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{{Infobox Beverage|name=New Coke|image=
For the first few months of production, cans bore a New! banner|type=Cola| origin=[USA| discontinued= [1992| variants= Coke II-->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 the new version of Coke, 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 Coca-Cola formula led to a significant gain in sales. Although the company insisted it was an unplanned reaction to the perceived rejection of New Coke, many rumors and conspiracy theory continue to circulate the claim that this reversal was a plan engineered before the production of New Coke began, perhaps to mask changes made to the "Original Formula."

History Pepsi's market gains and Coke's responses Coca-Cola's original drink's 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 arch rival Pepsi-Cola. When Roberto Goizueta took over as Chief Executive Officer 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.Newsweek, 22 July 1985: 39. Not long afterwards, the company bought Columbia Pictures, the company's first major diversification (strategy) 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 Coca-Cola 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.

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.

While Coca-Cola executives publicly disputed the results of the Pepsi Challenge, their own internal surveys found the same preference among cola drinkers. Other data was worrisome to them, also. In 1972, six times as many drinkers bought Coke exclusively as opposed to Pepsi. A decade later, Coke had only a slight edge, despite much deeper market penetration.

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.;Ibid., 40

Market research Coca-Cola's most senior executives commissioned the top-secret "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.Hays, Constance; The Real Thing:Truth and Power at the Coca-Cola Company, Random House, 2004, ISBN 0-8129-7364-X, 114 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 Statistical 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.Prendergast, Mark; For God, Country and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company that Makes It, Basic Books, 1994, ISBN 0-465-05468-4, 355

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 centennial. 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.Schindler, Robert M. "The Real Lesson of New Coke: The Value of Focus Groups for Predicting the Effects of Social Influence," Marketing Research, December 1992:27

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 Bahamas 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",Hays, op. cit., 106 and the change must take place openly. He insisted that the containers carry the "NEW!" label, which gave the drink its popular name.Prendergast, op. cit., 358

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.Prendergast, op. cit., 356Hays, op. cit., 115. To his own dying day, however, Goizueta insisted he had.

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.

Strategic maneuvers 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.

Despite a negative reaction by top Pepsi executives to a smuggled 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".Hays, op. cit., 117Prendergast, op. cit., 359 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.Oliver, Thomas; The Real Coke, The Real Story, Penguin, 1986; ISBN 0-14-010408-9; 125

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,Oliver, op. cit., 125 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: Goizueta defended the change by pointing out that the drink's secret formula was not sacrosanct and inviolable, as Asa Griggs Candler had obediently taken the cocaine out of the drink after it had been made a controlled substance. (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 Vegetarianism. American Jewish Historical Society)

toasting New Coke. 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") to avoid giving Pepsi any credit,To this day the company's official history of New Coke on its website refuses to name Pepsi, referring instead to its "chief competitor". 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. 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.Oliver, op. cit., 136

Nevertheless, the company's stock went up on the announcement,Hays, op. cit., 119 and market research showed that 80% of the American public was aware of the change within 48 hours.Matthews, Blair; Spring 2005; Coca Cola's Big Mistake: New Coke 20 Years Later ... Soda Pop Dreams, retrieved June 16, 2006

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) and Washington, D.C. (where thousands of free cans were given away in President's Park#Lafayette Square). 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.Demott, John; June 24, 1985; "All Afizz Over the New Coke; Time (magazine).

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.Oliver, op. cit., 153 Three-quarters of the respondents said they would buy New Coke again. The big test, however, remained in the Southern United States, where Coke was first bottled and tasted and has always been such a market leader and cultural institution that "coke" is a colloquial term for all colas, or even, in most areas of the South, for all soft drinks, regardless of flavor.

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, and viewed the company's decision to make it sweeter through the prism of the American Civil War, as Battle of Appomattox Courthouse to the "Union (American Civil War)s"Oliver, op.cit., 149-51 (although Pepsi was invented in New Bern, North Carolina, PepsiCo has located its headquarters in New York State since its 1965 establishment History of PepsiCo, PepsiCo.com, retrieved October 7, 2006. See under 1970).

