In order to understand why the New Coke introduced by the Coca-cola company in 1985 failed miserably; even when the launch of a new drink is as logical today as it was back then for the company, given the acute market competition; we need to understand the chronology of the events...
1945 onward
Coca-cola was the #1 brand in the soft-drinks market with a 60% market share.
1961
Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in 1893 by Caleb Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola in 1898, and then shortened to Pepsi in 1961.
1963
TaB; 1st diet cola soft drink; was launched by The Coca-Cola Company, introduced in 1963 - Tab was notably popular throughout the 1960s and 1970s, and several variations were made, including a number of fruit-flavored, root beer, caffeine-free, and ginger ale versions.
1945 onward
Coca-cola was the #1 brand in the soft-drinks market with a 60% market share.
1961
Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in 1893 by Caleb Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola in 1898, and then shortened to Pepsi in 1961.
1963
TaB; 1st diet cola soft drink; was launched by The Coca-Cola Company, introduced in 1963 - Tab was notably popular throughout the 1960s and 1970s, and several variations were made, including a number of fruit-flavored, root beer, caffeine-free, and ginger ale versions.
The Coca-Cola Company had a long-standing policy to not use the Coca-Cola name on any product other than the flagship cola - That's why the name didn't have Cola in its name.
Following studies in the early 1970s that linked saccharin, TaB's main sweetener, with bladder cancer in rats, the United States Congress mandated warning labels on products containing the sweetener. The label requirement was later repealed when no plausibility was found for saccharin causing cancer in humans.
1964
Diet-Pepsi premiered into the cola market.
1970
Pepsi introduced the Pepsi Challenge - a blind taste test which showed most Americans preferred Pepsi to Coke by a margin of 53% to 47% (because Pepsi was sweeter than Coke as it contained more sugar).
1980
The overall market for colas steadily declined in the early 1980s, as consumers increasingly purchased diet and non-cola soft drinks, many of which were sold by Coca-Cola themselves. This trend eroded Coca-Cola's market share.
1982
Diet-Cola premiered into the cola market (It was the 1st brand since 1886 to use the Coca-Cola trademark - It was after the long-term success of Diet Pepsi became clear to Coca-Cola that it decided to launch this sugar-free brand under the Coca-Cola name, which could be marketed more easily than TaB) - Diet Coke did not use a modified form of the Coca-Cola recipe, but instead an entirely different formula based on the TaB formula.
It quickly overtook TaB, in sales.
1983
Coca-cola was still the #1 brand, but only with a 24% market share - largely because of competition from Pepsi-Cola.
Pepsi had begun to outsell Coke in supermarkets.
Coke maintained its edge only through soda vending machines and fountain sales in fast-food restaurants, concessions, and sports venues where Coca-Cola had purchased the 'pouring rights'.
1984
Coca-cola was still the #1 brand.
Pepsi had used aggressive celebrity endorsements from the likes of Michael Jackson and hip advertising music to position itself as The choice of the new generation - It was this time that the phrase Pepsi Generation became popular - This helped Pepsi’s market share to gradually increase with a rate that and could have overtaken Coke by 1990.
Coca-Cola decided to conduct market research to better understand consumers’ preferences. This indicated that “taste” was the main reason for the decline in Coke’s popularity.
Coca-Cola's senior executives commissioned a secret research project dubbed Project Kansas headed by marketing VP Sergio Zyman and Coca-Cola USA president Brian Dyson to create a new flavor for Coke. Coca-cola CEO decided to develop a new formula; named New Coke; which would have more sugar than old-Coke and Pepsi. They then conducted over 200k blind taste tests, surveys, and focus groups to confirm that people preferred the new/sweet Coke over both old-Coke and Pepsi - and the results were overwhelmingly positive - Thought only about ~12% of testers felt angry and alienated at the thought, and said they might stop drinking Coke altogether.
23 April 1985
New Coke was launched - It used a version of the Diet Coke recipe that contained high fructose corn syrup and had a slightly different balance of ingredients.
