Coca-Cola Changed the Taste: Marketing Debacle or Smart Advertising?

At the end of World War II, Coca-Cola turned 59 years old and held an incredible 60% share of the soft drink market. Competition from other soft drinks slowly cut away at the company’s dominant position until Coke sales held 24% of the market in 1985. That was the year the Coca-Cola Company initiated a product change that business experts argued whether it was a total blunder or a brilliant marketing move.  

Pepsi-Cola joined the soft drink market in 1888, two years after Coca-Cola, and remains Coca-Cola’s main competitor. The two soft drink giants jockeyed back and forth in gaining dominance in sales. That competition became known as the Cola Wars.  

In April 1985, Coke introduced a drink with a different taste called New Coke. It was more like the flavor of Diet Coke, except that it contained sugars. The sugars used in New Coke came from corn and were less expensive than the sweeteners from beets and sugar cane that were in the original formula.

Coke conducted taste tests in several U.S. states for more than three years before New Coke sales started. The new product dominated all the tests with the public preferring New Coke over Pepsi-Cola and original Coca-Cola’s flavor. New Coke, like Diet Coke and Pepsi, was less carbonated and sweeter tasting than original Coca-Cola.

New Coke was a failure in spite of the dominant preference it held in taste tests. Marketing experts debated the reason for the failure for many years.  

Coca-Cola executives started an advertising blitz to introduce the new taste of Coca-Cola on April 23, 1985. The plan was to eliminate the original formula. That’s when a public backlash started. Coke executives promoted their new product as Coca-Cola’s replacement. Soda pop drinkers who liked New Coke in taste tests initially assumed that the new product would become an additional product alongside original Coke. Dropping original Coke impacted sales in a negative way.

National TV news reports showed people filling shopping carts with Cola-Cola to stockpile the product after the company announced they would eliminate the original drink. The Coke Company received hundreds of thousands of letters protesting the company’s move to stop sales of the original product. The public’s response showed the company that consumers of Coca-Cola wanted the original drink in spite of the overwhelming taste test results favoring New Coke.

Famous television and movie celebrity Bill Cosby was Coke’sspokesman for the new drink. He was in commercials across television stations in 1985 with his telling the public that Coke “just got better,” and New Coke “just slides down your throat.” 

Cosby resigned his role as spokesman later that year when Coke announced that the original drink would come back after only three months. It was renamed Coca-Cola Classic and sold side-by-side with New Coke. The actor said his statements about New Coke being better than the original ruined his credibility.

In 1986, the Coke Company introduced a new spokesman named MaxHeadroom. Supposedly a computer generated character; Headroom was a male actor in heavy makeup. The television commercials had static to emphasize the electronic quality of the character. Headroom spoke with a stutter and stammered as if he was the result of computer glitzes. 

The use of Headroom helped keep New Coke on the market, although fragmenting the market with two cola products wasn’t what the company wanted. “The Best Just Got Better” slogan was scrapped because it conflicted with the sales of two different colas.  Renamed Coke II in 1992, New Coke struggled with sales until it was eliminated completely in 2002.

The word Classic was eliminated from North American packaging by 2009. Classic still remains on the label in many international markets. After all the turmoil in 1985, the Coca-Cola Company immediately bounced back in sales and dominated in the Cola Wars.

Roberto Goizueta, then chairman of Coke, received the dubious credit of initiating the change to New Coke. With years of taste tests showing that the public liked the taste of New Coke better than the original, he pushed the company into changing the formula 30 years ago. He was a chemist by trade and didn’t have the marketing background needed to anticipate the consumer’s objection to the change.

The chairman and other Coca-Cola executives shared the label of getting the biggest dose of dumb luck found in soft drink sales. As soon as Coca-Cola Classic hit the market three months after New Coke appeared, the company’s sales zoomed up and still dominate in product share greater than any other soft drink company.

Consumers showed appreciation in getting their Coke back by setting record sales. The top executives must have shook their heads in amazement at the sale increases and probably said in unison, “What just happened?” Nobody in the company lost his or her job because of the New Coke fiasco.

Goizueta spoke at an employee event honoring the 10-year anniversary of New Coke in 1995. His words show a skilled use of double-speak and rationalization:

“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,” the chairman 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.”

To say that the top executives of Coke were lucky to get through the controversy and still have their jobs is a huge understatement.

Little was mentioned to the consumers of Coca-Cola about another change made to the famous product five years before New Coke hit the market. In 1980, succumbing to pressures from their independent bottlers, Coke permitted a substitution of high fructose corn sweeteners instead of beet and cane sugars originally used. The bottlers, independent franchise owners, wanted to reduce their costs by using the less expensive sugars that came from corn. Offering an ever-expanding line of products increased costs to the bottlers, and the lower-cost sugars helped the bottom lines. For most cola drinkers, the difference in taste was insignificant. Some consumers who considered themselves connoisseurs of Coke said the crisp and bracing taste of Coca-Cola was blunted.

Coca-Cola made with cane sugar is still made in Mexico, Canada, Hawaii and parts of Europe. It’s available online and in specialty stores.

Some conspiracy thinkers said the entire effort to switch to New Coke was a deliberate marketing ploy calculated to increase profits by changing to the use of the less expensive sugars. The company’s rebound was remarkable, and it gave the impression the whole thing was planned. Keep in mind, however, the change in sugars started five years before New Coke hit the market.

Donald Kough shared the leadership of the Coca-Cola Company with Goizeuta as president and chief operating officer. Responding to the unexpected increase of sales after Coca-Cola Classic was brought to the market, Kough make the following statement:

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

Marketing and advertising experts frequently mention the introduction of New Coke as a cautionary tale. It illustrates how businesses can tamper too extensively with a well-established brand and create a backlash from the consumers.

Thanks for reading this blog. Please take time to see my website www.joevlatino.com. You can read about my book of short stories “The Device.” The book is available through the website as well as Amazon. Look for another blog later this month.