New Coke was the informal name given to a reformulated version of the soft drink Coca-Cola, introduced by the Coca-Cola Company in the United States in April 1985. It was renamed Coke II in 1990 and was discontinued in July 2002. By 1985, Coca-Cola had been losing market share to diet soft drinks and non-cola beverages for several years. Blind taste tests indicated that consumers preferred the sweeter taste of rival Pepsi-Cola, leading the company to reformulate its product.
The change was met with widespread negative public reaction, and New Coke came to be regarded as a significant marketing failure. Within three months, the Coca-Cola Company reintroduced the original formula under the name "Coca-Cola Classic", which produced a notable increase in sales. The reversal prompted speculation that the formula change had been a deliberate strategy to revive interest in the original product, an interpretation the company has consistently disputed.
Background
After World War II, Coca-Cola held 60 percent of the market share for cola. By 1983, it had declined to under 24 percent, largely because of competition from Pepsi-Cola. Pepsi had begun to outsell Coke in supermarkets; Coke maintained its lead only through venues such as soda vending machines and fast food restaurants, especially McDonald's. Meanwhile, the overall market for colas steadily declined in the early 1980s, as consumers increasingly purchased diet and non-cola soft drinks, many of which were sold by Coca-Cola. This further eroded Coca-Cola's market share.
Development
Coca-Cola's senior executives commissioned a secret project headed by marketing vice president Sergio Zyman and Coca-Cola USA president Brian Dyson to create a new flavor for Coke. This project was named "Project Kansas", from a photo of Kansas journalist William Allen White drinking a Coke; the image had been used extensively in Coca-Cola advertising and hung on several executives' walls.
The sweeter cola overwhelmingly beat both regular Coke and Pepsi in taste tests, surveys, and focus groups. The southeastern United States, one of Coca-Cola's strongest and most reliable markets, narrowly preferred the new flavor; this preference widened once the testers revealed the new taste was also a Coca-Cola product. One bottling company was so impressed with the new formula, it threatened to sue the company if it did not put the drink on the market.
Asked if they would buy and drink the product if it were Coca-Cola, most testers said they would, although it would take a while for them to get used to it. About 10–12 percent of testers felt angry and alienated at the thought and said they might stop drinking Coke. Their presence in focus groups tended to negatively skew results as they exerted indirect peer pressure on other participants.
The surveys, which were given more significance by standard marketing procedures of the era, were less negative than the taste tests and were key in convincing management to change the formula in 1985, to coincide with the drink's centenary. However, the groups had provided a clue as to how the change would play out in the public, a finding the company downplayed. Management rejected an idea to make and sell the new flavor as a separate variety of Coca-Cola. The company's bottlers had already been complaining about absorbing other additions into the product line following the introduction of Diet Coke in 1982; Cherry Coke was launched in the United States, almost simultaneously with New Coke during 1985. Many bottling companies had sued the company over syrup pricing policies. A new variety of Coke in competition with the main variety could also have cannibalized Coke's sales and increased the proportion of Pepsi drinkers relative to Coke drinkers. Early in his career with Coca-Cola, Goizueta had been in charge of the Bahamas subsidiary. He had improved sales by tweaking the drink's flavor slightly and so was receptive to the idea that changing the flavor of Coke could boost profits. He believed it would be "New Coke or no Coke", Goizueta also refused to admit that taste tests had led the change, calling it "one of the easiest decisions we've ever made".
Initial success
Coca-Cola introduced the new formula with marketing pushes in New York City, where workers renovating the Statue of Liberty for its centenary in 1986 were given free cans, A psychiatrist whom Coke had hired to listen in on calls told executives that many people sounded as if they were discussing the death of a family member. while nevertheless expressing interest in securing the Coca-Cola Company as a client of his new firm should it reintroduce the old formula.
Company dissatisfaction
Behind the scenes, some Coca-Cola executives had quietly been arguing for a reintroduction of the old formula as early as May.
Reversal and return
On July 11, 1985, Coca-Cola executives held a press conference and announced the return of the original Coca-Cola formula, 79 days after New Coke's introduction. Peter Jennings of ABC News interrupted General Hospital with a special bulletin to share the news with viewers. On the floor of the U.S. Senate, David Pryor called the reintroduction "a meaningful moment in U.S. history". New Coke's sales dwindled to a three percent share of the market, although it was selling quite well in Los Angeles and some other key markets. The change was part of a larger strategy to rejuvenate the product's image. Later, when he became 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.
