New Coke

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New Coke
For the first few months of production, cans bore a New! banner
Type	Cola
Manufacturer	Coca-Cola Company
Country of origin	USA
Introduced	1985-04-23
Discontinued	1992
Variants	Coke II
Related products	Crystal Pepsi

New Coke was the unofficial name of the sweeter formulation introduced in 1985 by The Coca-Cola Company to replace its flagship soft drink, Coca-Cola or Coke. Properly speaking, it had no separate name of its own, but was simply known as "the new taste of Coca-Cola", until 1992 when it was renamed Coca-Cola II.

Public reaction to the change was devastating, and the new cola quickly entered the pantheon of major marketing flops. The subsequent reintroduction of Coke's original formula led to a significant gain in sales.

Contents 1 History 1.1 Background 1.2 Market research 1.3 Rollout 1.3.1 Marketing Response By Pepsi 1.3.2 Official launch 1.4 Early acceptance 1.5 Backlash 1.6 Company Dissatisfaction 1.7 Reversal 1.8 Aftermath 2 New Coke after Coke Classic 3 Coke II 3.1 Commercial legacy 4 Conspiracy theories 5 Was it really necessary? 5.1 Taste-test issues 6 See also 7 References 8 Further reading 9 External links

[edit] History

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[edit] Background

Coca-Cola's original drinks market share had been shrinking fast, from 60% just after World War II to under 24% in 1983, in the face of fierce competition from Pepsi-Cola. When Roberto Goizueta took over as CEO in 1980, he pointedly told employees there would be no sacred cows in how the company did its business, including how it formulated its drinks.^[1] Not long afterwards, the company bought Columbia Pictures, the company's first major diversification away from the drinks industry.

He also made his point when Diet Coke broke a longstanding company tradition that the brand would not be diluted and that no other product would also be called Coca-Cola. Instead of simply putting out Coke with an alternative sweetener (something the company only did with Coke Zero in 2005), Coca-Cola developed a new formula to go with the aspartame-sweetened drink. Diet Coke was a runaway success, quickly becoming the fourth most popular soft drink in America, and eventually displacing 7-Up as the third.^{[citation needed]}

However, this change in the industry created an adverse effect on the Coca-Cola Company. Part of Diet Coke's success came at the expense of regular Coke, as more consumers showed a preference for sweeter drinks, whether sugar-sweetened or not. Foremost among them was Pepsi, which was trailing within a couple of percentage points of Coke. In the wake of its late 1970s "Pepsi Challenge" campaign, in which blind taste tests in public arenas had shown an overwhelming preference for Pepsi, Pepsi began to outsell Coke in supermarkets. Coke maintained its edge only through fountain sales.^{[citation needed]}

While Coca-Cola executives publicly disputed the results of the Pepsi Challenge, their own internal surveys found the same preference among cola drinkers.^{[citation needed]} In 1972, six times as many drinkers bought Coke exclusively as opposed to Pepsi.^{[citation needed]} A decade later, Coke had only a slight edge, despite much deeper market penetration.^{[citation needed]}

The trend was not going to reverse itself. Market analysts believed baby boomers were likely to purchase more diet drinks as they aged and remained health- and weight-conscious. Therefore, any future growth in the full-calorie segment had to come from younger drinkers, who at that time favored Pepsi and its sweetness by even more overwhelming margins than the market as a whole.^[2]

[edit] Market research

Coca-Cola's most senior executives commissioned a secret effort named "Project Kansas", headed by marketing vice president Sergio Zyman and Brian Dyson, president of Coca-Cola USA, to test and perfect the new flavor for Coke itself. It took its name from a famous photo of that state's renowned journalist William Allen White drinking a Coke that had been used extensively in its advertising and hung on several executives' walls.^[3] The company's marketing department again went out into the field, this time armed with samples of the possible new drink for taste tests, focus groups, and surveys.

