Last Updated on April 23, 2023 by Rovamedia
Coca-Cola, or Coke, is a carbonated soft drink manufactured by The Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton and was bought out by businessman Asa Griggs Candler, whose marketing tactics led Coca-Cola to its dominance of the world soft-drink market throughout the 20th century. The drink’s name refers to two of its original ingredients: coca leaves, and kola nuts (a source of caffeine). The current formula of Coca-Cola remains a trade secret; however, a variety of reported recipes and experimental recreations have been published.
The Coca-Cola Company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout the world. The bottlers, who hold exclusive territory contracts with the company, produce the finished product in cans and bottles from the concentrate, in combination with filtered water and sweeteners. A typical 12-US-fluid-ounce (350 ml) can contains 38 grams (1.3 oz) of sugar (usually in the form of high-fructose corn syrup). The bottlers then sell, distribute, and merchandise Coca-Cola to retail stores, restaurants, and vending machines throughout the world. The Coca-Cola Company also sells concentrate for soda fountains of major restaurants and foodservice distributors.
The Coca-Cola Company has on occasion introduced other cola drinks under the Coke name. The most common of these is Diet Coke, along with others including Caffeine-Free Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Zero Sugar, Coca-Cola Cherry, Coca-Cola Vanilla, and special versions with lemon, lime, and coffee. Coca-Cola was called Coca-Cola Classic from July 1985 to 2009, to distinguish it from “New Coke”. Based on Interbrand’s “best global brand” study of 2015, Coca-Cola was the world’s third most valuable brand, after Apple and Google. In 2013, Coke products were sold in over 200 countries worldwide, with consumers drinking more than 1.8 billion company beverage servings each day. Coca-Cola ranked №87 in the 2018 Fortune 500 list of the largest United States corporations by total revenue.
The bad PR experience
The Coca-Cola Company had always maintained the lion’s share of the cola market, easily outselling Pepsi five to one in the 1950s. But a genius marketing campaign from Pepsi in the 1980s positioned the relative newcomer as the young person’s drink. Pepsi pulled out all the stops: Celebrity spokespeople, hip advertising music, and poking fun at Coke for being the cola of an older generation. By the early 1980s, Coke had lost its grip on the soda market and only controlled 24 percent of the market share.
The Coca-Cola Company had to make a move; especially since time and time again, sweeter-tasting Pepsi slayed Coke in the clever, blind, and very public Pepsi Challenge. Coca-Cola’s idea was to come up with a new Coke formula that consumers preferred over both old Coke and Pepsi.
Way back in 1985, Coca-Cola decided to change the taste of its drink to a sweeter version. They branded the drink as ‘New Coke’ and sent it out into the world. Well, it took just three months for them to realize that they had made the biggest mistake of their drink-making career.
No one could fault Coca-Cola for not doing their research: They tested the New Coke formula on 200,000 subjects and came up with a drink that beat Pepsi and old Coke time and time again. Therefore, when it finally went to market in 1985, the company felt confident enough in its research numbers to simultaneously end old Coke production. They even took out commercials to prove it.
While Goizueta and Keough toasted each other with cans of New Coke, the news was already beginning to fall flat. On the New York Stock Exchange, shares of Coca-Cola dropped, while those of its rival rose. Pepsi gave its employees the day off and declared victory in full-page newspaper advertisements that boasted, ‘‘After 87 years of going at it eyeball to eyeball, the other guy just blinked.’’
New Coke left a bitter taste in the mouths of the company’s loyal customers. Within weeks of the announcement, the company was fielding 5,000 angry phone calls a day. By June, that number grew to 8,000 calls a day, a volume that forced the company to hire extra operators. “I don’t think I’d be more upset if you were to burn the flag in our front yard,” one disgruntled drinker wrote to company headquarters. At protests staged by grassroots groups such as “Old Cola Drinkers of America,” consumers poured the contents of New Coke bottles into sewer drains. One Seattle consumer even filed suit against the company to force it to provide the old drink.