In the late 1990s, Zyman summed up the New Coke experience thus:
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 the remainder save two New Coke loyalists. When this group was given a chance to try all three in a blind test, New Coke slightly edged out Pepsi, but many drinkers reacted angrily to finding they had chosen a brand other than their favorite.
After Coca-Cola Classic
In the short run, the reintroduction of original Coca-Cola saved Coke's sales figures 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. 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 Coke to it and then cut to the condensation forming on, and running down, the can. "S-s-s-s-sweating?" he asked.
The campaign was a huge success. "Max's 'C-C-Catch the wave' spots for Coke," a Newsweek article said, "two of which were directed by Ridley Scott, may be the most cleverly structured pitches ever aimed at the under-30 viewer." John Reid, Coke's SVP of marketing, claimed that "76 percent of teenagers had heard of Max after our first flight of ads." The ads and campaign continued through 1987 and were chosen as best of 1986 by Video Storyboard of New York. The test was not extended past Spokane.
In a market already offering several choices 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. By 1998, Coke II could only be found in a few scattered markets in the Northwest, Midwest and some overseas territories. In July 2002, Coca-Cola announced that Coke II would be discontinued entirely. In 2009, Coca-Cola permanently removed "Classic" from its North American packaging.
Commercial legacy
"For a product so widely despised," noted AdWeek blogger Tim Nudd in 2006, "New Coke (a.k.a. Coke II) still gets an admirable amount of ink." He noted Blink: The Power of Thinking Without Thinking (2005) by Malcolm Gladwell, and Why Most Things Fail: Evolution, Extinction and Economics (2005) by Paul Ormerod, that dealt with it at some length, as well as two recent mentions in Forbes and Sports Illustrated.
Conspiracy theories
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The Coca-Cola Company's apparently sudden reversal on New Coke led to conspiracy theories, including:
- The company intentionally changed the formula, hoping consumers would be upset with the company, and demand the original formula to return, which in turn would cause sales to spike. Keough, the company president, answered this speculation by saying "We're not that dumb, and we're not that smart." who claims the reformulation was made in response to the escalating war on drugs by the Reagan Administration.
Taste test problems
In his book Blink, 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 "sip tests", meaning that drinkers were given small samples (less than a can or bottle's worth) to try. Gladwell contends that what people say they like in these tests may not reflect what they actually buy to drink at home over several days. Carol Dollard, who once worked in product development for PepsiCo, 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." For example, one of the researchers told Gladwell that his firm's research found 7-Up drinkers believed a sample from a bottle with a more yellow label was more "lemony", although the flavor was identical.
Coke considered but rejected gradually changing the drink's flavor incrementally, without announcing they were doing so. Executives feared the public would notice and exaggerate slight differences in taste. In 1998, Joel Dubow, a professor of food marketing at St. Joseph's University, tested this "flavor balance hypothesis" and argued that it was not true. He and fellow researcher Nancy Childs tested mixtures of Coca-Cola Classic and Coke 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.
2019 reintroduction
On May 21, 2019, Coca-Cola announced that the 1985 reformulation (once again bearing the name "New Coke") would be reintroduced in limited quantities to promote the third season of the Netflix series Stranger Things. The show, set in 1985, includes cans of New Coke in three of the season's episodes. About 500,000 cans of New Coke were produced for the promotion, to be sold mostly online. So many people were eager to buy it, however, that the volume of orders crashed the Coca-Cola website. Many fans complained because they wanted to order some, and the company apologized for the delays on social media platforms. It was also available in select vending machines in cities such as New York and Los Angeles. Food & Wine staffers also had favorable impressions: "sweeter and smoother than regular Coke", "almost syrupy in a pleasant way", although an older member who recalled the original rollout in 1985 said it had not improved for them.
Tim Murphy, a reporter for Mother Jones, suggested that in ultimately overcoming an initial resistance that he saw as reactionary, New Coke had won the war after losing the battle. "Soft-drink trends have also proven Coke right about a willingness to adapt to new tastes: A majority of Coke sales today are non-Classic products, such as Diet and Coke Zero," he wrote. This explained the favorable response from tasters. "It tasted weird then; it tastes like what's normal now."