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Coca-cola’s Big Mistake: New Coke 20 Years Later.

On the night of April 22, 1985, somewhere near Purchase, NY, Roger Enrico, president of Pepsi-Cola USA, was smiling. And who could blame him? He was about to declare victory in the longest running war in cola history – a knock-down, dragout affair between two companies the likes of which the world had never seen before. Little did Enrico know that what was starting out as a victory over big red rival Coca-Cola was about to snowball into a summer-long soap opera epic. He probably had butterflies in his stomach much the same as Coca-Cola CEO Roberto Goizueta and president Don Keough but for very different reasons.

When morning dawned on April 23rd, it was an average Tuesday in every way possible. But the world was about to learn that the fate of their favorite cola, with the most well-known trademark on Earth, was destined for the most drastic change in its nearly 100 year history. And no one was ready.

For several years prior, Pepsi-Cola had been slowly closing the marketshare gap between the two cola giants and as the Pepsi Taste Challenge had indicated, people seemingly wanted a slightly sweeter cola with less bite than Coke had. No matter how much The Coca-Cola Co. spent on advertising, no matter what they did… the gap with their biggest rival was closing fast – something drastic had to be done.

According to a New York Times report, Coca-Cola came upon the new formula while developing Diet Coke, which was introduced in 1982. With Coca-Cola executives mindful of their slipping market share, they began their own taste tests using Coca-Cola and several new variations. In testing a number of taste formulas, the company found one that stood out. When it was put in a Coke can and compared side by side with the old formula in blind taste tests, the new product was chosen by consumers 62 percent to 39 percent.

Over the Christmas holidays in 1984, top Coke executives including Goizueta, Keough, Brian Dyson and Ike Herbert decided unanimously to change the Coke formula just shy of its 99th anniversary.

While the new formula was being finalized, a set of commercials for the brand re-launch were being filmed with actors unaware they were pitching a new formula.

The brand re-launch was kept top secret – even Coca-Cola bottlers and the majority of Coke employees weren’t told of the impending reformulation until the day before the infamous New York press conference. For bottlers who knew all too well the lagging sales numbers, the reformulation was welcome news. Goizueta and Keough received a standing ovation from bottlers as Goizueta proclaimed to them in a private gathering, “Now we’re back in the ballgame.” The euphoric feeling was short-lived.

Ironically, the meeting with bottlers on April 22 was held in the Woodruff Arts Center, named after Coca-Cola ‘boss’ Robert Woodruff, who had dedicated most of his life to the company and promoting the original formula. Woodruff passed away only a month before the reformulation announcement.

The Press Conference Heard Around the World

April 23, 1985 is one of those days in history that Coke drinkers remember well. It ranks up there with other world events where you always remember where you were and what you were doing when you heard the news. If Goizueta had taken a moment to open up the morning paper that day before heading to Lincoln Center to make his earth-shattering announcement, he might have been fuming. Since word had leaked out several days before the formula change press conference, Roger Enrico took out a full page ad in major newspapers across the United States the day of the Coke press conference, declaring that the Cola Wars were over – Pepsi had won. To celebrate their victory, Enrico declared that Friday, April 26, 1985 would be a company-wide holiday for Pepsi employees.

It’s hard to say what Goizueta thought of his rival’s cocky newspaper announcement – he probably figured it was only a matter of time before the ‘new’ formula Coke made people forget they’d ever heard of Pepsi. Afterall, Goizueta himself said that New Coke was the surest move ever made.

Goizueta and Keough walked onto a stage at Lincoln Center for a press conference with 700 journalists and film crews – along with satellite feeds to media in Atlanta, Houston and Los Angeles. The world was watching.

The lights dimmed and a montage of Coca-Cola feel-good moments were shown – shots of Americana with Coke imagery… the Grand Canyon, the Statue of Liberty, wheat fields, Eisenhower and JFK, and Families. When the commercials were finally over, the lights returned and Goizueta took to the podium. “The best has been made even better,” he announced, reading from his prepared notes. “Some may choose to call this the single boldest marketing move in the history of the packaged goods business. We simply call it the surest move ever made. Simply stated, we have a new formula for Coke.”

When the floor was finally opened up to questions from the press, they were anything but kind.

“Are you 100 percent certain that this won’t bomb?” a St. Louis reporter questioned.

Another journalist asked Goizueta to describe the new taste. At first he stumbled, then found the words he was searching for. ‘I would say it is smoother, uh, uh, rounder, yet, uh, yet bolder… a more harmonious flavor,’ Goizueta responded.

When asked if the company was changing the formula in response to the Pepsi Challenge, Goizueta lost his composure. ‘Oh gosh no,’ he said. ‘The Pepsi Challenge? When did that happen?’

Question after question was pelted towards Goizueta and Keough.

A final question was asked that left a bitter taste in the confident C.E.O.’s mouth, asking whether diet Coke might be reformulated, ‘assuming that this is a success’.

“No. And I didn’t assume that this is a success. It is a success,’ Goizueta snapped.

And just like that, the press conference was over.

The early publicity that New Coke received was mixed – but largely favorable. More than 80 percent of the U.S. population was aware of the new formula within days of the announcement.