Old Coke was discontinued - Production of the original formulation was ended (because coca-cola didn’t want to have two competing products at the same time).
In many areas, New Coke was initially introduced in old-Coke packaging - Bottlers used up remaining cans, cartons and labels before new packaging was widely available - Old cans containing New Coke were identified by their gold-colored tops, while glass and plastic bottles had red caps instead of silver and white, respectively. Bright yellow stickers indicating the change were placed on the cartons of can multi-packs.
The press conference at New York City to introduce the new formula did not go well - Reporters had already been fed questions by Pepsi, which was worried that New Coke would erase its gains - Goizueta, Coca-Cola's CEO, described the new flavor as bolder, rounder, and more harmonious, and defended the change by saying that the drink's secret formula was not sacrosanct and inviolable - A reporter asked whether Diet Coke would also be reformulated assuming is a success, to which Goizueta curtly replied: "No. And I didn't assume that this is a success. This is a success."
Coca-cola's stock went up on the announcement.
Coke's sales were up 8% over the same period as the year before.
Most Coke drinkers resumed buying the new Coke at much the same level as they had the old one.
Surveys indicated that the majority of old-Coke drinkers liked the new-Coke.
3/4th of the survey respondents said they would buy New Coke again.
Despite New Coke's acceptance with a large number of Coca-Cola drinkers, many more resented the change in formula and were not shy about making that known - Many of these drinkers were Southerners (where Coke was first bottled and tasted), some of whom considered Coca-Cola a fundamental part of their regional identity. They viewed the company's decision to change the formula through the prism of the Civil War, as another surrender to the Yankees.
Coca-Cola headquarters began receiving (40k) letters and telephone calls expressing anger or deep disappointment - One letter, delivered to Goizueta, was addressed to "Chief Dodo, The Coca-Cola Company" - Another letter asked for his autograph, as the signature of "one of the dumbest executives in American business history" - Their hotline, 1-800-GET-COKE, received over 1.5k calls a day compared to around 400 before - A psychiatrist whom Coke had hired to listen in on calls told executives that some people sounded as if they were discussing the death of a family member.
Columnists also ridiculed the new flavor and damned the Coke's executives for having changed it. Comedians and talk show hosts made regular jokes mocking the switch. Ads for New Coke were booed heavily when they appeared on the scoreboard. Even Fidel Castro, a longtime Coca-Cola drinker called New Coke a sign of American capitalist decadence. Goizueta's father expressed similar misgivings to his son.
Gay Mullins, a Seattle retiree looking to start a public relations firm with $120k of borrowed money, formed the organization Old Cola Drinkers of America on May 28 to lobby Coca-Cola to either reintroduce the old formula or sell it to someone else - His organization eventually received over 60,000 phone calls - He also filed a class-action lawsuit against the company (which was quickly dismissed by a judge because, in two informal blind taste tests, Mullins failed to distinguish New Coke from old or expressed a preference for New Coke).
Despite ongoing resistance in the South, New Coke continued to do well in the rest of the country.
Now, the Coca-cola executives were uncertain of how international markets would react, and when the executives met with international Coke bottlers in Monaco they were not interested in selling New Coke.
Pepsi-Cola took advantage of the situation, running ads in which a first-time Pepsi drinker exclaimed, "Now I know why Coke did it!". Pepsi took out a full-page ad in The New York Times proclaiming that Pepsi had won the long-running "Cola Wars".
But Pepsi actually gained very few long-term converts, despite a 14% sales increase over the same month the previous year, the largest sales growth in the company's history.
Coca-Cola's director, Carlton Curtis, realized that consumers were more upset about the withdrawal of the old formula than the taste of the new one.
mid-June 1985
When soft drink sales usually start to rise, the new Coke's numbers were flat.
Coca-Cola's chemists also quietly reduced the acidity level of the new formula, hoping to assuage complaints about the flavor and allow its sweetness to be better perceived.