The outrage caught Coca-Cola executives by surprise. They had hardly made a rash decision unsupported by data. After all, they had performed 190,000 blind taste tests on U.S. and Canadian consumers. The problem, though, is that the company underestimated loyal drinkers’ emotional attachments to the brand. Never did its market research testers ask subjects how they would feel if the new formula replaced the old one.
The result?
Seventy-nine days after their initial announcement, Coca-Cola executives once again held a press conference on July 11, 1985 — this time to announce a mea culpa and the return of the original formula, which hardly had time to gather dust in its Atlanta bank vault, under the label “Coca-Cola Classic.” “Our boss is the consumer,” Keough said. “We want them to know we’re really sorry.” The news was so momentous that television networks broke into normal programming with special reports.
Coca-Cola Classic quickly outsold New Coke and within a few months had returned to its position as the top-selling sugar cola, ahead of Pepsi. The company rebranded the new formula “Coke II” in 1990 before it was eventually abandoned in 2002. Despite the blowback, Coca-Cola emerged from the fiasco with its market position actually strengthened as consumers rediscovered their attachment to the iconic brand. (Moreover, in 2019, Coca-Cola actually re-released a very limited run of New Coke.)
“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,” Keough admitted. The blunder was so colossal that some thought it must have been an intentional marketing gimmick. “Some cynics say that we planned the whole thing,” Keough said. “The truth is we’re not that dumb and we’re not that smart.”
Consumers hated it. Coca-Cola fielded as many as 400,000 angry phone calls and letters as Coke drinkers professed their dissatisfaction with the new product. In less than three months, New Coke has pulled off the shelves, and old Coke–rebranded as Coca-Cola Classic–was back.
They received thousands of phone calls, over 40,000 letters of complaints, and a ridiculous amount of bad press, so they decided to revert back to the original taste and branded it as Coca-Cola Classic. It got so much attention that the TV show General Hospital was even interrupted so that they could announce the news, and sales for the much-missed fizzy drink soared through the roof!
A Lesson for Coca-Cola and Brand Marketers
How did Coca-Cola get it so wrong when the market research surrounding taste was so promising? Here are a few glaring errors that contributed to the flub:
Customers are motivated by more than just taste. The most grievous error Coca-Cola’s researchers made was testing subjects on taste alone. Most people loved New Coke–53 percent preferred it over old Coke–but the taste isn’t enough. Consumers make purchasing decisions based on habit, nostalgia, and loyalty as well.
Cola is an identity classification. The research was completed during the height of the Pepsi and Coke wars, and consumers considered the brand of cola which they drank a part of their identification. Changing Coke fundamentally confused consumers’ identification and relation to the brand.
New Coke wasn’t a choice. The research was a blind taste test: What did subjects like best? But researchers neglected to qualify what the response would be if subjects understood that in choosing New Coke, they would effectively be pulling old Coke from the shelves, which could have drastically altered responses.
Researchers only focused on the physical. What researchers failed to grasp was that while subjects could appreciate changed physical characteristics like taste and branding, Coca-Cola also had symbolic significance to buyers, particularly in the American market. For a group that prefers tradition over novelty, New Coke couldn’t hold a candle to the continuity and familiarity of old Coke, or eventually, Coca-Cola Classic.
Market research isn’t just a numbers game. In failing to capture feelings and attitudes toward the brand and relying on taste tests alone, Coca-Cola was left with a ton of products, cranky consumers, and a big, corporate black eye.
It all worked out, of course. Once Coca-Cola Classic was reintroduced, sales actually improved over the same time the previous year (potentially because consumers began to hoard the product in preparation for another Coke-addon). Consumers were able to breathe a sigh of relief, and companies the world over learned two valuable lessons: The customer holds the cards and solid market research can prevent a failure of New Coke proportions.
The Coca-Cola Company produces the famous soft drink, Coca-Cola, which was invented by John Stith Pemberton in the late 19th century. Originally intended as a patent medicine, Coca-Cola was marketed as a temperance drink and contained coca leaves and kola nuts, both of which were original ingredients. Businessman Asa Griggs Candler bought the recipe, and with his marketing tactics, Coca-Cola became the dominant player in the world soft-drink market. The recipe for the current Coca-Cola formula is a trade secret; however, numerous reported recipes and experimental recreations have been published.
