‘New Coke or no Coke'
This was the opinion of Roberto Goizueta who had taken over as CEO of the Coca-Cola Company in 1980. This belief and the subsequent actions taken were to become one of the biggest ever commercial errors leading to an almost catastrophic flop. The impact, which could potentially have led to the demise of the Coca-Cola brand, is used today as a cautionary tale in businesses that are thinking about tampering with a successful and well-established brand.
The soft drink market share for Coca-Cola (or Coke) in 1983 was 24% down from the 60% spike that they boasted about just after World War II. Pepsi-Cola was well in the lead and although Coke was still the highest selling drink in vending machines, Pepsi was winning by far in the supermarkets. People believed that the decline in sales was due to the baby boomers becoming more health conscious in their old age and preferring the diet variety of sodas. This would mean that any full calorie drink would be competing for loyalty from the younger generation who had decided that they favoured the sweeter taste of Pepsi.
In 1983, Robert Goizueta decided that huge alterations must be made if Coke were to have any chance in resurrecting their title of ‘Supreme Soda'. He strongly discouraged the view that the formula of Coke should be kept as sacrosanct and unchanged pointing out that there should be no sacred cows in business.
There was a secret commissioning of a new project ‘Project Kansas' to design a new ‘perfect taste Coke' and before long, legions of marketing teams were dispatched around America, handing out samples, asking questions and taking surveys. The new-taste drink was tested against the original Coke and Pepsi-Cola with the results proving very promising indeed. Most testers who were asked (once they had shown preference to the new drink) if they would buy it if it were Coca-Cola said that they would. A small minority of around 10-12% expressed angry views against the proposals saying that they would stop buying Coke altogether if it were changed.
The marketing department was nonetheless very happy with their studies, concluding that the success of the new-taste Coke was imminent. Pleased with this, Goizueta was certain that the change in the taste of the drink would lead to increased profits and on Tuesday, the 23rd April, 1985, Coca-Cola informed the media, at a major press release, of the changing of the brand. In the weekend leading up to the press release a smuggled 6-pack of New Coke had found it's way to and had been tasted by the executives of Pepsi. Although they were not overly impressed, they concluded that it could be a serious threat and got to work speaking to the press and creating skepticism with the reporters, having double spread articles written about their ‘winning the cola-wars' and even giving their employees the next day off in celebration of ‘Victory against Coca-Cola'.
Initially, New Coke got off to a good start. Three quarters of the public who tried it said that they would buy it again. The problems started when the drink was taken to the Southeast where Coke had first been bottled and tasted. Just as had been noted in the testing period, the voices of the small minority, many of whom were Southerners, were heard loud and clear in their disappointment. This group felt that a ‘symbol of regional identity' had been stolen from them and a physiatrist hired by Coke to listen to the 400,000 phone calls taken by company hotline1-800-GET COKE informed executives that the callers sounded as bereaved as if a family member had died.
Although Pepsi ran with the backlash, airing adverts in which Pepsi drinkers exclaimed ‘'Now I know why Coke did it!'' they actually made very few converts from the situation. It seemed that original Coke drinkers would rather not drink cola at all if their preferred choice no longer existed. More surveys showed that people were less upset with New Coke than they were with the revoking of the original.
Despite this outrage, New Coke continued to do well in the rest of the country but the company was worried about the reaction of the international market that were yet to receive the new drink and have the old one discontinued. The company's president Donald Keough who visited relatives in Mexico and heard of doubts and skepticism from all he spoke to further founded these worries. Boycotts in southern cities added to the nosy public protests with bottles being emptied in the streets and bottlers started to complain that they had problems with having to market and sell a drink that had previously marketed as ‘The Real Thing', constant and unchanging, which was now being altered.
Three months after the release of New Coke, on the 10th of July, the announcement for the return of the original formula was made. The original brand, given the title Coca-Cola Classic had been slightly modified and now contained high fructose syrup instead of cane sugar (causing some controversy) but it retained the same taste. The new product, still named New Coke, continued to be sold until 1992 when it was renamed Coke II. Since then popularity dwindled further and by 1998, it could only be found in some Midwestern markets. New Coke was discontinued completely in 2002 and in August of the same year the word ‘Classic' was removed from the original Coke thus eliminating any remaining legacy of New Coke.
At the end of the year of the reversion back to the original-taste Coke, Coca-Cola was back on top as the largest distributor of the cola world. Their sales had increased at twice the rate of Pepsi's prompting talk of a conspiracy theory. Maybe Coca-Cola had changed the formula with the intention of upsetting its customers so much that they would demand the original back thus causing sales to surge. Coca-Cola has always denied this, which leaves the question open as to how a company with such experience and resources could make such a tremendous blunder.