Couple of bottlers were also suing Coca-Cola which had argued in its defense that the formula's uniqueness and difference from Diet Coke justified different pricing policies from the latter – but if the new formula was simply an HFCS-sweetened Diet Coke, Coca-Cola could not argue the formula was unique.
The bottlers also saw great difficulty having to promote and sell a drink that had long been marketed as "The Real Thing", constant and unchanging, now that it had been changed.
Bottlers and their acquaintances/friends/relatives, particularly in the South, were also tired of facing personal opprobrium & ostracization over the change.
23 June 1985
Several of the bottlers took these complaints to Coca-Cola executives in a private meeting.
Talks about reintroducing the old formula moved from if to when.
the Coca-Cola board decided to bring back the old-Coke - Company president Donald Keough revealed years later, that they realized this was the only right thing to do when they visited a small restaurant in Monaco and the owner proudly said they served the real thing, it's a real Coke, offering them a chilled 6 and 1/2 oz. glass bottle of original/old Coca-Cola.
11 July 1985
Coca-Cola executives announced the return of the original formula, 79 days after New Coke's introduction.
The company hotline received 31.6k calls in the two days after the announcement.
The new-Coke continued to be marketed/sold as Coke until 1992, when it was renamed Coke II.
The old-coke was named Coca-Cola Classic, and for a short time it was referred to by the public as Old Coke.
Some who tasted the reintroduced formula were not convinced that the first batches really were the same formula that had supposedly been retired that spring. This was true for a few regions, because Coca-Cola Classic differed from the original formula in that all bottlers who hadn't already done so were using high fructose corn syrup instead of cane sugar to sweeten the drink, though most had by this time.
"There is a twist to this story which will please every humanist and will probably keep Harvard professors puzzled for years," said Keough at a press conference. "The simple fact is that all the time and money and skill poured into consumer research on the new Coca-Cola could not measure or reveal the deep and abiding emotional attachment to original Coca-Cola felt by so many people."
end of 1985
Coca-Cola Classic was substantially outselling both New Coke and Pepsi.
Six months after the rollout, Coke's sales had increased at more than twice the rate of Pepsi's.
New Coke's sales dwindled to a three percent share of the market, although it was selling quite well in Los Angeles and some other key markets.
1987
The Wall Street Journal surveyed 100 randomly selected cola drinkers, the majority of whom indicated a preference for Pepsi, with Classic Coke accounting for the remainder save two New Coke loyalists. When this group was given a chance to try all three in a blind test, New Coke slightly edged out Pepsi, but many drinkers reacted angrily to finding they had chosen a brand other than their favorite.
1964
Diet-Pepsi premiered into the cola market.
1970
Pepsi introduced the Pepsi Challenge - a blind taste test which showed most Americans preferred Pepsi to Coke by a margin of 53% to 47% (because Pepsi was sweeter than Coke as it contained more sugar).
1980
The overall market for colas steadily declined in the early 1980s, as consumers increasingly purchased diet and non-cola soft drinks, many of which were sold by Coca-Cola themselves. This trend eroded Coca-Cola's market share.
1982
Diet-Cola premiered into the cola market (It was the 1st brand since 1886 to use the Coca-Cola trademark - It was after the long-term success of Diet Pepsi became clear to Coca-Cola that it decided to launch this sugar-free brand under the Coca-Cola name, which could be marketed more easily than TaB) - Diet Coke did not use a modified form of the Coca-Cola recipe, but instead an entirely different formula based on the TaB formula.
It quickly overtook TaB, in sales.
Coca-cola was still the #1 brand, but only with a 24% market share - largely because of competition from Pepsi-Cola.
Pepsi had begun to outsell Coke in supermarkets.
Coke maintained its edge only through soda vending machines and fountain sales in fast-food restaurants, concessions, and sports venues where Coca-Cola had purchased the 'pouring rights'.
1984
Coca-cola was still the #1 brand.
