In April 1985, it is rumored that a collection of executives gathered at their corporate headquarters for an emergency meeting. On the table before them sat six small canisters which had been smuggled from their chief competitor’s manufacturing plant. Inside the metal cylinders lurked a secret compound which represented the next strike in a long-running war: an altered version of their rival’s incredibly successful Merchandise 7X. The substance was scheduled to be released upon the public within mere days, and these men had assembled to assess the threat. They were aware that billions of dollars were at stake, but the true power of the revised chemistry was beyond their reckoning. Ultimately, the contents of these canisters would plunge the United States into a surreal turmoil the likes of which had never before been seen.
The 72 ounces of fluid were portioned into sampling containers and passed around the room with earnest resolve. Each man inspected his sample by ingesting it orally, then smacking his tongue to allow the solution full access to his taste buds. The men’s impressions were mixed, yet the Pepsi officials were forced to acknowledge that this “New Coke” represented a serious threat.
Today, the New Coke debacle of 1985 is usually looked upon as a blunder of monumental proportions; however the ill-fated reformulation ultimately became one of the most fortuitous and informative failures in human history.
The story of Coca-Cola’s infamous reformulation began some ten years earlier, in 1975. Pepsi’s plucky marketing department began erecting Pepsi Challenge booths in shopping centers around the United States, and passers-by were presented with two shrouded cola cans. Each participant was invited to sample each unmarked soda and indicate his or her preference. Although the statistics varied by region, tasters generally pointed to Pepsi about 12% more often. Coca-Cola dismissed these tests as unscientific claptrap, yet when they reproduced the experiment internally they obtained the same distressing results.
Owing to the effectiveness of the Pepsi Challenge, Coke’s domination dwindled in the $25-billion-per-year soft drink industry. By 1983 the clash of the cola colossuses had cost millions in marketing, as well as the lives of two cola-war soldiers in Thailand. Despite outspending Pepsi by almost $100 million annually, Coke’s market share fell from 60% to 22%. As the gap closed, Pepsi braced for drastic action from its archrival, but none anticipated that Coca-Cola would be rash enough to abandon its century-old, $5.5-billion-per-year cola recipe—one of history’s most profitable products.
Sometime in late 1984 or early 1985, Coca-Cola’s CEO Roberto Goizueta called his minions into action. He initiated Project Kansas, a clandestine operation to undermine his cola-war adversaries. Chemists working in Coca-Cola’s laboratory were commanded to reconfigure the mysterious Merchandise 7X, a secret cocktail of coca leaf extract, kola nut extract, vanilla, citrus oils, cinnamon, coriander, nutmeg, and other seasonings. The company also chose to completely abandon conventional sugar in favor of high fructose corn syrup (HFCS), an easy-to-handle but unnatural alternative which would give the mutant Cokes a much longer shelf life. The use of HFCS also reduced production costs, since corn products are artificially cheap in the US due to farm subsidies, while sugar is disproportionately pricey owing to import tariffs.
Once the company chemists delivered the atypical Cokes, a series of secret human experiments were undertaken. The abnormal formulas were inflicted upon focus groups, and although most variations were met with indifference, one sweeter formulation showed some promise. In blind taste tests, it was favored about 8% more often than Pepsi, and about 20% more than original-recipe Coke. When participants were asked whether they would drink Coca-Cola if it were modified to use this new formula, most responded positively. However about 11% of the samplers—even some who preferred the new flavor in the blind tests—were hostile to the idea. They were astonished that the soft-drink juggernaut would have the audacity to tinker with the American-as-bald-eagle-pie beverage. This indignation was so potent that it exerted indirect peer pressure within the focus groups, thereby contaminating the results; but Coke experimenters were quick to detect and correct the effect.
After $4 million in research and almost 200,000 consumer interviews, CEO Roberto Goizueta was convinced that Merchandise 7X-100 was the formula they had been searching for. Upon his order, the reformulation was afoot. “The New Taste of Coca-Cola” was scheduled to be unleashed upon the unsuspecting citizens of the world on 23 April 1985. On the eve of that fateful announcement, Coca-Cola officials met with their bottlers in a private gathering. They disclosed their intent to make the first major change to the Coke formula since cocaine was eliminated by switching to “spent” coca leaves in 1903. “Now we’re back in the ballgame,” Goizueta proclaimed, stirring his audience into a heartfelt standing ovation. Little did they know that Pepsi officials were privy to their plans, and already orchestrating a counterattack.