The results of that were strong — the high fructose corn syrup mixture overwhelmingly beat both regular Coke and Pepsi. Then tasters were asked if they would buy and drink it if it were Coca-Cola. Most said yes, they would, although it would take some getting used to. A small minority, about 10-12%, felt angry and alienated at the very thought, saying that they might stop drinking Coke altogether. Their presence in focus groups tended to skew results in a more negative direction as they exerted indirect peer pressure on other participants.^[4]

The surveys, which were given more significance by standard marketing procedures of the era, were less negative and were key in convincing management to move forward with a change in the formula for 1985, to coincide with the drink's centenary. But the focus groups had provided a clue as to how the change would play out in a public context, a data point that the company downplayed but which was to prove important later.^[5]

Management also considered, but quickly rejected, an idea to simply make and sell the new flavor as yet another Coke variety. The company's bottlers were already complaining about absorbing other recent additions into the product line in the wake of Diet Coke. Many of them had sued over the company's syrup pricing policies. A new variety of Coke in competition with the main variety could, if successful, also dilute Coke’s existing sales and increase the proportion of Pepsi drinkers relative to Coke drinkers.

Early in his career with Coca-Cola, Goizueta had been in charge of the company's Bahamian subsidiary. In that capacity, he had improved sales by tweaking the drink's flavor slightly, so he was receptive to the idea that changes to the taste of Coke could lead to increased profits. He believed it would be "New Coke or no Coke",^[6] and the change must take place openly.^[4] He insisted that the containers carry the "NEW!" label, which gave the drink its popular name.^[7]

Goizueta also made a visit to his mentor and predecessor as the company's chief executive, the ailing Robert W. Woodruff, who had built Coke into an international brand following World War II. He claimed he had secured Woodruff's blessing for the reformulation, but even many of Goizueta's closest friends within the company doubt that Woodruff truly understood what Goizueta intended.^[8][9] Goizueta always said he had.

[edit] Rollout

Many of New Coke's problems developed during the rollout. Archrival Pepsi was able to undermine the public relations push, and Coke's own executives, particularly Goizueta, did not impress the media.

[edit] Marketing Response By Pepsi

Coke let the media know on April 19, 1985 that a major announcement was planned for the following Tuesday, April 23, concerning a change in the product. While its press release did not explicitly say so, many recipients correctly guessed it meant a change in the flagship brand's formulation. So, too, did officials at PepsiCo, who had expected a major move but not something so drastic.^[4]

Despite a negative reaction by top Pepsi executives to a smuggled^{[citation needed]} preview six-pack of the new flavor, they nevertheless concluded it was a serious threat. Roger Enrico, then director of North American operations, wasted no time taunting Pepsi's older rival. He declared a companywide holiday and took out a full-page ad in The New York Times proclaiming that Pepsi had won the long-running "cola wars".^[10][11] Since Coke officials were preoccupied over the weekend with preparations for the big day, their Pepsi counterparts had time to cultivate skepticism among reporters, sounding themes that would later come into play in the public discourse over the changed drink.^[12]

[edit] Official launch

New Coke was introduced on April 23, 1985. Production of the original formulation ended that same week.

The press conference at New York City's Lincoln Center to introduce the new formula did not go over very well. Reporters present had already been fed questions by Pepsi,^[12] which was extremely worried that New Coke would erase all its gains. The press did not give Goizueta easy questions as he changed a century of tradition. His stumbling description of the new taste, given his background as one of the company's flavor chemists, was widely ridiculed:

“

[It's] smoother, uh, uh, yet, uh, rounder yet, uh, bolder ... it has a more harmonious flavor.[13]

”

Goizueta defended the change by pointing out that the drink's secret formula was not sacrosanct and inviolable. (At the request of an Atlanta rabbi, Woodruff had also changed the formula so that the glycerine in it came not from hog fat but vegetable sources, so the drink could be certified kosher and, incidentally, halal and vegetarian.^[14])

But Goizueta also refused to admit that taste tests had in any way led the company to make the change (which he called "one of the easiest decisions we have ever made"^[9]) to avoid giving Pepsi any credit,^[15] yet gave no other real reason for the change, further alienating reporters who had already heard from Pepsi representatives in advance on this very issue.^[12] Many were taken aback by Goizueta's apparent arrogance when, following a reporter's question about whether Diet Coke would be reformulated "if this is a success," he curtly replied, "This is a success."