Pepsi had used aggressive celebrity endorsements from the likes of Michael Jackson and hip advertising music to position itself as The choice of the new generation - It was this time that the phrase Pepsi Generation became popular - This helped Pepsi’s market share to gradually increase with a rate that and could have overtaken Coke by 1990.
Coca-Cola decided to conduct market research to better understand consumers’ preferences. This indicated that “taste” was the main reason for the decline in Coke’s popularity.
Coca-Cola's senior executives commissioned a secret research project dubbed Project Kansas headed by marketing VP Sergio Zyman and Coca-Cola USA president Brian Dyson to create a new flavor for Coke. Coca-cola CEO decided to develop a new formula; named New Coke; which would have more sugar than old-Coke and Pepsi. They then conducted over 200k blind taste tests, surveys, and focus groups to confirm that people preferred the new/sweet Coke over both old-Coke and Pepsi - and the results were overwhelmingly positive - Thought only about ~12% of testers felt angry and alienated at the thought, and said they might stop drinking Coke altogether.
23 April 1985
New Coke was launched - It used a version of the Diet Coke recipe that contained high fructose corn syrup and had a slightly different balance of ingredients.
Old Coke was discontinued - Production of the original formulation was ended (because coca-cola didn’t want to have two competing products at the same time).
In many areas, New Coke was initially introduced in old-Coke packaging - Bottlers used up remaining cans, cartons and labels before new packaging was widely available - Old cans containing New Coke were identified by their gold-colored tops, while glass and plastic bottles had red caps instead of silver and white, respectively. Bright yellow stickers indicating the change were placed on the cartons of can multi-packs.
The press conference at New York City to introduce the new formula did not go well - Reporters had already been fed questions by Pepsi, which was worried that New Coke would erase its gains - Goizueta, Coca-Cola's CEO, described the new flavor as bolder, rounder, and more harmonious, and defended the change by saying that the drink's secret formula was not sacrosanct and inviolable - A reporter asked whether Diet Coke would also be reformulated assuming is a success, to which Goizueta curtly replied: "No. And I didn't assume that this is a success. This is a success."
Coca-cola's stock went up on the announcement.
Coke's sales were up 8% over the same period as the year before.
Most Coke drinkers resumed buying the new Coke at much the same level as they had the old one.
Surveys indicated that the majority of old-Coke drinkers liked the new-Coke.
3/4th of the survey respondents said they would buy New Coke again.
Despite New Coke's acceptance with a large number of Coca-Cola drinkers, many more resented the change in formula and were not shy about making that known - Many of these drinkers were Southerners (where Coke was first bottled and tasted), some of whom considered Coca-Cola a fundamental part of their regional identity. They viewed the company's decision to change the formula through the prism of the Civil War, as another surrender to the Yankees.
Coca-Cola headquarters began receiving (40k) letters and telephone calls expressing anger or deep disappointment - One letter, delivered to Goizueta, was addressed to "Chief Dodo, The Coca-Cola Company" - Another letter asked for his autograph, as the signature of "one of the dumbest executives in American business history" - Their hotline, 1-800-GET-COKE, received over 1.5k calls a day compared to around 400 before - A psychiatrist whom Coke had hired to listen in on calls told executives that some people sounded as if they were discussing the death of a family member.
Columnists also ridiculed the new flavor and damned the Coke's executives for having changed it. Comedians and talk show hosts made regular jokes mocking the switch. Ads for New Coke were booed heavily when they appeared on the scoreboard. Even Fidel Castro, a longtime Coca-Cola drinker called New Coke a sign of American capitalist decadence. Goizueta's father expressed similar misgivings to his son.
Gay Mullins, a Seattle retiree looking to start a public relations firm with $120k of borrowed money, formed the organization Old Cola Drinkers of America on May 28 to lobby Coca-Cola to either reintroduce the old formula or sell it to someone else - His organization eventually received over 60,000 phone calls - He also filed a class-action lawsuit against the company (which was quickly dismissed by a judge because, in two informal blind taste tests, Mullins failed to distinguish New Coke from old or expressed a preference for New Coke).
