an off-smell. But it didn't make me nauseous." He adamantly insisted that "there is nothing wrong with Coca-Cola."

Why didn't Ivester speak out? Go on television? Tell European consumers the facts or at least show a little empathy and feel their pain? "The minister said he wanted this [investigation] conducted behind closed doors," Ivester explains. Because of this admonition, he declined to discuss any details. But there was another reason Ivester stayed so quiet for more than a week. Belgium's chief food inspector believed Coke's products were safe to drink and was urging Van den Bossche to end the nationwide ban. The health minister refused to budge for days. Ivester no doubt felt trapped in the political infighting. "I can't go out there and speak, and not be respectful of their process," he told FORTUNE. But respect goes only so far when critics and the media are battering you. He flew to Brussels. The following day, Belgian newspapers carried full-page ads with a letter from Ivester. "My apologies to the consumers of Belgium," it began. "I should have spoken with you earlier." The government lifted the ban that week.

Ivester might do well to apply a similar strategy to his problems closer to home. Some people think he should have solicited black leaders friendly to Coke--Jesse Jackson, Nelson Mandela--to speak up for the company when four current and former employees filed a racial discrimination suit in April. "This company doesn't tolerate discrimination in any form," Ivester says, but adds that he can't discuss any details of the case because the judge warned Coke not to try it in the press. There's no reason to think Coke is vulnerable, except that Ivester may be in another situation where reason doesn't prevail: It's cheap to sue. It's expensive to defend. And if the lawsuit reaches the courtroom, a jury decides.

Amid so many pressures, Ivester believes he must stay calm. "Doug understands the importance of steady leadership," says Stahl. "He's said to all of us, 'Don't take this personally. Just keep focusing on the long term.' " Coke is trying hard, at a time when Pepsi seems to be bouncing back in the U.S. After losing share throughout the 1990s, PepsiCo (with 31.4% of the market to Coke's 44.5%, according to Beverage Digest) has refocused on drinks and outperformed Coke in the first part of 1999. "[Pepsi] has become more rational," says Ivester, offering perhaps his ultimate compliment. But Coke is fighting intelligently. It just beat Pepsi for the Burger King account, even though Pepsi is known to have offered bigger discounts. Jim Watkins, Burger King's senior vice president of marketing, says that Ivester and Stahl's broad strategic thinking clinched the deal for Coke. Stahl told Watkins during the pitch, "Let's think about what we would like this relationship to be in 100 years."

Coke has solid relationships with most customers, including its two biggest: McDonald's and Wal-Mart. But another key partnership, with Disney, is frayed. Senior executives at Disney were not pleased to learn from a Wall Street Journal article in January that Coke had forged a major marketing partnership with Disney's archrival, Universal. They believe Coke should have given them a heads-up. Ivester says he has the highest regard for Disney, but when asked whether Coke has tense relations with the company, he gets noticeably uncomfortable. "They are what they are," he says. Soon after the FORTUNE interview, Ivester left a voice mail with his spokeswoman, clarifying his reply: "We have a great relationship with Disney. They are a great long-term partner. And I anticipate they will always be a great long-term partner."

Maybe. Pepsi has picked up "pouring rights"--soda-speak for the contracts to serve its products--at Disney's baseball stadium in California and at the company's new regional entertainment venues: its just-opened DisneyQuest in Chicago, its ESPN Zone sports-entertainment restaurants, and its Club Disney interactive playgrounds. Coca-Cola turned down those sites, apparently because Disney's terms didn't meet Ivester's scrupulous criteria for returns on marketing deals. Coke has a long-term contract with Disney. But PepsiCo's Roger Enrico is schmoozing Michael Eisner. The two CEOs talk and occasionally meet when they're on each other's coasts. "You know that Pepsi is salivating after Disney," says Emanuel Goldman, a veteran cola-war watcher at Merrill Lynch.

So where does all this leave Ivester? He emerges as a fine long-term strategist and a tenacious competitor who has a lot to prove as CEO. Many people who have followed Coke over the years believe that if Goizueta were still running the company, Coke's problems--the Disney relationship, the racial discrimination suit, the acquisitions abroad, the product recall in Europe--would not be festering as they are. Ivester disagrees. He takes an analytical (i.e., rational) view of his critics. "What I hear about myself are vast contradictions," he says. "That I'm shy and afraid of being in the public eye. And that I'm aggressive and too forward-thinking." He even defends his controversial acquisitions. "If we hadn't struck the deals to purchase the Cadbury Schweppes brands and pursued Orangina,

I would have gotten tremendous criticism, especially since the sellers came to me," says Ivester. "People would have said, 'Can you believe how unaggressive this guy is, how he doesn't have the vision to fit those brands into Coke's system?' " He adds, "I decided on boldness. You have to choose your poison, I guess."

But even supporters question Ivester's ability to resolve so many problems all at once. They believe he should appoint a president to share the burden and to handle diplomatic and public image tasks that he isn't very good at. After all, a duo at the top worked beautifully at Coke for years, first with Goizueta and his gregarious No. 2, Donald Keough, and then with Goizueta and Ivester. Says Merrill Lynch's Goldman: "Coke needs someone so that if something happens to Doug, that person can step in and know enough about the total company to run it. The person could also give Doug feedback, whether Doug likes it or not."

The leading candidates are the popular and polished Jack Stahl; European chief Bill Casey; Asian boss Doug Daft; plus two stars who left Coke to run its big foreign bottlers: Neville Isdell, CEO of London-based Coca-Cola Beverages; and David Kennedy, chief executive of Coca-Cola Amatil in Australia. Ivester, who works seven days a week, insists that he doesn't need a president. "I have six No. 2s in my group presidents," he says. "They don't see the need for a filter between me and them. Especially in tough times, you want to de-layer the organization." Ivester's most influential supporter, Warren Buffett, agrees. "I think it's a mistake to designate a No. 2 to run the business," he says. "I like a CEO who does that job himself." But isn't Ivester stretched? "Doug is capable of doing a lot," Buffett says.

We shall see. The short-term outlook for Coca-Cola isn't very good. Volume growth this year will be substantially below Coke's targets. Earnings are likely to be flat, following a 14% decline last year. Moreover, until Ivester completes the Schweppes and Orangina acquisitions, Coke isn't buying back any of its shares. This is not good news for investors.

Ivester takes the long view, of course. Asked about Coke's outlook, he says, "In ten years, we'll sell twice the volume we do today. The turmoil of the last 18 months will be history, just like New Coke is history." Warren Buffett weighs in, noting, "From an investor's standpoint, the whole game is about realizing what you've got, which is the world's greatest brand. And it's about looking at where Coke is going. People will drink more Coke every year, and the company will make a little more on each serving." He adds, "As a director, the only concern is, do you have the right people? We've got the right people."

If Ivester is astute, he'll learn from his missteps and try to see the world more the way others do. If he's lucky, investors will regard him and the Coca-Cola Co. rationally: down, but likely to bounce back. If he's lucky and astute, he'll be compared favorably with Roberto Goizueta someday.

REPORTER ASSOCIATE Natasha A. Tarpley