The emphasis on the sweeter taste of the new flavor also ran contrary to previous Coke advertising, in which spokesman Bill Cosby had touted its less-sweet taste as a reason to prefer Coke over Pepsi.^[16]

Nevertheless, the company's stock went up on the announcement,^[17] and market research showed that 80% of the American public was aware of the change within 48 hours.^[18]

[edit] Early acceptance

While it is widely believed today that the new drink failed almost instantly, this was not the case. The company, as it had planned, introduced the new formula with big marketing pushes in New York (workers renovating the Statue of Liberty were symbolically the first Americans given cans to take home^[18]) and Washington, D.C. (where thousands of free cans were given away in Lafayette Park). Sales figures from those cities, and other regions where it had been introduced, showed a reaction that went as the market research had predicted. In fact, Coke's sales were up 8% over the same period the year before.^[19]

Most Coke drinkers resumed buying the new drink at much the same level as they had the old one. Surveys indicated, in fact, that a majority liked the new flavoring.^[20] Three-quarters of the respondents said they would buy New Coke again.^[19] The big test, however, remained in the Southeast, where Coke was first bottled and tasted and has always been such a market leader and cultural institution that "coke" is a colloquialism for all colas, or even, in some areas of the South, for all soft drinks, regardless of flavor.

[edit] Backlash

Despite its acceptance with a large number of Coca-Cola drinkers, a vocal minority resented the change in formula and was not shy about making that opinion known — again just as had happened in the focus groups. Many of these drinkers were indeed Southerners, some of whom considered the drink a fundamental part of regional identity. They viewed the company's decision to change the formula through the prism of the Civil War, as another surrender to the "Yankees"^[21] (although Pepsi was invented in New Bern, North Carolina, PepsiCo has located its headquarters in New York State since its 1965 establishment^[22]).

They were, nonetheless, joined by some voices from outside the region. Chicago Tribune columnist Bob Greene wrote some widely reprinted pieces ridiculing the new flavor and damning Coke's executives for having changed it. Talk show hosts and comedians made light of the switch. Ads for New Coke were booed heavily when they appeared on the scoreboard at the Houston Astrodome.^[18] Even Fidel Castro, a longtime Coke drinker, contributed to the backlash, calling New Coke a sign of American capitalist decadence.^[23] Goizueta's own father expressed similar misgivings towards his son; the only time the younger man recalled him ever agreeing with Castro, the man whose revolution had driven him and his son, nearly penniless, to America a quarter-century before.^[24]

Company headquarters in Atlanta started receiving angry letters expressing deep disappointment and anger at executives. Over 400,000 calls and letters were received by the company.^[25] A psychiatrist Coke hired to listen in on phone calls to the company hotline, 1-800-GET-COKE, told executives some people sounded as if they were discussing the death of a family member.^[26]

Pepsi took advantage of the situation, running ads in which a first-time Pepsi drinker exclaimed "Now I know why Coke did it!"^[27] However, Pepsi actually gained very few converts over Coke's switch, despite claiming a 14% sales increase over the same month the previous year, the largest sales growth in the company's history.^[19] The most alienated customers simply refused to buy New Coke rather than switch to Pepsi.^[28] Coca-Cola's director of corporate communications, Carlton Curtis, realized over time that they were more upset about the withdrawal of the old formula than the taste of the new one.^[29]

Gay Mullins, a Seattle retiree looking to start a public relations firm with $120,000 of borrowed money, formed the organization Old Cola Drinkers of America on May 28 to lobby Coca-Cola to either reintroduce the old formula or sell it to someone else. His organization eventually received over 60,000 phone calls. He also filed a class action lawsuit against the company (which was quickly dismissed by a judge who said he preferred the taste of Pepsi^[30]), while nevertheless expressing interest in landing Coca-Cola Company as a client of his new firm should it reintroduce the old formula.^[31] In two informal blind taste tests, Mullins either failed to distinguish New Coke from old or expressed a preference for New Coke.^[32]

Still, despite ongoing resistance in the South, New Coke continued to do well in the rest of the country.^[21] But executives were uncertain of how overseas markets would react. Sergio Zyman, the company's chief marketing officer, heard doubts and skepticism from his relatives in Mexico, where New Coke was slated to be introduced later that summer, when he went there on vacation.

