The Fall and Rise of Coca-Cola

“[It’s] smoother, uh, uh, rounder yet, uh, bolder… a more harmonious flavor.”

So were the words of Robert Goizueta at a press conference held at Lincoln Center in New York City nearly 28 years ago. At the time, Goizueta was the Chairman and CEO of The Coca-Cola Company. Formerly a flavor chemist with the world’s most famous soda producer, Goizueta knew what he was talking about.

Or at least he sure should have.

Goizueta was describing the flavor of the newly reformulated Coca-Cola, or “New Coke” as it would become more commonly referred to. On April 23, 1985, Coca-Cola did what by any measure today would appear to be pure brand suicide – it took its flagship product, arguably the most beloved soft drink on the planet, and completely revamped it.

To put this into context, imagine… well, herein lies the ludicrous scale of this maneuver: when imagining an indelible brand seemingly beyond the scope of compromise, the mind of even a novice marketer instinctively wants to turn to Coca-Cola. The brand is as much legacy as it is institution, since it’s creation by John Pemberton as a medicinal elixir in 1886 to its rise as the second most recognizable term in the world (“OK” is number one).  Coca-Cola is as synonymous with 20th Century, new world tradition as baseball, hot dogs, and television. To change the formula would be like arguing a pantsuit for Lady Liberty.


Well, maybe not.

To be fair, when Goizueta took over as CEO in 1980, there was a lot for Coca-Cola to be worried about. The Cola Wars were in full swing, and PepsiCo had gained the upper hand. Halfway through the 20th Century, Coca-Cola had held the lion’s share of the soft drink market, but by 1983, it commanded less than a quarter. The younger demographic had migrated to Pepsi, with its sweeter flavor and lifestyle marketing campaigns (Pepsi rarely focused its advertising on its products, instead showcasing who drank them; this was a marketing first and major boon for PepsiCo). Goizueta, an aggressive tactician who abhorred sacred cows, well knew Coca-Cola had to embrace Pepsi as a viable usurper to its throne and meet this challenge head on with a drastic strategy.

Goizueta enlisted the support of Coca-Cola President, Donald Keough, as well as marketing vice-president Sergio Zyman and Coca-Cola USA President, Brian Dyson. An assertive marketing research campaign was launched involving taste-testings, focus groups, and surveys. And overwhelmingly what the results of the campaign showed were that people liked the taste of Coke’s new formula over both Pepsi and original Coca-Cola. Additionally, surveys showed people, for the most part, were open to the idea of drinking the new beverage, even if it were labeled “Coke.” The focus groups, on the other hand, weren’t as unilateral in conclusiveness. A small minority scoffed at the idea of altering Coca-Cola, which sparked peer-pressure resonance within the group dynamic. This, however, was widely ignored. Coca-Cola brass was confident in the taste test results and moved forward with release of “the new taste of Coca-Cola.”

Upon its initial release, New Coke did very well. Sales had risen from the same time the previous year, and surveys continued to show a substantial majority favor for New Coke. Of course, these were major metropolitan demographic results… not the South.

Coca-Cola was born in the Southeast, in the wake of defeat at the hands of the Union. Coca-Cola held a virtually unparalleled reverence throughout the region, and its perversion was considered sacrilege. That vocal minority from the focus groups had found its spawning ground, and from this nest it bred like wildfire. Disapproving letters and phone calls came pouring in. Critics began lambasting Coca-Cola executives for their carelessness in underestimating their customer-base’s loyalty. Pepsi fired back with its own advertising campaign questioning Coca-Cola’s motives. And even internal murmurs of dissatisfaction with the reformulation began to surface, prompting the question of a possible reintroduction of the old formula not even two months after New Coke’s release.

But perhaps no bigger component pressured Coca-Cola’s reversal decision than its own bottlers. Long entangled in a pricing feud – that at the time included litigation – Coke’s bottlers had become increasingly frustrated with the public’s alienation from the company. While Coca-Cola Company made the concentrate for Coke, the individual bottlers still had to produce, distribute, and merchandise Coca-Cola within their respective regions. In the South, this had become a challenge with so many consumers staunchly refusing to buy Coke – if not dump it on the ground in a show of defiance. Facing a major boycott from its bottlers, Coca-Cola had to concede defeat… to itself. The original formula would return to market.

On July 10, less than three months after the introduction of New Coke, Coca-Cola announced the heralded return of original Coke, dubbed Coca-Cola Classic. To say this merely stalled irrevocable damage would be a vast understatement. The return of Coca-Cola Classic rocketed company sales past Pepsi and reestablished Coca-Cola as the dominant force in the soft drink market. This quickly led to speculation that New Coke’s introduction and swift dismissal was an elaborate marketing ploy to reaffirm Coke’s value within the public arena. An amazing conspiracy, if it weren’t for the fact that New Coke wasn’t so readily dismissed.

While multiple product lines has become de rigueur in today’s diversified market, positioning two high-calorie soft drink beverages in a field recently divided by the advent of diet soda was a formidable task in 1985. But Goizueta and his team stood by their new product. It retained only a North American presence, but production continued until 2002 (New Coke was renamed Coke II in 1992). The beverage, however, was largely ignored by both consumers and corporate marketing. The soft drink that had found unanimous acceptance during its test phase died a slow and caustic death.

Despite what was seen as a monumental blunder by one of the most lauded corporations in the world, no blame was cast upon any one individual at the Coca-Cola Company. Simply, there was no one to blame. Marketing researchers have puzzled for years over one of the greatest missteps in free market history – how could a company as infallible as Coca-Cola make such a colossal mistake as tampering with their star product? Well, how did the stock market – with all its fancy, new computer hardware and mathematician brokers – crash only two years later? The Invisible Hand of economics revealed itself as the emotional unpredictability of consumerism during the height of the Cola Wars. If people loved Coca-Cola so much, why were sales down at the start of the decade? No one asked. The epic failure of New Coke was also the sweeping revitalization of Coca-Cola Classic. The power elite at Coca-Cola were happy enough to wipe the sweat off their brows and forget the whole thing ever happened.

Although that’s not entirely true, either. Its universal scorn notwithstanding, New Coke did maintain at least one loyal drinker for twelve years. Robert Goizueta continued to drink New Coke until his death in 1997.

“The moment avoiding failure becomes your motivation, you’re down the path of inactivity. You stumble only if you’re moving.”

Robert Goizueta



  3. Pingback: Coca Cola colouring and sweetener are Cancerogenous | The Free
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