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. Even Fidel Castro, a longtime Coke drinker, contributed to the backlash, calling New Coke a sign of American capitalist decadence.Prendergast, op. cit., 362 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 Cuban Revolution had driven him and his son, nearly penniless, to America a quarter-century before.Hays, op. cit., 118

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.Hays, 121 A psychiatry 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.Oliver, op. cit., 163.

Pepsi took advantage of the situation, running ads in which a first-time Pepsi drinker exclaimed "Now I know why Coke did it!"Oliver,op. cit., 148-49. 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. The most alienated customers simply refused to buy New Coke rather than switch to Pepsi.In a frequently retold story (see Matthews), an elderly woman at a Marietta, Georgia supermarket confronts the Coca-Cola deliveryman as he restocks the shelves. As he attempts to put New Coke bottles on it, she hits him with her umbrella, yelling "It tastes like shit!" A nearby counterpart from Pepsi begins to snicker, only to be told in turn, "You stay out of it! This is family business! Your stuff tastes worse than shit!" 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.Oliver, op.cit., 175

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 PepsiJune 21, 1985; "Coke Flavor-Suit Rejected"; United Press International.), while nevertheless expressing interest in landing Coca-Cola Company as a client of his new firm should it reintroduce the old formula.Oliver, op. cit., 160. Incidentally, in two informal blind taste tests, Mullins either failed to distinguish New Coke from old or expressed a preference for New Coke.Oliver, op. cit., 162

Still, despite ongoing resistance in the South, New Coke continued to do well in the rest of the country. 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."Oliver, op. cit., 154

Revolt behind the scenes Some Coca-Cola executives had quietly been arguing for a reintroduction of the old formula as early as May.Oliver, op. cit., 157. 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.Oliver, op. cit., 158 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).Prendergast, op. cit., 364

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, they were less enthusiastic about the taste.Hays, op. cit., 106, 116Prendergast, op. cit., 360 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. 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."

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 History of the United States".

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.Oliver, op.cit. 183

"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.

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. 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.The New York Times; October 23, 1985; Topics; Cars and Cola Jokes; retrieved November 19, 2006. 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. In fact, it generated more sales in its first year on the market than the entire Nantucket Nectars product line would in its first five years.Bhidé, Amar; The Origin and Evolution of New Businesses, Oxford University Press, 2000, 136. Later research, however, suggested that it was not the reintroduction of Classic Coke, but instead the less-heralded rollout of Coca-Cola Cherry, that can be credited with the company's success that year.Oliver, op. cit., 187.

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."). 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 Joseph Schlitz Brewing Company'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 stock 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.Time (magazine); July 22, 1985; 48 - but he admitted later, when he himself became PepsiCo's CEO, 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.Enrico, Roger and Kornbluth, Jesse; The Other Guy Blinked: How Pepsi Won the Cola Wars, Bantam Books, New York, NY, 240. ISBN 0-553-26632-2.

In the late 1990s, Zyman summed up the New Coke experience thus:{{cquote] 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.Cited in Smith, Gary; Introduction to Statistical Reasoning, McGraw Hill 1998, 186-87, excerpt retrieved here October 15, 2006.

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.

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.Oliver, op. cit., 181.).

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.Prendergast, op. cit., 366 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.Prendergast, op. cit., 369. print ad from "Catch the Wave."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 (Character), the purportedly computer-generated British people 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 "Paranoimia" music 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". the Max Headroom chronicles: Max & N-N-New Coke, 2005, accessed 14 December 2006. 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.Library of Congress, Highlights in the History of Coca-Cola Television Advertising, retrieved June 22, 2006 Cartoonist Garry Trudeau followed suit with "Ron Headrest", a similar cyber-caricature of Ronald Reagan, in some of his Doonesbury comic strip. The ads and campaign continued throughout the year and were chosen as best of 1986 by Video Storyboard of New York.

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.

Coke II In 1985, New Coke was sold only in Canada, the United States, and United States territory, 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, perhaps not wanting to get burned a second time, 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 United States 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.John H. McConnell; How to Design, Implement and Interpret an Employee Survey, AMACOM Division of the American Management Association, ISBN 0-8144-0709-9, 2003, 3. As of late 2006, however, "Classic" remains on the label, albeit in slightly smaller type, and below the name of the drink. The production of Coke II is, however, still theoretically possible; comparatively few brands have been canceled 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 United States territory American Samoa, where it is still sold in most Coca-Cola vending machines. It is still sold in French language-speaking Quebec, Canada. 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 (book) and another recent book that dealt with it at some length, as well as two recent mentions in Forbes (magazine) and Sports Illustrated.Nudd, Tim; February 24, 2006; Where are the last few cans of New Coke?; AdWeek; retrieved June 26, 2006

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.