Goizueta publicly voiced a complaint many company executives had been making in private as they shared letters the company had received thanking them for the change in formula, that bashing it had become "chic" and that, as had happened in the focus groups, peer pressure was keeping those who liked it from speaking up in its favor as vociferously as its critics were against it. Donald Keough, the company's president and chief operating officer, reported overhearing this exchange at his country club outside Atlanta:

"Have you tried it?"
"Yes."
"Did you like it?"
"Yes, but I'll be damned if I'll let Coca-Cola know that."^[33]

[edit] Company Dissatisfaction

Some Coca-Cola executives had quietly been arguing for a reintroduction of the old formula as early as May.^[34] By June, when soft drink sales usually start to rise, the numbers showed the new formula was leveling among consumers. Executives feared social peer pressure was now affecting their bottom line. Some consumers began trying to obtain old Coke from overseas, where the new formula had not yet been introduced, as domestic stocks of the old drink were finally liquidated.^[35] Over the course of the month, Coca-Cola's chemists also quietly reduced the acidity level of the new drink, hoping to assuage complaints about the flavor and allow its sweetness to be better perceived (ads pointing to this change were prepared, but never used).^[36]

In addition to the noisier public protests, boycotts and bottles being emptied into the streets of southern cities, the company had more serious reasons for concerns. Its bottlers, and not just the ones still suing the company over syrup pricing policies, were expressing concern. While they had given Goizueta a standing ovation when he announced the change at an April 22 bottlers' meeting at Atlanta's Woodruff Arts Center, glad the company had finally taken some initiative in the face of Pepsi's advances,^[18] they were less enthusiastic about the taste.^[37][38] Most of them saw great difficulty having to promote and sell a drink that had long been marketed as "The Real Thing", constant and unchanging, now that it had been changed.

The twenty bottlers still suing Coca-Cola had even more sport with the change in their legal arguments. Coca-Cola had argued in its defense when the suit was originally filed that the formula's uniqueness and difference from Diet Coke justified different pricing policies from the latter - but if the new formula was simply an HFCS-sweetened Diet Coke, Coca-Cola could not argue the formula was unique. Bottlers, particularly in the South, were also tired of facing personal opprobrium over the change. Many reported that some acquaintances had stopped speaking to them, or had expressed displeasure in other emotionally hurtful ways. On June 23, several of the bottlers took these complaints to Coca-Cola executives in a private meeting.^[17] With the company now fearing boycotts not only from its consumers but its bottlers, talks about reintroducing the old formula moved from "if" to "when."

[edit] Reversal

Humbled, Coca-Cola executives announced the return of the original formula on July 10, less than three months after New Coke's introduction. So important was the development that ABC News's Peter Jennings interrupted regular programming to share it with viewers. On the floor of the U.S. Senate, David Pryor called it "a meaningful moment in U.S. history".^[36]

The new product continued to be sold and retained the name Coca-Cola (until 1992, when it was officially renamed Coca-Cola II), so the old product was named Coca-Cola Classic, more commonly Coke Classic and later just Coke. Many who tasted the hastily reintroduced formula were not convinced that the first batches really were the same formula that had supposedly been retired that spring. This is partially true because Coca-Cola Classic differed from the original formula as all bottlers who hadn't already done so were using high fructose corn syrup instead of cane sugar to sweeten the drink.^[39]

"There is a twist to this story which will please every humanist and will probably keep Harvard professors puzzled for years," said Keough at a 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 company made peace with Mullins and those he represented by giving him the first case of Coke Classic.^[18]

