Why Did 'New Coke' Fail So Terribly?

James Logie

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Every time you pick up a Coke today, do you realize what you’re holding had to be reintroduced and spent a little while as New Coke?

New Coke came out in 1985 and was a response to dwindling Coca-Cola sales.

It was used to replace the classic formula but was met with such consumer backlash that within three months, the original formula was returned and rebranded as “Coca-Cola Classic.”

This caused a spike in sales, making many wonder if this was the plan all along.

The Place of Coca-Cola in Our Culture

Before getting into how this monumental debacle took place, here’s a quick history of the development and growth of one of the most famous beverages ever created by mankind.

No doubt you’ve had a Coke at some point. Beyond that, you might have had many iterations of it, from Diet, Coke Zero, Cherry Coke, Vanilla Coke, or Coke Life.

There are also a few short-lived versions you might not remember:

  • Coca-Cola with Lemon
  • Coca-Cola with Lime
  • Coca-Cola BlāK (a coffee-flavored version; I actually tried this, and it was amazing)
  • Coca-Cola Citra
  • Coca-Cola Orange
  • Coca-Cola Ginger
  • Coca-Cola Lite

There are many others, and they have made several versions for select countries or available for only a short time.

Coke has had a global impact — for better or for worse — and has reached every corner of the globe. It is one of the most well-recognized brands on the planet and one of the most heavily advertised.

I’ve been in some very remote parts of the world where there isn’t running water or electricity, but you still see faded signs for Coke.

The History of Coca-Cola

Coca-Cola was first created by John Pemberton, who fought in the Civil War, was wounded, and used morphine for pain. He wanted to get off the morphine and started looking for a substitute for the drug.

He created the first version in a drugstore, but it was more of coca wine.

In 1885, he registered this French wine as a nerve tonic. This was its original intent, but prohibition forced him to create a non-alcoholic version.

It was sold as medicine along with carbonated water which, at the time, was believed to be good for health. Its popularity grew, but it was hard to expand.

Transporting this new beverage seemed impossible and there was no way to guarantee it would have a consistent flavor.

This is where bottling came in and is the advancement that helped it grow Coca-Cola into the powerhouse it has now become.

Coke was first bottled in 1894 and this was also when the very first advertisement was displayed. Coca-Cola and advertising go hand-in-hand as they have created some of the most iconic commercials in history.

They have also given us the modern iteration of Santa Claus with his red and white robes, rosy cheeks, and plump physique.

Getting Its Name

If you wondered where the name Coca-Cola came from, it’s from a few of the ingredients. The first is the kola nut, which is what gave it its distinct flavor and caffeine.

Another key ingredient is the coca leaf, which gave it cocaine. OK, this isn’t entirely true. Cocaine is derived from coca leaves, but the original formula only contained trace amounts.

But I guess a little bit of cocaine is still cocaine. Either way, in 1904 they went to using “spent” coca leaves that didn’t cause an issue. Today, they use a cocaine-free coca leaf extract.

The formula is still considered a guarded secret.

Dwindling Sales

It’s hard to think of Coke as not being on top of the soft drink market, and today, with the huge amount of competition, it’s hard to stand out — especially when people are more health-conscious of the sugar and extra crap they are getting in a soft drink.

Coke, however, has had market share trouble for years. This goes back as far as the Second World War where Coke only had 60% of the market share.

By 1983, it had dropped to a shocking 24%, and this is where part of our story starts.

Pepsi was really getting aggressive in its advertising and taking an enormous chunk out of the market. They were actually outselling Coke in supermarkets.

It was only with vending machines and fountain sales in fast-food restaurants that Coke was still staying competitive.

Along with this came the sugar issue. The 1980s can be seen as a very bad turning point in our health.

It’s when harmful ingredients like trans fats and high-fructose corn syrup got more popular, making fast food and junk more affordable.

You can see a direct correlation between the advent of junk, soda, and our increasing rates of diabetes, heart disease, and obesity.

High-fructose corn syrup was incredibly cheap to produce, meaning manufacturers could make much larger bottles and servings with a minimal cost to them — and the consumer thought they were getting a bargain.

The Big Gulp from 7–11 was introduced in the late ‘70s and by the ‘80s was more prominent and became cheaper.

Because of people’s awareness of sugar and calories, baby boomers were looking for diet versions of things. It was thought that their kids would have to be the target market for full-sugar versions of these products.

