Jan 12, 2018 in Research

The Story of New Coke

Before the appearance of New Coke, the most popular drink had been generally enjoyed in a limited amount of places, like ice cream stores and special soda fountains. Things changed a bit in the 1960s, but before that, soda fountains also carried communicational functions because they gathered many people of all ages and genders. Over time, their popularity declined and they were outweighed by fast food restaurants that became a brand new spot for serving Coke. Coca-Cola Company covered 60% of the market share, but by 1983 this number fell down to 25% (The Coca-Cola Company). Until the downfall, Coca-Cola had been very successful in terms of marketing campaigns, with the support from the Cola hit song “I’d like to buy the world a Coke”, that were transmitted on the radio in every American state. The following television advertisement was the most expensive filmed commercial in history at that time, but at the end of the day, the campaign was very successful (Oliver 125).

The downfall was easy to explain: the target audience of the fully sugared Coke was young drinkers who were healthy and not yet aware of their dietary needs and weight problems. However, most of the youngsters gave their preference to Pepsi Cola that had a sweeter taste. New Coke was a very risky decision to take by Coca-Cola managers, because changing the formula, which was beloved by millions of customers, would potentially influence sales a lot. Before the public announcement, Coca-Cola was trying to keep this secret until April 1985 (The Coca-Cola Company). However, Coca-Cola announced the formula enhancement with no fear although it was the first shift in 99 years of the company’s existence. All Americans could know then about the New Coke coming from television advertisements and posters. The announcement was made in April 1985. It was the time when Pepsi turned into a real competitor for Coca-Cola, and the market positions were quite unstable. Actually, Pepsi also contributed to the negative acceptance of the New Coke creating suspicions in mass media that later escalated to the New Coke press conference. Pepsi accused Coke taste changers in plagiarism, as the New Coke was sweeter, just like traditional Pepsi (The Coca-Cola Company).

The introduction of the New Coke continued with giving our free Coke cans in Washington and New York. The first results proved that the campaign was successful, as sales grew compared to the same time last year; many consumers said they would prefer the New Coke for the future instead of the traditional beverage (Stewart 2011). However, the New Coke had to be tested in the Southern and Eastern states, where Coke originally came from. It turned out that most of the resistant drinkers who did not want to hear about the New Coke came from the South, where the invention of Coke was a subject of regional pride. Some of the Southern consumers even perceived this taste switch as a threat related to the Civil War – just another campaign started by the Northerners against the South (Hays 114).

The furious reaction of the customers was not expected by the market analysts, who instead hoped for brand refreshment and the wave of new customers.  The company had to bring Coca-Cola Classic formula back to life in 4 months. However, the result of this revolution in soft drinks industry was not negative as it shook up the traditional management decisions made before. The return of Classic Coca-Cola stopped this productive revolution that proved the reasonability behind taking smart risks even if the outcome turned out to be different than the foreseen. Almost 80 days of constant changed the traditional management ways and their understanding (Hays 114).

The headquarter office in Atlanta was receiving the largest amounts of calls and letters daily. Most of them expressed anger or disappointment; others were even insulting the company managers. Coca-Cola even had to hire a psychiatrist to listen to the feedback from the customers, some of whom perceived the taste change as a death of their friend or family member. It was very difficult to deal with such public reception of the product, and no slogans like “The Best Got Better” could help (The Coca-Cola Company). The attempts to give out free cans of the New Coke in Atlanta were useless as people poured them on the streets as a sign of their protest and dissatisfaction. The rebellion in the South was supported by separate publications that criticized the New Coke – even Fidel Castro who turned out to be a loyal Classic Coke lover identified the taste switch as a failure of America (Oliver 125).

It is interesting that just before April 1985, Classic Coke had lost its positions in the market. Customers got more aware of different products in the soft drinks industry, and for 15 years Coca-Cola was being left behind. Even though the New Coke was not accepted by the customers as qualitative brand refreshment, it was outplaced by the enormous affection increase for the Classic formula (Stewart). The decision taken by Coca-Cola managers was not spontaneous: the enhanced formula was tested on two hundred thousand potential customers, but the nationwide reaction in the US revealed that the customer connection and loyalty to the Classic Coca-Cola was much deeper than expected (The Coca-Cola Company). The testing demonstrated that a new sweeter formula was more preferable by customers than traditional Coke or Pepsi. Only one tenth of all customers who took part in this experiment felt insulted with the thought that their ‘good old Coke’ will be replaced with a stranger (Ross).