[edit] Aftermath

At first it looked as if Coke's worst fears had come to pass as Pepsi pulled into the lead, running yet another ad teasing Coke by suggesting that the whole thing was very confusing and consumers should just stick with Pepsi^{[citation needed]}. But by the end of the year, Coke Classic was substantially outselling both New Coke and Pepsi, putting the company back into the number-one position it has enjoyed ever since. Six months after the rollout, Coke's sales had increased at more than twice the rate of Pepsi's.^[40] New Coke's sales, however, had dwindled to a mere three percent share of the market, although it was doing quite well in Los Angeles and some other key markets.^[40] It sold better in its first year on the market than the entire Nantucket Nectars product line would in its first five years.^[41] Later research, however, suggested that it was not the reintroduction of Classic Coke, but instead the less-heralded rollout of Cherry Coke, that can be credited with the company's success that year.^[42]

Coke spent a considerable amount of time trying to figure out where it had made a mistake, ultimately concluding that it had underestimated the public impact of the portion of the customer base that would be alienated by the switch. This would not emerge for several years afterward, however, and in the meantime the public simply concluded that the company had, as Keough suggested, failed to consider the public's attachment to the idea of what Coke's old formula represented. While that has become conventional wisdom in the ensuing years, some analyses have suggested otherwise.

This populist version of the story served Coke's interests, however, as the whole episode did more to position and define Coca-Cola as a brand embodying values distinct from Pepsi than any deliberate effort to do so probably could have done. Allowing itself to be portrayed as a somewhat clueless large corporation forced to back off a big change by overwhelming public pressure flattered customers (as Keough put it, "We love any retreat which has us rushing toward our best customers with the product they love the most."^[36]). The bottles and cans continue to bear the "Coca-Cola Classic" title even though it has long since displaced its erstwhile usurper as the main brand.

While in the short term the fiasco led Cosby to end his advertising for Coke, saying his commercials that praised the superiority of the new formula had hurt his credibility, no one at Coca-Cola was fired or otherwise held responsible for what is still widely perceived as a misstep, for the simple reason that it ultimately wasn't (in contrast with Schlitz beer's disastrous change to a cheaper formula in the early 1970s, which was also based on market research into product taste yet unquestionably detrimental to the company in the long term). When Goizueta died in 1997, the company's share price was at a level well above what it was when he had taken over 16 years earlier and its position as market leader even more firmly established. At the time Roger Enrico, then head of Pepsi's American operations, likened New Coke to the Edsel.^[43] Later, when he was himself PepsiCo's CEO, he modified his assessment of the situation, saying that had people been fired or demoted over New Coke, it would have sent a message that risk-taking was strongly discouraged at the company.^[44]

In the late 1990s, Zyman summed up the New Coke experience thus:

“

Yes, it infuriated the public, cost a ton of money and lasted only 77 days before we reintroduced Coca-Cola Classic. Still, New Coke was a success because it revitalized the brand and reattached the public to Coke.[45]

”

New Coke continued to do what it had originally been designed to do: win taste tests. In 1987, The Wall Street Journal surveyed 100 randomly selected cola drinkers, the majority of whom indicated a preference for Pepsi, with Classic Coke accounting for all save two New Coke loyalists. Given a chance to try all three in a blind test, New Coke slightly edged out Pepsi - yet many drinkers reacted angrily to finding they had chosen a brand other than their favorite.^[46]

Goizueta never once regretted the decision, even throwing an anniversary party for New Coke in 1995, and continued to have it produced for his personal consumption until shortly before his own death.^[18]

[edit] New Coke after Coke Classic

In the short run, the reintroduction of old Coke saved Coke's sales numbers and brought it back in the good graces of many customers and bottlers. Phone calls and letters to the company were as joyful and thankful as they had been angry and depressed ("You would have thought we'd cured cancer", said one executive.^[47]).