Conspiracy theories

Coca-Cola's sudden reversal on New Coke led to several rumors and conspiracy theory 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). The company denies the accusations.

Other explanations that have been proffered:

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

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 (business) 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.

Taste-test issues In talks, and his book Blink (book), 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. Gladwell, Malcolm; Blink (book), Little, Brown, New York, NY 2005. 155-166. ISBN 0-316-17232-4. 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."Gladwell, op. cit., 159. 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.

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.Cheskin, Louis and Ward, L.B.; September 1948; "Indirect Approach to Market Reactions," ;Harvard Business Review, referenced by Gladwell. 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.Gladwell, op. cit., 163.

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". He points to Pepsi's work in establishing a youth-oriented brand identity from the 1960s onwardFor general background on this see Frank, Thomas, The Conquest of Cool: Business Culture, Counterculture and the Rise of Hip Consumerism, University of Chicago Press, 1997, 168-183 ("Carnival and Cola: Hip vs. Square in the Cola wars"). 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 Saint 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.J. Dubow and N. Childs (1998). " New Coke, Mixture Perception and the Flavor Balance Hypothesis". Journal of Business Research 43 (3): 147-155.

New Coke in popular culture As with business, New Coke has enjoyed a healthy afterlife in pop-culture references:

Slurm Queen: "Soon, you'll be submerged in Royal jelly Slurm, which in a matter of minutes will transform you into a Slurm Queen like myself!"


Glurmo (Slurm soldier): "But your Highness, she's a commoner. Her Slurm will taste foul."


Slurm Queen: "Yes. Which is why we'll market it as New Slurm. Then, when everyone hates it, we'll bring back Slurm Classic and make billions!"

























See also

References

Further reading

External links

{{Infobox Beverage|name=New Coke|image=
For the first few months of production, cans bore a New! banner|type=Cola| origin=[USA| discontinued= [1992| variants= Coke II-->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 the new version of Coke, 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 Coca-Cola formula led to a significant gain in sales. Although the company insisted it was an unplanned reaction to the perceived rejection of New Coke, many rumors and conspiracy theory continue to circulate the claim that this reversal was a plan engineered before the production of New Coke began, perhaps to mask changes made to the "Original Formula."

History Pepsi's market gains and Coke's responses Coca-Cola's original drink's 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 arch rival Pepsi-Cola. When Roberto Goizueta took over as Chief Executive Officer 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.Newsweek, 22 July 1985: 39. Not long afterwards, the company bought Columbia Pictures, the company's first major diversification (strategy) 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 Coca-Cola 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.

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.

While Coca-Cola executives publicly disputed the results of the Pepsi Challenge, their own internal surveys found the same preference among cola drinkers. Other data was worrisome to them, also. In 1972, six times as many drinkers bought Coke exclusively as opposed to Pepsi. A decade later, Coke had only a slight edge, despite much deeper market penetration.

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.;Ibid., 40

Market research Coca-Cola's most senior executives commissioned the top-secret "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.Hays, Constance; The Real Thing:Truth and Power at the Coca-Cola Company, Random House, 2004, ISBN 0-8129-7364-X, 114 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 Statistical 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.Prendergast, Mark; For God, Country and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company that Makes It, Basic Books, 1994, ISBN 0-465-05468-4, 355

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 centennial. 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.Schindler, Robert M. "The Real Lesson of New Coke: The Value of Focus Groups for Predicting the Effects of Social Influence," Marketing Research, December 1992:27

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 Bahamas 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",Hays, op. cit., 106 and the change must take place openly. He insisted that the containers carry the "NEW!" label, which gave the drink its popular name.Prendergast, op. cit., 358

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.Prendergast, op. cit., 356Hays, op. cit., 115. To his own dying day, however, Goizueta insisted he had.

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.

Strategic maneuvers 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.

