Coca Cola is one of the world’s most recognizable brands and has been atop the soft drink industry for decades. Their unique taste and red can are cherished by their millions of loyal customers. The iconic taste has remained largely unchanged since Dr. Pemberton constructed it in his pharmacy back in 1886.
Except when Coca Cola ceased the production of their classic Coke flavor to release New Coke in 1985…
This shocking move came at the height of the “Cola Wars” where brand marketing and taste test battles were at the forefront of the industry. Coca Cola and Pepsi were the undisputed top two soda brands in the US at the time, and it appeared as if Pepsi was close to catching Coke in market share and brand appeal.
The Cola Wars
Coca Cola had a near-monopoly of the soda industry post WW2 with a 60% market share. They had succeeded in capturing the American consumer with successful marketing emphasizing the cola as exceptionally tasteful and a necessary refresher in American culture. However, by 1983 their market share had dropped to 24% as Pepsi was starting to put serious pressure on their reign as king of cola. Pepsi was seeing huge success with their marketing campaigns, especially towards the younger population in America. Coca Cola was maintaining its edge with pouring rights in major fast-food chains and major venues like movie theatres, but Pepsi was gaining major traction in retail outlets where consumers had the choice.
The two soda giants had been engaged in a competitive back and forth marketing battle for some time, but it was in 1981 when the cola war escalated. That was the year when Pepsi launched the Pepsi Challenge campaign. The Pepsi Challenge was a series of nationwide taste tests inside malls and on university campuses where consumers would blindly compare Pepsi and Coca Cola. These taste tests saw consumers preferring the taste of Pepsi, prompting them to launch ads declaring victory in the cola war. Coca Cola was unable to effectively respond to Pepsi’s campaign and resorted to overly defensive and relatively off-brand response ads.
Coca Cola was feeling immense pressure from Pepsi and was starting to be convinced that consumer tastes were shifting to favor sweeter and lighter beverages. As a result of their worries, Coca Cola had been working on a secret venture known as “Project Kansas” to develop a sweeter version of their current cola. As cola war tensions rose, this project went into full-scale commercial effect in 1985 when Coke yanked their iconic current recipe off the shelves and started the sale of New Coke.
The introduction of New Coke was a bold move to make for an industry leader in the midst of increasing competition and marketing battles. The product actually led to an initial increase in sales as many consumers enjoyed the sweeter tasting product. However, a vocal minority of long-time Coca Cola enthusiasts quickly incited public outcry over the loss of their favorite drink. The Atlanta headquarters received over 40,000 calls and letters complaining about the switch. The tide was turning on New Coke and Coca Cola executives, as well as prominent bottlers, who started expressing their frustration with the decision. Pepsi took full advantage of Coke’s business disaster and launched a series of attack ads mocking the debacle. Just 79 days after its inception, Coca Cola pulled New Coke off the shelves and brought back the original recipe under the new name Coca Cola classic.
The New Coke experiment was an incident where a big company attempted a groundbreaking innovation, but ended up upsetting their most loyal customers. They based their decision to make the switch off of taste tests that did not take into consideration the impact of changing the 100-year-old consistent Coke experience. The taste tests typically involved participants judging the soda from a sip or two, which does not compare to the standard experience of enjoying the full glass. Pepsi tended to get the nod over Coke in taste tests because it is slightly sweeter, which gave it the edge in the one sip tastings. However, many consumers prefer the smoothness and more moderate taste of Coca Cola when drinking an entire glass or to go with eating food.
By completely changing the Coca Cola flavor that their loyal customers had enjoyed for decades, they erased the beloved Coke experience they had worked so hard to create and damaged their brand image in the eyes of their consumer base. Even if the New Coke tasted better, it failed to evoke the same emotions as the classic flavor customers expected when they cracked open their favorite red can. Innovation is typically an excellent way to grow and evolve a business with new ideas and products, but sometimes it can do more damage than good. In this case, Coca Cola already had the industry-leading soda and should not have changed a thing.