Coca-Cola and the “the biggest marketing blunder of all time”

As brands go, few are as muscular as Coca-Cola. It’s claimed - not unconvincingly - that its logo is recognisable to 90% of the world’s population and that, on average, the company shifts 1.4 billion units every single day. They bestride the soft drink marketplace like they’ve always been there, since time immemorial, but that current preeminence came out of an episode that was once called “the biggest marketing blunder of all time”. This is the story of New Coke.

There had been a long-standing rivalry between Coca-Cola and Pepsi ever since Pepsi launched eight years after Coca-Cola’s birth in 1886. For most of that time Coca-Cola had an effortless market lead over its upstart rival, but through the 1960s and 70s, Pepsi began making significant dents in Coke’s sales. Though Coke generally outsold its rival, Pepsi was the number one cola choice for younger consumers. If Coca-Cola was to secure its future, it reasoned, it would have to do something drastic.

In 1984, in response to taste tests that most often favoured Pepsi, the company’s top brass decided to test a new, sweeter flavour of Coke. The results were overwhelmingly in favour of the new recipe, with tasters rating the new flavour above regular Coke and Pepsi. But the company rejected an idea of selling the new flavour alongside the established recipe, instead choosing to ditch the old formula in favour of the new one.

Coca-Cola made the announcement on 23 April 1985. “It was one of the easiest decisions we have ever made,” said the company’s CEO, Roberto Goizueta, of the taste change. Coca-Cola’s stock soared after the press conference and initial sales figures for New Coke were up 8% over the same period the year before.

All looked sunny, until the company began to receive letters from customers, angry at the traditional formula being changed. Initially, the unrest seemed to spring from the American South (where loyalty to the Atlanta-born brand was at its highest), but soon dissent was being felt elsewhere. Disgruntled customers began to organise boycotts and campaigns, irate at the sudden disappearance of a cherished product. One Coke-loving Texan even forked out $1,000 on a hoard of old-recipe Colas in protest at the new flavour.

Within only a few weeks, Coca-Cola was being lambasted in the press and on television for messing with, what some people were beginning to call, an American icon.

A month or so in, the negative stink around the relaunch was beginning to hobble sales of New Coke. Eventually, only three months after the initial announcement, Coca-Cola issued a statement saying they would be returning to the old formula. Senator David Pryor called the decision, “a meaningful moment in US history.”

“There is a twist to this story which will please every humanist and will probably keep Harvard professors puzzled for years,” said Coca-Cola’s chief operating officer, Donald Keough. “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.”

Throughout the 20th century, Coke’s marketing had stressed its uniqueness and originality. Being the first cola brand, predating Pepsi, was once its unique selling point. “It’s the real thing” was the slogan they had stuck to, limpet-like, throughout the 70s and 80s. In the words of marketing guru Al Ries, changing the Coke recipe was “like introducing a new God”.

The company had underestimated its own iconic power and the sentimental attachment to the brand that ran deep in the American psyche. But despite the supposed blunder of New Coke, Coca-Cola ended up triumphant in the soda wars. By the end of 1985, Coke’s sales had increased at more than twice the rate of Pepsi’s and in 2010, Coca-Cola was selling 1.6 billion Cokes compared to Pepsi’s 892 million.

Conspiracy theorists continue to blather that the New Coke debacle was a savvy marketing ploy, intended to keep the company’s name in the public’s mind, but the truth is probably more prosaic than that. Though fear led the company to tinker with the formula that had served them for a century, the New Coke episode almost certainly helped them work out their own commercial identity and their brand’s relationship with its consumer base.

“Some cynics say we planned the whole thing,” reflected Keough at the time. “The truth is, we’re not that dumb, and we’re not that smart.”