But confusion reigned at the company's marketing department, which had to come up with a plan to market two Cokes where such plans had been completely off the table mere months before. Classic Coke didn't need much help, with a "Red, White and You" campaign showcasing the American/Canadian virtues many of those who had clamored for its reintroduction had pointedly reminded the company it embodied. But the company was at a loss to sell what was now just Coke. "The Best Just Got Better" could no longer be used. Marketers fumbled for a strategy for the rest of the year.^[48] Matters were not helped when McDonald's announced shortly after the reintroduction that it was switching over to Classic Coke at every store across the country.^[49]

At the beginning of 1986, however, Coke's marketing team found a strategy by returning to their original motives for changing the drink — the youth market so beholden to Pepsi. Max Headroom, the purportedly computer-generated British media personality played by Matt Frewer, was chosen to replace Cosby as the spokesman (of sorts) for Coke's new "Catch the Wave" campaign. A very stylish figure in his jacket and sunglasses, he was already known to much of the U.S. youth audience through appearances on MTV, where he had first appeared in the Art of Noise's "Paranoimia" video, and Cinemax. The campaign was launched with a memorable television commercial, produced by McCann-Erickson New York, with Max saying in his trademark stutter, "C-c-c-catch the wave!" and referring to his fellow "Cokeologists".^[50] In a riposte to Pepsi's televisual teasings, one showed Headroom asking a Pepsi can he was "interviewing" how it felt about more drinkers preferring the new Coke to it and then cut to the condensation forming on the can. "Sweating?" he asked.

It was a huge success, and surveys likewise showed that more than three-quarters of the target market were aware of the ads within two days. Coke's corporate hotline received more calls about him than any previous spokesperson, some even asking if he had a girlfriend.^[51] Cartoonist Garry Trudeau followed suit with "Ron Headrest", a similar cyber-caricature of President Reagan, in some of his Doonesbury strips. The ads and campaign continued throughout the year and were chosen as best of 1986 by Video Storyboard of New York.^[51]

However, some stutterers and advocates for them complained that the ads were insulting. Some viewers found them annoying, and ultimately Coke itself found that some viewers thought they were Pepsi ads.

[edit] Coke II

In 1985, New Coke was sold only in Canada, the United States, and United States territories, while the original formula continued to be sold in the rest of the world (had the new version been a success it would presumably have been introduced worldwide). New Coke was eventually returned to the company's product portfolio; it was test-marketed in certain U.S. cities under the name Coke II in 1990 and officially renamed Coke II in 1992. So, having determined not to make it a second brand, the company ultimately did exactly that.

However, Coca-Cola did little to promote or otherwise distinguish it. In a market already offering far more choice of drinks calling themselves "Coke" in some fashion or another, the public saw little reason to embrace a product they had firmly rejected seven years earlier, and within about a year, Coke II was largely off the American shelves again. By 1998, it could only be found in some scattered Midwestern markets, and sometime in 2002, New Coke was discontinued entirely. On August 16 of that year, Coke announced a change of the label in which the word "Classic" was no longer so prominent, leading to speculation that it would eventually be removed and the last legacy of New Coke eliminated from the company's packaging.^[52] The production of Coke II is, however, still theoretically possible; comparatively few brands have been cancelled by Coca-Cola outright, and the decision is usually left to semi-independent bottling companies to decide what they will bottle.

It has found acceptance in some foreign markets. As of 2006, it was still selling in Yap (one of the four Federated States of Micronesia), along with Coca-Cola C2. It is also still very popular in the U.S. Territory American Samoa, where it is still sold in most Coke vending machines.

[edit] Commercial legacy

New Coke had the spotlight for only three months but casts a long shadow, in both the business world and popular culture, that can be seen today. It is most frequently mentioned as a cautionary tale among businesses against tampering too extensively with a well-established and successful brand.

"For a product so widely despised," noted AdWeek blogger Tim Nudd in 2006, more than two decades later, "New Coke (aka Coke II) still gets an admirable amount of ink." He noted Blink and another recent book that dealt with it at some length, as well as two recent mentions in Forbes and Sports Illustrated.^[53]

Within Coca-Cola, the role the company's bottlers had played in forcing its hand led executives to create a new subsidiary, Coca-Cola Enterprises, which bought out several of the larger bottlers and placed distribution and marketing efforts more tightly under its control.

[edit] Conspiracy theories

Coca-Cola's sudden reversal on New Coke led to several rumors and conspiracy theories that have circulated in the years since to explain how a company with the resources and experience of Coca-Cola could have made such an apparently colossal blunder.