The next day, Roberto Goizueta and Coca-Cola president Donald Keough sat before a large gathering of reporters alongside the redesigned Coke cans. As the photographers’ reflex lenses snapped their mechanical kisses, the executives announced that the “Real Thing” was now even… realer. Unbeknownst to Goizueta and Keough, informants from Pepsi had tipped off certain members of the press and equipped them with armor-piercing questions. Other reporters had learned of the news by reading the morning New York Times, where a full-page Pepsi ad declared victory in the cola wars. The barrage of antagonizing questions left Goizueta flustered, as was evident when he was asked to describe the New Coke taste. He responded, “I would say it’s smoother, uh, uh, yet, uh, rounder yet, uh, bolder.” According to some reports, beads of water formed on his forehead and rolled down his cheeks, indicating either anxiety, or a capacity to quench even the most powerful thirst. When another reporter asked whether Diet Coke would be reformulated if New Coke was a success, he testily replied, “This is a success.”
At first, Goizueta’s surly synopsis proved accurate. The company’s stock went up upon the announcement, and sales improved by 8% in the first few weeks. Surveys indicated that an impressive 75% of consumers were happy with New Coke, and would buy it again. Pepsi chemists hastily assembled their own new-and-improved product dubbed Pepsi Supreme, and company executives kept an anxious finger poised over the “release” button. If New Coke encroached too drastically into Pepsi’s sales, this option of mutually assured destruction would remain as a last resort.
On television, Bill Cosby informed audiences that “The incredible has happened, the impossible has become a reality… Coke actually tastes better better than ever before!” Within a few weeks, however, unpleasant sentiments began to ooze from the unpredictable public. There was a segment of the population—about 11%, strangely enough—who disliked New Coke with such enthusiasm that their complaints and harsh editorials began to disintegrate public approval. New Coke became a vehicle for large-scale informational conformity, the human tendency to unconsciously adjust one’s opinions to correlate with the outspoken views of the social group.
(Informational conformity was first formally documented by Dr Muzafer Sherif in 1935, when he placed a group of subjects in a dark room with a single point of light in the distance. He asked them to estimate how much the light moved around, and although each person perceived a different amount of movement, most of them relinquished their own estimates to conform to the predominant guesses within the group. In reality, the light had not been moving at all; it only appeared to move because of the autokinetic effect, a quirk in visual perception where a bright point of light in complete darkness will appear to wander. It is thought that this imagined movement occurs due to the lack of a fixed visual reference point, and it may be the cause of many nighttime UFO sightings.)
Original Coke soon vanished from stores as the scarce resource was stockpiled by entrepreneurs and desperate consumers. The Coca-Cola corporate offices became a delta of animosity at the mouth of a river of angry phone calls and letters. One distressed customer said, “There are only two things in my life: God and Coca-Cola. Now you have taken one of those things away from me.” In a fit of misplaced patriotism, some even likened the alteration of Coke to spitting on the flag. Baffled company officials hired a psychologist to listen to the customer complaints, and he pointed out that many of the customers spoke as one does when discussing a deceased relative.
When ads for New Coke appeared on the scoreboard at the Houston Astrodome, spectators suspended their bellows of enthusiasm to issue bellows of disapproval. Even Cuban president Fidel Castro decried the revisions to his favorite soft drink, citing it as yet another example of capitalist decadence. In an oft-told and possibly apocryphal anecdote, a woman in Georgia assaulted a Coca-Cola delivery man while he stocked a grocery shelf with New Coke. “You bastard!” she screamed while bludgeoning him with an umbrella, “you ruined it—it tastes like shit!”
The national frenzy reached a bizarre crescendo when a man named Gay Mullins, founder of the Old Cola Drinkers of America, attempted to file a lawsuit to force the Coca-Cola company to restore the 99-year-old original flavor. Federal District Judge Walter McGovern rejected the lawsuit, taking the trouble to point out that he preferred Pepsi.