The Coca-Cola Company took to the streets of Atlanta for its huge sampling campaign. In New York, workers who were renovating the Statue of Liberty were the first in New York to get cans of New Coke.

Coke spared no expense with red and white balloons, fireworks, New Coke samples, and airplanes dragging advertising banners through the skies. It was pagentry at its grandest.

But it didn’t take long for the public to react to the formula change and it was perhaps the biggest collective rejection in the history of consumerism.

Soonafter, Coke loyalists asserted their dislike for New Coke in ways you had to see to believe.

Dan Lauck, a television journalist from San Antonio drank nothing but six-and-a-half ounce bottles of Coke – at a rate of 15 per day. He regularly skipped breakfast and lunch just so he could continue to drink Coke while managing his weight. He hated New Coke, and he knew he’d never switch. When he heard the news about New Coke, he immediately went out and bought 110 cases of the original.

Members of the press, mindful of the public’s obvious dislike for New Coke, ran their own taste tests, surveys and public opinion polls. The results were obvious by the endless stories printed in the month of May as the media reported the bad taste that folks were left with.

Houston Astrodome crowds booed New Coke commercials on the stadium’s giant video screen. Novelty songs were written about when ‘Coke WAS it’. And yes, even Coca-Cola delivery drivers were assaulted.

Mark Pendergrast, author of the popular book For God, Country & Coca-Cola doesn’t recall a lot of personal memories of April 23, 1985 – at the time, he rarely drank Coca-Cola and New Coke certainly wasn’t an issue that affected him much at the time. But in researching and writing his history book about The Coca-Cola Company years later, he had a unique perspective, unjaded by a formula change that insensed cola connoisseurs across North America.

“It was amazing that everyone was having this gigantic nervous breakdown about it. When I researched and wrote the book I interviewed a bunch of people for whom it did mean everything.”

In the late 1970s and early 1980s, America had lost its identity, Pendergrast says. From Watergate and Vietnam, to high inflation and very rapid change in the country. It caused a loss of confidence by the American public.

“All kinds of things were changing under our feet,’ he says. ‘Coca-Cola was really a symbol of something that was seemingly solid and it represented something that wasn’t changing. So when they changed it, it really hit people where they hurt because of the slide of our culture into disfunction. People were looking back nostalgically on a time which certainly had its problems but where we seemed to be more together as a country.”

Marketing experts suggested that the company’s original studies and taste tests had missed one very key aspect – they had failed to take into account the world’s loyalty to the 99-year-old drink and their emotional attachment to it. Studies had focused on taste alone rather than brand preference. And when taste testers blindly chose New Coke over original Coke, they were never told that New Coke would ultimately replace the original.

Admittedly, it was a mistake but in some folks’ minds, it was a national disaster.

And then there were the angry calls and letters that the Coca-Cola Company’s head office was flooded with.

In early May, it was about 1,000 calls a day to the 1-800-COKE consumer hotline. By June it was 8,000 calls a day.

Richard Mix, one of the leading authorities on Coke bottle collecting, and resides just outside Atlanta, came close to working for the Coke call center that same spring.

“In 1985 I was in college at The University of Georgia. When The Coca-Cola Company introduced New Coke in April I was applying for summer internships at numerous companies. The day after I accepted an internship at Rockwell I got a call from Coke offering a summer job in the consumer product information center. They had to expand the call center due to the major increase in consumer calls. After much consideration, I decided to stay with my commitment and work at Rockwell,” he says.

Mix often wonders what would have happened career-wise had the call from Coke come a day earlier.

How to sell the world a New Coke?

Bill Baver worked for The Coca-Cola Company for some 37 years on the delivery route and then in the pre-mix area of the company. Fortunately, he retired nearly a full year before the introduction of New Coke in ’85 and avoided the consumer backlash.

The reaction of the introduction of New Coke in 1985 by consumers certainly didn’t come as a shock to Baver. ‘Because we’ve been living on it since we were weaned,” he points out. “I might have been bitter in 1985 because I wasn’t happy with my pension – I probably drank more whiskey than Coke at that time anyway,” Baver jokes.

Though he doesn’t envy the salesforce that had to go out and try to sell New Coke to a dissatisfied public, Baver has no doubts about how he would have done it. “I would still be going out there and telling you it’s the best damn drink in the world. I’m just that type of guy. I’d swear that it’s the best thing there is and nothing’s different although we know there is.”

But some Coke drinkers weren’t content with any explanation or sales pitch.

In Marietta, Georgia, a Coca-Cola delivery man was assaulted by a woman with an umbrella while he stocked a grocery store shelf with New Coke. “You bastard,” she yelled, “you ruined it – it tastes like shit!” When a nearby Pepsi driver snickered at the scene, she blasted him as well. “You stay out of it! This is family business. Yours is worse than shit!”

The Company Conceeds Defeat:

June sales of New Coke dropped off the map. To make matters worse, a 57-year-old Seattle man, Gay Mullins, founded a group he called the Old Cola Drinkers of America. Together with his supporters, he garnered significant media attention by publically dumping New Coke down the sewer while the media filmed his every move. Mullins also filed a class-action lawsuit against Coca-Cola to force the company to return to the original formula. It was thrown out of court.