The simplest was that the company had planned all along to reintroduce the old formula as a ploy to reinvigorate interest in the product. There have been apocryphal tales of employees seeing batches of the old formula continuing to be produced well after April, and others who say that long before July they saw the graphics for the Coke Classic containers (which Coke said at the time were hastily conceived and produced within a day, which raised some eyebrows as large corporations rarely do such momentous things with that much haste). This theory has been satirized in various pop-culture media, including the VH1 series I Love the 80s and Fox's Futurama. The company denies the accusations.

Other explanations that have been proffered:

• The putative switch was planned all along to cover the change from sugar-sweetened Coke to much less expensive high fructose corn syrup (HFCS), a theory that was supposedly given credence by the apparently different taste of Coke Classic when it first hit the market (the U.S. sugar trade association took out a full-page ad lambasting Coke for using HFCS in all bottling of the old formula when it was reintroduced^[39]). However, as noted above, some Coke bottlers had been using HFCS for several years already, though it is true that eventually all bottlers would abandon cane sugar. Also, many of those who claimed the reintroduced Coke Classic tasted different had not been able to sample the old drink for a couple of months, and naturally their memories may have played a part in idealizing the taste.^{[citation needed]}
• In another theory, it provided cover for the final removal of all coca derivatives from the product to placate the Drug Enforcement Administration, which was trying to eradicate the plant worldwide to combat an increase in cocaine trafficking and consumption. While Coke's executives were indeed relieved that the new formula contained no coca, and concerned about the long-term future of the Peruvian government-owned coca fields that supplied it in the face of increasing DEA pressure to end cultivation of the crop, there was no direct pressure from the DEA on Coca-Cola to do so.^[4]
• Yet another theory agrees that the switch was meant ultimately to fail, but that it was not about providing cover for any substantive change in the product, instead a sort of pre-emptive flanking maneuver. Pepsi, this theory holds, had been developing and considering marketing a product called Pepsi Supreme which was to have tasted more like Coke as a way to increase its market share and attract yet more Coke drinkers to its product line. By pulling a similar move themselves, Coke guaranteed, it is believed, that any move by Pepsi would look like mere imitation and thus headed off a challenge to its flagship drink. (Pepsi supposedly had such a product in development at the time, and was going to introduce it if the combination of New Coke and Coke Classic had successfully cut into its market share; but since that never happened Pepsi Supreme never saw the light of day.)
• Another theory calls the whole thing a stock manipulation scheme. The subsequent drop in Coca-Cola's share price made it easier for the company and its primary owners to buy back shares, un-diluting the company's ownership. Once sufficient shares had been purchased or taken off the market, "classic" Coke was returned to market to drive the stock price back up.^{[citation needed]} However, as the company's share price went up on New Coke's introduction and closed the year up 33.5%, it is unlikely that such a scheme would have been successful, and indeed Coke's executives were looking to boost the share price through their actions.^[54]
• A final theory suggests that the company was attempting to increase the amount of shelf space for its products in supermarkets in order to make Pepsi look smaller by comparison. This is a common reason for line extension, as the introduction of Cherry Coke and more recent variations illustrates, but if that were the real goal, the new formula could have simply been introduced alongside the old one to begin with.

Keough answered all speculation by saying "We're not that dumb, and we're not that smart", as Coke Classic was reintroduced.

[edit] Was it really necessary?

Although the reason for Coke's early-'80s loss of market share was originally thought by both companies and all observers to be Pepsi's sweeter taste, later research has suggested otherwise.

The real culprit, according to this research, turned out to be the 1965 merger between Pepsi and Frito-Lay that created PepsiCo. The new company was able to take advantage of Frito-Lay's highly developed retail distribution system to leverage more shelf space at supermarkets and other food retailers. With more shelf space available, sale specials were common for Pepsi products. Price, not loyalty, was the motivating factor for most retail consumers, and Pepsi gained substantial market share as a result.^{[citation needed]}

[edit] Taste-test issues

In talks, and his book Blink, author Malcolm Gladwell relates his conversations with market researchers in the food industry who put most of the blame for the failure of New Coke on the flawed nature of taste tests. They claim most are subject to systematic biases.