Despite ongoing resistance in the South, New Coke continued to do well in the rest of the country.
Now, the Coca-cola executives were uncertain of how international markets would react, and when the executives met with international Coke bottlers in Monaco they were not interested in selling New Coke.
Pepsi-Cola took advantage of the situation, running ads in which a first-time Pepsi drinker exclaimed, "Now I know why Coke did it!". Pepsi took out a full-page ad in The New York Times proclaiming that Pepsi had won the long-running "Cola Wars".
But Pepsi actually gained very few long-term converts, despite a 14% sales increase over the same month the previous year, the largest sales growth in the company's history.
Coca-Cola's director, Carlton Curtis, realized that consumers were more upset about the withdrawal of the old formula than the taste of the new one.
mid-June 1985
When soft drink sales usually start to rise, the new Coke's numbers were flat.
Coca-Cola's chemists also quietly reduced the acidity level of the new formula, hoping to assuage complaints about the flavor and allow its sweetness to be better perceived.
Couple of bottlers were also suing Coca-Cola which had argued in its defense that the formula's uniqueness and difference from Diet Coke justified different pricing policies from the latter – but if the new formula was simply an HFCS-sweetened Diet Coke, Coca-Cola could not argue the formula was unique.
The bottlers also saw great difficulty having to promote and sell a drink that had long been marketed as "The Real Thing", constant and unchanging, now that it had been changed.
Bottlers and their acquaintances/friends/relatives, particularly in the South, were also tired of facing personal opprobrium & ostracization over the change.
23 June 1985
Several of the bottlers took these complaints to Coca-Cola executives in a private meeting.
Talks about reintroducing the old formula moved from if to when.
the Coca-Cola board decided to bring back the old-Coke - Company president Donald Keough revealed years later, that they realized this was the only right thing to do when they visited a small restaurant in Monaco and the owner proudly said they served the real thing, it's a real Coke, offering them a chilled 6 and 1/2 oz. glass bottle of original/old Coca-Cola.
11 July 1985
Coca-Cola executives announced the return of the original formula, 79 days after New Coke's introduction.
The company hotline received 31.6k calls in the two days after the announcement.
The new-Coke continued to be marketed/sold as Coke until 1992, when it was renamed Coke II.
The old-coke was named Coca-Cola Classic, and for a short time it was referred to by the public as Old Coke.
Some who tasted the reintroduced formula were not convinced that the first batches really were the same formula that had supposedly been retired that spring. This was true for a few regions, because Coca-Cola Classic differed from the original formula in that all bottlers who hadn't already done so were using high fructose corn syrup instead of cane sugar to sweeten the drink, though most had by this time.
"There is a twist to this story which will please every humanist and will probably keep Harvard professors puzzled for years," said Keough at a press conference. "The simple fact is that all the time and money and skill poured into consumer research on the new Coca-Cola could not measure or reveal the deep and abiding emotional attachment to original Coca-Cola felt by so many people."
end of 1985
Coca-Cola Classic was substantially outselling both New Coke and Pepsi.
Six months after the rollout, Coke's sales had increased at more than twice the rate of Pepsi's.
New Coke's sales dwindled to a three percent share of the market, although it was selling quite well in Los Angeles and some other key markets.
1987
The Wall Street Journal surveyed 100 randomly selected cola drinkers, the majority of whom indicated a preference for Pepsi, with Classic Coke accounting for the remainder save two New Coke loyalists. When this group was given a chance to try all three in a blind test, New Coke slightly edged out Pepsi, but many drinkers reacted angrily to finding they had chosen a brand other than their favorite.
Credit:
En.wikipedia.org/wiki/New_Coke
En.wikipedia.org/wiki/Pepsi
Conversion-uplift.co.uk/new-coke-market-research-fail/
En.wikipedia.org/wiki/Pepsi
Conversion-uplift.co.uk/new-coke-market-research-fail/
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