Nearly 40,000 letters of protest piled up at Coke’s head office in Atlanta.

It was finally becoming clear to Coca-Cola what must be done.

On July 11, less than 3 months after the introduction of New Coke, the Company acknowledged they had made a major miscalculation. Once again Goizueta and Keough faced the press to announce the return of Coca-Cola Classic.

“There is a twist to this story which will please every humanist and will probably keep Harvard professors puzzled for years,” said Keough at the 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.

“The passion for original Coca-Cola – and that is the word for it, passion – was something that caught us by surprise… It is a wonderful American mystery, a lovely American enigma, and you cannot measure it any more than you can measure love, pride, or patriotism.

“Some critics will say Coca-Cola made a marketing mistake. Some cynics will say we planned the whole thing. The truth is we are not that dumb and we are not that smart.”

As the press conference came to a close, Keough presented Gay Mullins with the first case of Coca-Cola Classic.

Suddenly, it was a love-fest for Coca-Cola, with newspapers across North America splashing the news across front pages everywhere. Letters and calls continued to come in from consumers, but this time they were messages of delight, relief, and thanks.

For Coke aficionados, all was right with the world again.

For nearly a year afterwards, both Cokes co-existed side by side. But confusion in the marketplace about how to sell both simultaneously, a lack of shelf space, and a shrinking market share of New Coke helped it disappear from most North American markets.

All told, the New Coke fiasco cost The Coca-Cola Company $4-million to research and develop. After a few dismal months in 1985, the cola giant roared back with the help of a grateful American public. The marketing blunder of epic proportions had inadvertently taken its misguided company to the top once more.

Pendergrast says he has often thought about what other products, if they had changed the flavor of the product, would have caused such an incredible uproar. “I can’t think of a branded product that that would be true of.”

The Happy Accident Remembered:

In 1995, The Coca-Cola Company held a celebration honoring New Coke’s 10th Anniversary. Roberto Goizuetta addressed Coke employees at the event saying, “We set out to change the dynamics of sugar colas in the United States, and we did exactly that – albeit not in the way we had planned. But the most significant result of ‘new Coke’ – by far,” Goizueta said, “was that it sent an incredibly powerful signal … a signal that we really were ready to do whatever was necessary to build value for the owners of our business.”

Two years later, Goizueta succumbed to cancer – but the company forged ahead without their longtime leader. Goizueta drank New Coke right up until his death, insisting it was still the best tasting cola the world over, no matter what the consumer said.

Pendergrast says that if the company is smart, they’ll hold a similar celebration to mark the 20th Anniversary of New Coke as they did for the 10th Anniversary. “They should make a big deal of it because the moral of it was perfect for the company as Don Keough said at the time – anything that gets all this attention and gets our favorite customers rushing back to thank us is a pretty good thing.”

What if New Coke Hadn’t Happened?

With nostalgic memories of Coca-Cola being ressurected as ‘Coca-Cola Classic’ in July of 1985, it begs the question – what if New Coke had never happened? What if it had all been just a dream? And what if the company had introduced New Coke in 2005 instead of in 1985 – what would the reaction have been?

Pendergrast doesn’t think it would have caused nearly the commotion today as it did 20 years ago. “I doubt that you would have as much of a reaction. I hope I’m wrong – maybe I’m just jaded. I think it would cause an uproar, but maybe not as much.”

And with the company’s many brand extensions taking over coolers around the world with Vanilla Coke, Coca-Cola With Lime, Cherry Coke, C2, and others on the horizon, is there a chance of a Coca-Cola reformulation ever happening again?

“Never say never,” Pendergrast says. “But I doubt they will ever attempt it again in our lifetime. If they did, they would probably have enough brains to keep the old one and just offer the new one as a line extension. If they had offered New Coke as an alternative but have kept the old one, I don’t think they would have had such a problem.”

On the otherhand, if The Coca-Cola Company hadn’t reverted back to Coca-Cola Classic in the summer of 1985 and stayed with New Coke, Pendergrast believes the beverage landscape would look much different than it does today. “I think Pepsi would be the dominant soft drink in the country today by far. I think it would have been a total disaster.”

Baver disagrees. “I don’t feel that Pepsi could have overtaken Coke because we had the other products. Sprite killed 7UP, it hurt them badly. We had Fanta, Tab and Diet Coke, at that point in time there’s no way Pepsi could have surpassed Coke I don’t think.”

These days, when Pendergrast hears the words ‘New Coke’, he immediately thinks of Bill Cosby appearing in commercials “trying to make it all better,” Pendergrast jokes.

“It’s a wonderful quintisentially American love story, and a crazy story. The moral of it is that people are capable of getting excited about the stupidest things but it’s also quite touching. I like that sort of story. I hope that we are capable of being just as excited nowadays, 20 years on, as we were then. But I don’t know.”

New Coke (Coke II) faded from most U.S. markets by the early 1990s. In Chicago, however, sales of Coke II remained strong and continued to flourish for years; it was finally shelved in 2002.

Source by Blair Matthews

marketing, small business marketing