Tests such as the Pepsi Challenge were what are called in the industry "sip tests," meaning that drinkers were given small samples (less than a can or bottle's worth) to try out. Gladwell contends that what people say they like in these tests may not reflect what they will actually buy to sit at home and drink over a week or so.^[55] Carol Dollard, who once worked in new product development for Pepsi, told Gladwell, "I've seen many times where the sip test will give you one result and the home-use test will give you the exact opposite."^[56] For example, although many consumers react positively to the sweeter taste of Pepsi when drinking it in small volumes, it may become unattractively sickly when drunk in quantity. Coke, on the other hand, may be more attractive for drinking in volume, precisely because it is less sweet. A more comprehensive testing regime could possibly have revealed this, Gladwell's sources believe.^[55]

Gladwell reports that other market researchers have criticized Coke for not realizing that much of its success as a brand came from what they call sensation transference, a phenomenon first described by marketer Louis Cheskin in the late 1940s: tasters unconsciously add their reactions to the drink's packaging into their assessment of the taste.^[57] For example, one of the researchers told Gladwell that his firm's research had found 7-Up drinkers offered a sample from a bottle with a distinctly more yellowish label believe the flavor to be more lemony, although it wasn't.^[58]

In Coke's case, it is alleged that buyers, subject to sensation transference, were "tasting" the red color of the container and distinctive Coca-Cola script as much as the drink itself. It was thus, in their opinion, a mistake to focus solely on the product and its taste. "The mistake Coke made," said Darrel Rhea, an executive with the firm Cheskin founded, "was in attributing their loss in share entirely to the product".^[58] He points to Pepsi's work in establishing a youth-oriented brand identity from the 1960s onward^[59] as having more bearing on its success.

An alternative Coke considered but rejected was to have gradually changed the drink's flavor incrementally, without announcing that they were doing so. Executives feared that the public would notice and exaggerate slight differences in taste. But Joel Dubow, a professor of food marketing at St. Joseph's University, tested this "flavor balance hypothesis" and argues that it was not true. He and fellow researcher Nancy Childs tested mixtures of classic Coke and Coca-Cola II and found that the gradual changes of taste were not noticed by a significant number of tasters. Coke, he said, would have succeeded had it chosen this strategy.^[60]

[edit] See also

• C2
• Crystal Pepsi
• Dasani (United Kingdom)
• Cola wars

[edit] References

[edit] Further reading

• Civille, Gail Vance and Lyon, Brenda G., Aroma and Flavor Lexicon for Sensory Evaluation, American Society for Testing and Materials, West Conshohocken, PA 1996.
• Hine, Thomas; The Total Package: The Secret History and Hidden Meanings of Boxes, Bottles, Cans, and Other Persuasive Containers; Back Bay Books, 1997. ISBN 0-316-36546-7.
• Imram, Nazlin (1999). "The role of visual cues in customer perception and acceptance of a food product", Nutrition & Food Science', 99 (5):224-230
• Leven, S. and Levine, D., (1996). "Multiattribute Decision Making in Context: A Dynamic Neural Network Methodology", Cognitive Science, 20:271-299.
• Meilgaard, Morten; Civille, Gail Vance and Carr, B. Thomas, Sensory Evaulation Techniques, third edition, CRC Press, Boca Raton, Fla. 1999.
• Wilson, Timothy and Schooler, Jonathan (1999), "Thinking Too Much: Introspection Can Reduce the Quality of Preferences and Decisions," Journal of Personality and Social Psychology, 60(2):181-192.

[edit] External links

• Coca-Cola history on New Coke
• God, What a Blunder: The New Coke Story By Michael Bastedo Angela Davis With a good talk on the problems of their research methodologies (focus groups v. surveys).
• QuickTime news clip on New Coke introduction from KTLA news in Los Angeles, courtesy of CNN.com
• Cokelore (Knew Coke) — Snopes' take on New Coke

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