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Goizueta also made a visit to his mentor and predecessor as the company's chief executive, the ailing Robert W. He insisted that the containers carry the "New!" label, which gave the drink its popular name. He believed it would be "New Coke or no Coke", : 106 and that the change must take place openly. 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. Įarly in his career with Coca-Cola, Goizueta had been in charge of the Bahamas subsidiary. 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. Many bottling companies had sued over the company's syrup pricing policies. The company's bottlers were already complaining about absorbing other recent additions into the product line since 1982, after the introduction of Diet Coke Cherry Coke was launched nationally nearly concurrently with New Coke during 1985. Management rejected an idea to make and sell the new flavor as a separate variety of Coca-Cola. However, the groups had provided a clue as to how the change would play out in the public, a finding the company downplayed. 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. Their presence in focus groups tended to negatively skew results as they exerted indirect peer pressure on other participants. About 10–12 percent of testers felt angry and alienated at the thought, and said they might stop drinking Coke. Īsked if they would buy and drink the product if it were Coca-Cola, most testers said they would, although said it would take some getting used to. One bottling company threatened to sue the company if it did not put the drink on the market. The South, 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. The sweeter cola overwhelmingly beat both regular Coke and Pepsi in taste tests, surveys, and focus groups. 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. Development Ĭoca-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. When Roberto Goizueta became Coca-Cola CEO in 1980, he told employees there would be no "sacred cows" in how the company did business, including how it formulated its drinks. 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 sold by Coca-Cola this further eroded Coca-Cola's market share. Growth in the full-calorie segment would come from younger drinkers, who at that time favored Pepsi by increasing margins. Market analysts believed baby boomers were more likely to purchase diet drinks as they aged and remained health- and weight-conscious. Pepsi had begun to outsell Coke in supermarkets Coke maintained its lead only through venues such as soda vending machines and fast food restaurants. By 1983, it had declined to under 24 percent, largely because of competition from Pepsi-Cola. The story of New Coke remains influential as a cautionary tale against tampering with a well-established and successful brand.Īfter World War II, Coca-Cola held 60 percent of the market share for cola. The company reintroduced the original Coke formula within three months, rebranded "Coca-Cola Classic", resulting in a significant sales boost this led to speculation that the New Coke formula had been a marketing ploy to stimulate sales of the original Coca-Cola, which the company has denied. The American public reacted negatively, and New Coke was considered a major failure. Blind taste tests suggested that consumers preferred the sweeter taste of rival Pepsi, and so the Coca-Cola recipe was reformulated. It was renamed Coke II in 1990 and discontinued in July 2002.īy 1985, Coca-Cola had been losing market share to diet soft drinks and non-cola beverages for several years. New Coke was the informal name given by the Coca-Cola Company to a new formula for its most popular drink, Coca-Cola, released in 1985.