Why Coke Tried to Switch to New Coke It turns out there was actually (if you squint
at the problem hard enough), a semi-good reason for doing the switch. It didn’t work out,
of course… But then, it kind of did work out amazingly well at the same time, as you’ll
soon see. Now, before I get into the real reason for
the switch, let me debunk the conspiracy theory- that Coca-Cola was trying to swindle people
into accepting high fructose corn syrup over sugar in their drink by pulling the New Coke
stunt. The truth of the matter is that they’d already allowed bottlers to use high fructose
corn syrup in Coke for about five years before they introduced New Coke (before they even
thought up the idea to make a New Coke). Most made the switch pretty quickly because of
the drastic cost savings. Initially Coca-Cola allowed a 50% corn syrup substitution and
by about 6 months before the introduction of New Coke, nearly every major bottler of
Coca-Cola was using 100% high fructose corn syrup, rather than sugar or a mixture of the
two. So those who claimed they could taste a difference because of the high fructose
corn syrup after the return of the old Coca-Cola, actually had already been drinking it with
high fructose corn syrup, in most cases long before New Coke. Now, Coca-Cola did consider not announcing
that they were switching to New Coke, with a plan to just very gradually change the flavor.
But they ended up deciding that it was too risky, because if someone noticed, it might
become a huge news story and hurt sales from the bad publicity of trying to trick their
customers. So what really was the motivation for switching
to New Coke? Coke had steadily been losing ground to Pepsi and by the early 1980s, taste
tests done by Coca-Cola and Pepsi showed that most people tested preferred Pepsi over Coke.
Further, if not for Coke’s exclusive contracts with many restaurants and vending machine
vendors, Pepsi would have been drastically outselling Coke, as it was in supermarkets
and other locations where people had a choice. Coca-Cola, thus, set about changing their
formula to come up with something people would prefer over the original Coke and Pepsi. Specifically,
they created New Coke based on their Diet Coke formula. Diet Coke was extremely popular
right from its debut (rocketing up to the third most popular cola after Pepsi and Coke
within just a few years of its debut), even though it was a new flavor and not a drink
flavor based on regular Coke, as the name seems to imply. Thus, as taste tests showed that more people
preferred the taste of Diet Coke to regular Coke, they decided to primarily just take
out the artificial sweeteners in Diet Coke and substituted in high fructose corn syrup.
With a few more minor modifications, they succeeded in creating a new apparently tasty
drink. This wasn’t a case of them not doing their
due diligence on whether it was better than the original Coca-Cola. They knew full well
how big of a thing it would be to abandon their old formulation. As such, they ran numerous
tests which showed the vast majority of people preferred the new formulation over the old
and it also beat out Pepsi by a decent margin. What went wrong is still partially up for
debate, but the heart of the issue is basically the “nostalgia” factor and that they’d
spent nearly a century marketing their product as something you can’t live without, then
they took it away. People had apparently taken this message to heart. While the taste tests
made New Coke look great, they never explicitly asked the question in any of their tests “Would
you care if we switched in this new formulation of Coke and got rid of the old?” They didn’t
do this because they didn’t want people to know they were developing a new formulation
at all. They did ask a a very similar question that subtly implied the previous question
and the result should have clued them in to the dissent. They asked tasters who had liked
it, “Would you buy this [new flavor] if it were Coca-Cola?” While the majority said
yes, about 10% said no and got angry about the subtle implication of getting rid of Coke.
While this is a small percentage, the problem ahead was illustrated in that these 10% were
very vocal about their dissent and had a tendency to try to convince other testers that they
should switch their answer to “no” too, often successfully. This is exactly how it played out when New
Coke was introduced as well. At first, sales were up a significant amount over the previous
year, even more than Coca-Cola expected; and according to surveys run by Coca-Cola, most
people preferred the new flavor over the old. Just as importantly, the majority of existing
Coke drinkers continued to buy Coke at the same levels as they did before. Further, most
of those few customers they lost weren’t switching to Pepsi, they were simply just
not drinking Coke anymore. Coca-Cola stock went up and things were looking really good. But then the vocal minority started kicking
up their heels- complaints trickled in and the angered Coke fans started enlisting the
aid of the media; soon that trickle started to develop into a flood. One man, Gay Mullins,
even started the Old Cola Drinkers of America organization to lobby for the return of the
Old Coke, or at the least try to get Coca-Cola to license out the formula to someone else.
The fact that in blind taste tests Mullins himself picked New Coke over Old Coke didn’t
stop him from attempting to sue Coca-Cola over the switch either, and continue his campaign. The dissenters started convincing others,
many who had never even tried New Coke decided they hated it before even tasting it, primarily
because they were upset at the fact that the original Coke was no longer available. Finally,
just three months after New Coke was introduced, the public outcry forced Coca-Cola to release
the old formula under the name “Coca-Cola Classic”. So why did they get rid of Coca-Cola “Classic”
in the first place, rather than just introducing New Coke as a separate drink right off the
bat? There were a few reasons, but the big one was because the market for cola drinks
at the time was shrinking fast and by introducing another Coke substitute (having introduced
Diet Coke in 1982), they feared (rightly so) it would split the market for their product
with many people who would have drank Coca-Cola Classic now drinking New Coke. This would
allow Pepsi to take the top spot by a good margin, allowing Pepsi to not only claim taste
tests showed people preferred Pepsi, but also to boast about how Pepsi was the most popular
soft drink in the world. Coca-Cola was unwilling to give this marketing advantage to Pepsi,
so decided to get rid of the original Coke, in favor of New Coke. After all, every test
they ran showed people preferred the new formulation anyways. What could go wrong? Despite this switch not working out the way
they hoped, it did in the end work out amazingly well. After this fiasco, Coca-Cola Classic,
instead of continuing its steady decline, began to take back market share over both
Pepsi and New Coke. This was despite the fact that when people were blind taste tested,
they almost universally picked both New Coke and Pepsi as better tasting than Coca-Cola
Classic. (Although, some theorize that the taste tests here are flawed because they often
only gave people small sips. Thus, the sweeter tasting Pepsi and New Coke would perform better,
whereas when drunk normally, might be too sweet, and so Coca-Cola would win in these
cases. Those who theorize this is the reason for Coke losing out in the taste tests tend
to state that Pepsi’s steady rise before this fiasco was not due to superior taste,
but from their superior marketing, particularly to youth.) Whatever the case, while the whole thing was
a fiasco that nearly sunk the company initially, within 6 months of the return of Classic Coke,
Coca-Cola sales had risen at double the rate of Pepsi and it continued to climb. Thus,
the blunder ultimately was a huge part of why Coca-Cola was able to reestablish itself
as the most popular cola in the world. Sometimes doing something stupid can really pay off. Despite New Coke sales dropping like crazy
after the return of Classic Coke, when the Wall Street Journal in 1987 did yet another
blind taste test of Pepsi, Classic Coke, and New Coke, with most of the participants before
the test saying they preferred one or the other of Coke or Pepsi, New Coke won out as
the most popular choice again. Much like the New Coke dissenters, when the people were
told they’d picked New Coke as their favorite instead of their previous stated favorites
of Coke or Pepsi, rather than deciding they’d start drinking New Coke, they predominately
got angry at the testers.