Despite a negative reaction by top Pepsi executives to a smuggled 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".Hays, op. cit., 117Prendergast, op. cit., 359 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.Oliver, Thomas; The Real Coke, The Real Story, Penguin, 1986; ISBN 0-14-010408-9; 125

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,Oliver, op. cit., 125 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: Goizueta defended the change by pointing out that the drink's secret formula was not sacrosanct and inviolable, as Asa Griggs Candler had obediently taken the cocaine out of the drink after it had been made a controlled substance. (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 Vegetarianism. American Jewish Historical Society)

toasting New Coke. 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") to avoid giving Pepsi any credit,To this day the company's official history of New Coke on its website refuses to name Pepsi, referring instead to its "chief competitor". 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. 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.Oliver, op. cit., 136

Nevertheless, the company's stock went up on the announcement,Hays, op. cit., 119 and market research showed that 80% of the American public was aware of the change within 48 hours.Matthews, Blair; Spring 2005; Coca Cola's Big Mistake: New Coke 20 Years Later ... Soda Pop Dreams, retrieved June 16, 2006

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) and Washington, D.C. (where thousands of free cans were given away in President's Park#Lafayette Square). 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.Demott, John; June 24, 1985; "All Afizz Over the New Coke; Time (magazine).

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.Oliver, op. cit., 153 Three-quarters of the respondents said they would buy New Coke again. The big test, however, remained in the Southern United States, where Coke was first bottled and tasted and has always been such a market leader and cultural institution that "coke" is a colloquial term for all colas, or even, in most areas of the South, for all soft drinks, regardless of flavor.

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, and viewed the company's decision to make it sweeter through the prism of the American Civil War, as Battle of Appomattox Courthouse to the "Union (American Civil War)s"Oliver, op.cit., 149-51 (although Pepsi was invented in New Bern, North Carolina, PepsiCo has located its headquarters in New York State since its 1965 establishment History of PepsiCo, PepsiCo.com, retrieved October 7, 2006. See under 1970).

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. Even Fidel Castro, a longtime Coke drinker, contributed to the backlash, calling New Coke a sign of American capitalist decadence.Prendergast, op. cit., 362 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 Cuban Revolution had driven him and his son, nearly penniless, to America a quarter-century before.Hays, op. cit., 118

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.Hays, 121 A psychiatry 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.Oliver, op. cit., 163.

Pepsi took advantage of the situation, running ads in which a first-time Pepsi drinker exclaimed "Now I know why Coke did it!"Oliver,op. cit., 148-49. 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. The most alienated customers simply refused to buy New Coke rather than switch to Pepsi.In a frequently retold story (see Matthews), an elderly woman at a Marietta, Georgia supermarket confronts the Coca-Cola deliveryman as he restocks the shelves. As he attempts to put New Coke bottles on it, she hits him with her umbrella, yelling "It tastes like shit!" A nearby counterpart from Pepsi begins to snicker, only to be told in turn, "You stay out of it! This is family business! Your stuff tastes worse than shit!" 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.Oliver, op.cit., 175

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 PepsiJune 21, 1985; "Coke Flavor-Suit Rejected"; United Press International.), while nevertheless expressing interest in landing Coca-Cola Company as a client of his new firm should it reintroduce the old formula.Oliver, op. cit., 160. Incidentally, in two informal blind taste tests, Mullins either failed to distinguish New Coke from old or expressed a preference for New Coke.Oliver, op. cit., 162

Still, despite ongoing resistance in the South, New Coke continued to do well in the rest of the country. 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."Oliver, op. cit., 154

Revolt behind the scenes Some Coca-Cola executives had quietly been arguing for a reintroduction of the old formula as early as May.Oliver, op. cit., 157. 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.Oliver, op. cit., 158 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).Prendergast, op. cit., 364

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, they were less enthusiastic about the taste.Hays, op. cit., 106, 116Prendergast, op. cit., 360 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. 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."

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 History of the United States".

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.Oliver, op.cit. 183

"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.