Pepsi was also killing Coke in the coveted 18-to-34 demographic.

What the Market Research Was Saying

People now wanted more diet and non-cola soft drinks. Diet Coke had launched in 1982 and this was great, but they needed better control of the full cola market.

They worked on a new formula in the early ‘80s and called it “Project Kansas” — not related to the epic band of the same name.

The focus was on creating a sweeter version of Coke, and it seemed to be working. In taste tests with original Coke and Pepsi, this newer version of Coke seemed to work with most testers.

Testers said they would buy this if it was a Coca-Cola product. There was a smaller percentage saying they hated it and were angry at the change.

They even said this might make them stop drinking Coke altogether.

They should have paid more attention to that group.

A man named Roberto Goizueta was in charge of all this and was encouraged by all the surveys they were running. It was now 1985 and this was the hundredth anniversary of the original Coca-Cola.

This seemed like the perfect time to launch this “new” Coke — but there was one very crucial piece of data they had that they overlooked which would be quite revealing in what was to come: Respondents said they liked the idea of “new” Coke being a separate product and not a replacement.

Launching New Coke

New Coke was launched on April 23, 1985, and they actually stopped making the original formula later in that same week. Here are some interesting things that happened during these first few weeks:

  • Area manufacturers were using original packaging for New Coke before the new packages were available. The old cans that contained New Coke had gold tops on them. These cans are now re-used for caffeine-free Diet Coke. Old bottles with New Coke in them had red caps instead of silver and white. Now all bottles have red caps.
  • At the original press conference at the Lincoln Center, Pepsi had infiltrated the reporters to ask questions to throw off Coca-Cola executives. Pepsi was clearly nervous about New Coke taking over all the gains it had made in the market.
  • The initial reaction at first was pretty good. The marketing had worked and 80% of people polled were aware of the New Coke.
  • Getting New Coke into McDonald’s was paramount and the initial sales showed them to be up 8%.

So far, so good. Their market research seemed to have been spot on and surveys said that most people liked the new taste and three-fourths of them would buy again.

But as we’ve seen with polling research, it doesn’t always turn out how the numbers say.

An enormous question remained: How would this New Coke go over in the South and southeast where Coca-Cola originated?

Here Comes the Backlash

The people who were enjoying New Coke were apparently just keeping it to themselves. There was no internet, blogs, social media, or forums where people could share what they liked.

The people who didn’t like it really didn’t like it, and they turned out to be the vocal majority.

These were mainly southerners who resented the change to something that they held dear and grew up on.

You can mess with a lot of things, but you can’t mess with kids on Christmas. Sorry, that was “Home Alone” speaking. What I meant to say is you can’t mess with the continuity in people’s lives.

This got kind of out of hand as southerners were seeing the change in the formula as another surrender to the “Yankees.”

Yikes.

The head offices, which are in Atlanta, were getting hammered with calls and complaints and had received 40,000 calls and letters.

The company hotline was also getting 1,500 calls a day from irate customers. It got to the point where Coke hired a psychiatrist to try to analyze the emotions and sentiment in the calls.

His conclusions? People were responding the same way they would when discussing the death of a family member.

Double-yikes.

The word spreads

The problem now was this was getting into the mainstream. Some notable newspapers, such as the Chicago Tribune, were lambasting Coca-Cola in articles.

And then late night got a hold of it. Johnny Carson and David Letterman started mocking everything to do with New Coke on a nightly basis.

If you’re under 30, it might be hard to imagine, but there was a time when there were only three networks and nothing else to watch at night on TV.

There wasn’t an onslaught of cable channels, streaming services, or anything.

On any given night, a third of the viewing country was watching one of these channels, meaning anything that was on these shows was seen by a majority of the country.

Johnny Carson was especially powerful. Since so many people were watching, a comedian who had a good set and got Johnny’s approval was instantly famous and had their entire career launched the next day.

Have a bad set and you’re never heard from again.

A few examples of this: In 1966, when Carson played an unknown game called “Twister” with Eva Gabor, it sent sales skyrocketing and shelves emptied.

Another example in 1973 was when Carson joked about a shortage of toilet paper. This leads to panic buying and hoarding across the U.S. as people emptied out stores causing an actual shortage that lasted for weeks.

So if these shows are ripping into your new product, everyone was laughing along with it.

Petitions were being started, but somehow the sales — except in the South — were doing pretty good. The worry was how New Coke would do in international markets, as a lot of countries didn’t want to bottle this New Coke.