The Coca-Cola Company produces concentrate, which is sold to licensed bottlers worldwide. The bottlers mix the concentrate with filtered water and sweeteners to produce the finished product in cans and bottles. A standard 12-US-fluid-ounce (350 ml) can of Coca-Cola contains 38 grams (1.3 oz) of sugar, mostly in the form of high-fructose corn syrup. The bottlers then distribute and sell Coca-Cola to retail stores, restaurants, and vending machines worldwide, and the company also provides concentrate for soda fountains in major restaurants and food service distributors.
In addition to Coca-Cola, The Coca-Cola Company produces other cola drinks under the Coke name, such as Diet Coke, Caffeine-Free Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Zero Sugar, Coca-Cola Cherry, Coca-Cola Vanilla, and special versions with lemon, lime, and coffee. In 2013, Coke products were sold in over 200 countries worldwide, and consumers drank more than 1.8 billion company beverage servings each day. In 2015, Coca-Cola was the world’s third most valuable brand, based on Interbrand’s “best global brand” study, after Apple and Google. Coca-Cola ranked №87 in the 2018 Fortune 500 list of the largest United States corporations by total revenue.
In the 1980s, Pepsi’s clever marketing campaign positioned it as a young person’s drink, which led to a decline in Coke’s market share. In response, Coca-Cola came up with a new formula, which they branded “New Coke”. The company tested the formula on 200,000 subjects, and it beat Pepsi and old Coke time and time again. In 1985, when New Coke went to market, the company felt confident enough in its research numbers to simultaneously end old Coke production. However, New Coke left a bitter taste in the mouths of the company’s loyal customers, and the outrage caught Coca-Cola executives by surprise. Within weeks of the announcement, the company was fielding 5,000 angry phone calls a day. In response, Coca-Cola reintroduced the original formula, under the label “Coca-Cola Classic,” and apologized to its customers. The company underestimated the emotional attachment that consumers had to the brand.
Despite the initial backlash, Coca-Cola’s decision to bring back the original formula paid off in the end. Coca-Cola Classic quickly regained its market share, and even gained a boost from the nostalgia factor of its brief absence. In fact, the reintroduction of Coca-Cola Classic was so successful that it led to an increase in overall soda consumption in the United States that year.
The failure of New Coke was a valuable lesson for Coca-Cola and other companies in the importance of brand loyalty and emotional attachment to products. Coca-Cola learned that even extensive market research could not replace the emotional connection that consumers had with their product. From then on, the company became more cautious in its approach to product innovation and marketing.
Despite the setback, Coca-Cola continued to thrive in the years following the New Coke debacle. The company introduced several successful variations of its flagship drink, such as Diet Coke and Coca-Cola Zero, and expanded its product line to include other beverages and snacks. Today, Coca-Cola remains one of the world’s most valuable brands, with a presence in over 200 countries and billions of servings consumed every day.
In conclusion, Coca-Cola’s history is a testament to the power of branding and the importance of understanding consumer behavior. While the New Coke experiment was a misstep for the company, it ultimately served as a valuable lesson and helped Coca-Cola to become the iconic brand that it is today.
Ultimately, the decision to bring back the original formula was the right one, as the reintroduction of Coca-Cola Classic was met with widespread relief and celebration from loyal consumers. Sales quickly rebounded, and Coca-Cola regained much of the market share it had lost to Pepsi during the New Coke fiasco.
The lesson learned from the New Coke debacle was a valuable one for Coca-Cola and for the business world as a whole. It underscored the importance of emotional branding and the power of consumer loyalty in shaping a company’s success. It also served as a reminder that even the most carefully researched and data-driven decisions can still be flawed if they fail to account for the emotional connection between consumers and a brand.
In the years since the New Coke debacle, Coca-Cola has continued to adapt and evolve its brand, introducing new products and marketing campaigns while also embracing its heritage and staying true to the values that have made it a global icon. And while the New Coke experiment may have been a misstep, it ultimately helped to strengthen Coca-Cola’s connection with its customers and reinforce the brand’s enduring place in popular culture.