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. 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.The New York Times; October 23, 1985; Topics; Cars and Cola Jokes; retrieved November 19, 2006. 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. In fact, it generated more sales in its first year on the market than the entire Nantucket Nectars product line would in its first five years.Bhidé, Amar; The Origin and Evolution of New Businesses, Oxford University Press, 2000, 136. Later research, however, suggested that it was not the reintroduction of Classic Coke, but instead the less-heralded rollout of Coca-Cola Cherry, that can be credited with the company's success that year.Oliver, op. cit., 187.

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."). 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 Joseph Schlitz Brewing Company'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 stock 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.Time (magazine); July 22, 1985; 48 - but he admitted later, when he himself became PepsiCo's CEO, 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.Enrico, Roger and Kornbluth, Jesse; The Other Guy Blinked: How Pepsi Won the Cola Wars, Bantam Books, New York, NY, 240. ISBN 0-553-26632-2.

In the late 1990s, Zyman summed up the New Coke experience thus:{{cquote] 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.Cited in Smith, Gary; Introduction to Statistical Reasoning, McGraw Hill 1998, 186-87, excerpt retrieved here October 15, 2006.

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.

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.Oliver, op. cit., 181.).

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.Prendergast, op. cit., 366 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.Prendergast, op. cit., 369. print ad from "Catch the Wave."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 (Character), the purportedly computer-generated British people 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 "Paranoimia" music 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". the Max Headroom chronicles: Max & N-N-New Coke, 2005, accessed 14 December 2006. 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.Library of Congress, Highlights in the History of Coca-Cola Television Advertising, retrieved June 22, 2006 Cartoonist Garry Trudeau followed suit with "Ron Headrest", a similar cyber-caricature of Ronald Reagan, in some of his Doonesbury comic strip. The ads and campaign continued throughout the year and were chosen as best of 1986 by Video Storyboard of New York.

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.

Coke II In 1985, New Coke was sold only in Canada, the United States, and United States territory, 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, perhaps not wanting to get burned a second time, 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 United States 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.John H. McConnell; How to Design, Implement and Interpret an Employee Survey, AMACOM Division of the American Management Association, ISBN 0-8144-0709-9, 2003, 3. As of late 2006, however, "Classic" remains on the label, albeit in slightly smaller type, and below the name of the drink. The production of Coke II is, however, still theoretically possible; comparatively few brands have been canceled 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 United States territory American Samoa, where it is still sold in most Coca-Cola vending machines. It is still sold in French language-speaking Quebec, Canada. 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 (book) and another recent book that dealt with it at some length, as well as two recent mentions in Forbes (magazine) and Sports Illustrated.Nudd, Tim; February 24, 2006; Where are the last few cans of New Coke?; AdWeek; retrieved June 26, 2006

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.

Conspiracy theories

Coca-Cola's sudden reversal on New Coke led to several rumors and conspiracy theory 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). The company denies the accusations.

Other explanations that have been proffered:

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

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 (business) 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.

Taste-test issues In talks, and his book Blink (book), 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. Gladwell, Malcolm; Blink (book), Little, Brown, New York, NY 2005. 155-166. ISBN 0-316-17232-4. 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."Gladwell, op. cit., 159. 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.

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.Cheskin, Louis and Ward, L.B.; September 1948; "Indirect Approach to Market Reactions," ;Harvard Business Review, referenced by Gladwell. 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.Gladwell, op. cit., 163.

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". He points to Pepsi's work in establishing a youth-oriented brand identity from the 1960s onwardFor general background on this see Frank, Thomas, The Conquest of Cool: Business Culture, Counterculture and the Rise of Hip Consumerism, University of Chicago Press, 1997, 168-183 ("Carnival and Cola: Hip vs. Square in the Cola wars"). 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 Saint 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.J. Dubow and N. Childs (1998). " New Coke, Mixture Perception and the Flavor Balance Hypothesis". Journal of Business Research 43 (3): 147-155.

New Coke in popular culture As with business, New Coke has enjoyed a healthy afterlife in pop-culture references:

Slurm Queen: "Soon, you'll be submerged in Royal jelly Slurm, which in a matter of minutes will transform you into a Slurm Queen like myself!"


Glurmo (Slurm soldier): "But your Highness, she's a commoner. Her Slurm will taste foul."


Slurm Queen: "Yes. Which is why we'll market it as New Slurm. Then, when everyone hates it, we'll bring back Slurm Classic and make billions!"

























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