On 11 July 1985, news reporter Peter Jennings interrupted General Hospital for a special news bulletin: After a mere 79 day furlough, the original-recipe Coke was back on the market as “Coca-Cola Classic.” Virtually every major newspaper in the United States carried the announcement on their front page, and on the floor of the US Senate, David Pryor observed the event as “a meaningful moment in US history.” In spite of their embarrassment, Coke was quick to claim credit as part of the “fabric of America,” stating that their cola’s value was as immeasurable as “love, pride, or patriotism.” However the large-scale turmoil revealed more about human nature than it did about brown sugar-water.
In retrospect, some marketers believe that the failure of New Coke may have had something to do with sensation transference, a human oddity first described by Louis Cheskin in the 1940s. Cheskin demonstrated that people will unconsciously associate imagery, sounds, tastes, aromas, and textures into their general impression of a product, even if such associations are unintended or inaccurate. These sensory inputs create a halo effect which actually modifies flavor perception, so while cola drinkers may have preferred the new Coke formula, they may have disliked the “taste” of the redesigned packaging. Even Gay Mullins—the man who tried to sue to restore the old flavor—showed a preference for New Coke when subjected to blind taste tests. If Coca-Cola had changed their recipe but retained the familiar branding, New Coke and its taste-test-winning flavor might have been more acceptable to our primitive brains. Sensation transference was also powerfully demonstrated in a 2007 experiment, in which preschoolers were given McDonald’s menu items in both branded and plain wrappers. Although the foods were identical aside from their wrappings, the children said they preferred the taste of the McDonald’s-branded burgers, carrots, and apple juice in the vast majority of tests.
The advertising and consumer research industries gleaned some vital lessons from Coca-Cola’s high-profile failure, particularly with respect to social conformity in marketing. The 11% segment of alienated consumers proved to be a formidable force in shaping the public’s perception, an effect which Coke had observed but ignored in its focus groups. Marketing professionals also noted that New Coke’s success in taste tests may have been due to the small servings offered to tasters. In his book Blink, Malcolm Gladwell points out that such “sip tests” could produce a systemic bias towards sweeter drinks, since small samples would prevent the drinker from reaching the sickly-sweet threshold.
Regardless of people’s reasons for rejecting New Coke, Pepsi capitalized on the fiasco by mocking Coke’s waffling. Coca-Cola executives looked on helplessly as Pepsi’s sales surpassed those of Coke, giving Pepsi a comfortable lead in the beverage business. But then the incredible happened, and the impossible became a reality: over several months the restoration of the original recipe completely reversed the river of loathing, and the public engaged in a wholesale love-fest for Coca-Cola. They re-embraced the beverage they had taken for granted, and by the end of the year Coke Classic sales were outpacing Pepsi by a considerable margin.
Coca-Cola then became, and has since remained, the most profitable soft drink in the world. The “marketing blunder of the century” was so successful, in fact, that some people are convinced that New Coke Was an Inside Job—a delicately engineered gambit to revitalize the brand. As Coca-Cola president Donald Keough put it, “Some critics will say Coca-Cola made a marketing mistake. Some cynics will say we planned the whole thing. The truth is we are not that dumb and we are not that smart.” Coca-Cola truthers have also suggested that New Coke was a disposable facade intended to mask the transition from sugar to HFCS. While it is true that the reborn Coca-Cola Classic used HFCS as the exclusive sweetener, many US Coke bottlers had made the switch several years prior to the New Coke announcement.
Because the multi-million-dollar New Coke catastrophe was ultimately a financial success, no one at Coke was fired over the debacle. A disgruntled Cosby, however, ended his relationship with Coca-Cola. He complained that his pro-New-Coke commercials had damaged his credibility, and he retreated to the relative safety of pudding. New Coke gradually faded into obscurity, reappearing briefly in the early 1990s as “Coke II.” With the final collapse of the New Coke regime, a number of cans of the troublesome liquid are still unaccounted for. According to sketchy reports, it can still be found in a handful of smaller countries, including the island of Yap in Micronesia, and the Samoan islands.
Roberto Goizueta never expressed any regret regarding the reformulation; in fact, people who were close to him say that he arranged for the local Coca-Cola supplier to keep a cache of Coke II on hand and at all times. He drank his smoother, rounder, and bolder New Coke until the day he died in 1997, insisting all the while that the fruit of his brain-loins was the best-tasting cola in history, no matter what the fickle consumers may say.
Note: This article was originally entitled “Bite the New Wax Tadpole,” but a number of readers pointed out that this was excessively obscure and/or lame.