What Was Pepsi’s Response During This Time?

They obviously loved all this and took advantage of the situation.

They would point out in ads that Coke had dropped that ball and new Pepsi drinkers understood why they had made the right choice by avoiding New Coke.

The funny thing is that Pepsi didn’t pick up that much of the new market. The understanding was that people were more upset by the withdrawal of the old formula than the taste of the new.

It really wasn’t the taste that was the issue in this complete debacle, as people generally liked it. It comes back to nostalgia and taking away something that has had a mainstay in a person's life.

Nothing makes people panic more than getting used to something and then having it taken away.

Doing the ‘Ol Switcheroo Back to Old Coke

Not only was there the consumer backlash, but even Coke executives wanted a return to the old formula as early as May.

This is barely a month after they introduced New Coke.

By June — when soft drink sales tend to rise — Coke was leveling off. The flavor was even being adjusted by chemists to try to balance things out and not make it as sweet.

The company was running into bottling problems resulting in lawsuits and the entire thing was having the wheels fall off it.

The tipping point was when the company president had gone to a small restaurant in Monaco and the owner proudly said he had original Coca-Cola there, which he called “the real thing,” and offered them chilled glass bottles.

Ouch.

The board decided enough was enough and started plans to bring back the old Coke.

On July 11, just 78 days after they introduced New Coke, they informed the world that it would be no more and regular Coke would return.

Peter Jennings actually interrupted “General Hospital” on this day with a special bulletin announcing the news.

New Coke still was kicking around and would continue to be sold, but just called Coca-Cola. In 1992 it was renamed Coke II. The original formula was now rebranded as “Coca-Cola Classic.”

Calling it classic was a nice touch as it helped to reconnect people to the version they kept near and dear to their hearts.

The Aftermath

The company president had an interesting take on all this. He pointed out that all the research and data in the world could not reveal the deep emotional attachment that people had for the original Coke.

You can’t test for that or predict it. People don’t know how they will react to something, and foreseeing this is next to impossible.

So here are the interesting stats after the return to the original Coke:

  • At the end of the year, Coca-Cola Classic was outselling New Coke and Pepsi by a huge margin.
  • Six months after the change Coke sales had increased to more than twice the rate of Pepsi.

The big thing this also did was an unintentional one: it furthered the gap between Coke and Pepsi. People realized how much nostalgia they felt for Coke, and Pepsi did not have this.

It helped cement Coke as the real cola and gave it even more of a significant place in the culture.

This was all unintended, and another big takeaway was the fact that customers were completely catered for in this situation.

They got what they wanted and their feelings were not just considered but fully acknowledged.

Products would continue to use the name Coca-Cola Classic until 2009 when the word “classic” was removed as a way to give it a new branding.

Coke would go on to use the “Red, White, and You” campaign that was based around showcasing American virtues.

They also went back to the original intent of New Coke — focusing on the youth market that Pepsi had — by using MTV’s Max Headroom in their new “Catch The Wave” promotion.

Conspiracy Theories About New Coke

We all love a good conspiracy theory, and some of these seem hard to ignore:

  • Coke intentionally changed the flavor, hoping it would upset people and demand a return to the original formula which would make sales spike. (Which is basically what happened.)
  • This switch was planned all along to cover the sweetness change from regular sugar to the super-cheap high-fructose corn syrup.
  • They needed to get rid of any connection to coca and cocaine. The DEA was trying to get rid of the plant worldwide and New Coke would contain no coca. This, in turn, would please the DEA and essentially Coke would not have to deal with them again.
  • They wanted to ultimately reveal Pepsi as not being as significant to the culture as they were. Even if people were not buying Coke, there was a goal to just have them not buy Pepsi and cut into their market share. Again, another thing that basically happened.

Wrapping it Up

New Coke is a very interesting story that is all about nostalgia, public demand, marketing oversights, and a lesson for big-time companies.

The big takeaway regarding this is to be very careful when messing with an established product. With Coke, they got very lucky — which was either by design or a fluke.

Despite its failings, New Coke was a success because it helped the company, increased profits, and made them more relevant than ever.

This might be one of the best cases of a happy accident that’s happened in the history of marketing.

Photo by Afif Kusuma on Unsplash

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Personal trainer, podcaster, Amazon best-selling author. Writing about some health, a little marketing, and a whole lot of 1980s.

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