But on the national level, everything turned out to be very different. This intimate relationship with Coca-Cola product in its traditional way could not be altered by the company management, so the sales of the Classic Coke actually grew a lot after it was launched once again. This important event has changed the way Coca-Cola Company employees think forever. Taking smart risks was accepted as an essential element of the company success, even if the first results were reflected in customer complaints.

The amount of customer complaints and suggestions increased significantly right after the announcement of the taste change – it grew from 400-500 up to 1500-1600 calls a day (Hays 114). Every employer that was related to Coca-Cola Company – people wearing Coca-Cola uniform or those who were known to be their employees – brought in thousands of messages related to the taste change. Surely, the customers’ demand was to stop ruining traditional Coca-Cola immediately. Customers who felt panic about the taste change bought dozens of classic cokes before they were completely removed from the market. It was possible to sell a case of the traditional Coke for $25-30 (Oliver 125). In spite of the numerous accusations and even insults, the top manager of Coca-Cola stayed patient and just waited for the final results to appear. The way everybody in the USA got anxious about traditional Coca-Cola suddenly let all customers realize how important this soft drink was in their life, meaning that Coca-Cola was something more than a beverage. The event led to formation of protest groups, including the Old Cola Drinkers and the Preservation of the Real Thing. One of the Old Coca-Cola Drinkers – the founder of this temporary organization – sued the company pressing it to switch to the traditional taste again (The Coca-Cola Company). However, the judge turned out to be a Pepsi fan and rejected this request at once. The representatives of these groups organized mass protests against the formula change all around the US. Some pieces of art, such as posters, paintings, and songs, were dedicated to this unusual issue. Finally, the top management of Coca-Cola Company realized that the backlash was rather stimulated by the disappearance of the old formula rather than the appearance of the new one (Oliver 125). The disappointed consumers did not switch to Pepsi but started buying more old Coke instead of the new taste.

Although the main wave of resistance was in the South, the New Coke was quite successful in the rest of the US. However, the company managers were now uncertain of the possible reactions in other parts of the world where the introduction of New Coke was a little postponed. In fact, in many cases, consumers did like the taste of New Coke but some kind of peer pressure often prevented them from speaking up about their real preference (The Coca-Cola Company). By the beginning of summer season, when the sales of all soft drinks were traditionally expected to increase, it was almost impossible to find old Coke in the market, and that was partially connected with the panic people felt. The problems were not limited by the consumers’ dissatisfaction – Coca-Cola bottlers started suing the company because of the growing prices for syrup and difficulties in advertising as the former advantageous concept of the product had been radically changed (Schindler 27). The argument among the company managers finished with the decision to return Classic Coke to the market. As for New Coke, it had been sold until 2002. In the following few months after the reintroduction, it was clear that Coca-Cola Classic outweighed both Pepsi and the New Coke, and this growth was also supported by the successful appearance of Cherry Cola. Classic Cola did not need any advertisement, and thousands of thankful and delighted calls were received by the company daily (Schindler 27). However, the market specialists were completely lost because they did not know how New Coke should be sold from now on and whether they should go on with it at all (Ross). The majority of the blind tests showed that New Coke actually tasted better than the Classic version and Pepsi because of its balanced sugar. In spite of it, consumers still preferred their favorite product line regardless of their sensations (Schindler 27-28).

Right after the traditional Coca-Cola was back in July 1985, the customers stopped their panic shopping and started consuming Coke by necessity. The return of traditional Coke was heavily discussed in media and all American newspapers. On the announcement day, Coca-Cola hotline was loaded with as many as 32,000 calls. As a result, in 1985, two kinds of Coke – the old and the new – existed in the market with their own independent advertising campaigns and mottos. Eventually, the New Coke or the Coke II (the name it got in 1992) disappeared from the US. The lesson learned from the attempt to change Coke classic formula is never forgotten by the Coca-Cola Company. 

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