The Cola Wars: The story of 'New Coke'

In the 1980s, there had long been two top contenders in the field of cola – Coca-Cola, the market leader, and Pepsi, its rival.

Coke had long been dominant in this arena. After all, its brand name had become synonymous with cola drinks. You couldn’t say the same for Pepsi. However, in the mid-1980s, Coca-Cola started to sense Pepsi nipping at its heels.

One issue was Pepsi’s 'Pepsi Challenge' advertising campaign, which seemed like a real threat to Coke. In the ads, Pepsi showed that consumers actually preferred the taste of Pepsi when they didn’t know what beverage they were drinking. In other words, customers liked the brand name of Coke. But they liked the flavour of Pepsi.

Naturally, Coca-Cola felt it had to act to defend its position. But what should the company do to fight back?

Disturbingly to Coca-Cola, its own blind taste tests yielded the same result as Pepsi’s – consumers liked the taste of Pepsi better.

Therefore, Coke executives thought the answer was clear. They should adjust the secret recipe behind Coke so that it tasted a bit sweeter, more like Pepsi. So, Coca-Cola got to work making a new version of its product. After testing it with 190,000 consumers, the company found that people did indeed like their new, sweeter Coke more. It seemed all the signs were pointing to success for the new Coke.

On 23rd April 1985, Coca-Cola made a huge announcement. Its newly formulated flavour, labelled 'New Coke' on its cans, would replace its old formulation.

While the Coca-Cola Company said it was very confident that this decision was a great idea, the stock prices of the two companies immediately suggested otherwise. Pepsi gave its employees the day off work and took out newspaper ads gloating about its victory over Coca-Cola. But these ill omens were only the beginning of what was to come.

To say that the public hated New Coke would be an understatement. Coca-Cola’s innocent product revamp unleashed an unprecedented wave of anger directed at the company.

People hoarded cans of the original Coke. They called and wrote to the Coca-Cola Company. They booed New Coke ads. They started protest groups. They told newspapers how upset they were. They wrote songs about how much they loved the old Coke flavour. In Seattle, they poured New Coke into sewers.

While Coca-Cola denied that it had changed Coke to taste more like Pepsi, it was pretty clear to everyone that, in fact, that was precisely what it had done. Helpfully, Pepsi also ran TV advertisements mocking Coca-Cola for its poor judgement.

Initially, Coca-Cola was resistant to the backlash. However, as the summer went on, Coca-Cola had to accept that its renewed product was a massive failure. Just 77 days after New Coke was launched, Coca-Cola held a press conference to announce it was bringing its old formulation back. The statement was so momentous that it was featured on news broadcasts and on the front page of newspapers.

Technically, New Coke would stay around as 'Coke II' and the original flavour would be brought back as 'Classic Coke'. However, Coke II eventually faded away – to no-one’s surprise – and is no longer available.

So, what went wrong?

Really, the answer was already there in the 'Pepsi Challenge' ads. People liked the idea of Coke and only preferred Pepsi when they didn’t know what brand’s beverage they were drinking. In other words, consumers are not always logical. In the case of Coca-Cola and New Coke, they were motivated by their emotions more than by their senses.

Coca-Cola meant something to them that was bigger than flavour. They had an emotional attachment to it, as though it was an old friend. When that friend was taken away from them, they felt outraged. To some, the image of Coca-Cola was interwoven with their idea of America itself.

Obviously, the introduction of New Coke involved a significant dose of bad press for the Coca-Cola Company, and no doubt even larger financial costs.

Yet it also brought Coke back into the forefront of the public’s awareness. People who had rarely thought about Coke now realised that they cared about it after all. The surge of nostalgia for the original Coke flavour and the vehemence of people’s affection for it were, in a way, good publicity. It can be argued that New Coke was a win of sorts because it reminded consumers where their loyalties lay.

In 1995, Roberto Goizueta, the CEO of Coca-Cola, spoke happily of the New Coke incident at an event commemorating the new formula’s ten-year anniversary. He said that while New Coke was a mistake, Coca-Cola’s market share and profits were doing better than ever – although Pepsi disputed some of his statistics.

In other words, the Cola Wars continued on.

Of course, there are worse places to make a mistake than in marketing and sales. To learn about blunders of a different kind, see our list of some of the worst military decisions ever.