Coca-Cola and New Coke

The story

For most of the 1900s, Coca-Cola was the best-selling soft drink in the world. But by the early 1980s, its lead over Pepsi had been slipping for about 15 years in a row. Pepsi ran a famous advertising campaign called the Pepsi Challenge, where people took a sip of two unlabeled colas and picked the one they liked. Many picked Pepsi, which is sweeter. Coca-Cola's own private tests found the same thing. Its leaders, including chairman Roberto Goizueta and president Donald Keough, decided the problem might be the taste itself.

So the company's scientists worked on a new, sweeter formula. Coca-Cola tested it on nearly 200,000 people. In blind tests, where people did not know which brand they were drinking, the new recipe beat both Pepsi and the old Coke. On paper, the decision looked safe. On April 23, 1985, the company announced the first change to its recipe in 99 years. Goizueta called it "the surest move ever made." Pepsi gave its employees a day off to celebrate and ran ads saying the other guy had "blinked."

What the taste tests had not measured was how people felt about Coke. To millions of Americans, Coca-Cola was part of childhood, holidays, baseball games and family memories. Changing it felt like someone had changed a piece of their history without asking. Angry phone calls poured in. Coca-Cola's own records say its hotline went from about 400 calls a day to about 1,500 a day by June; other accounts put the number of angry calls much higher. The company received tens of thousands of letters. One was addressed to "Chief Dodo, The Coca-Cola Company." People stocked up on old Coke, some buying hundreds of bottles, and a protest group called Old Cola Drinkers of America formed. The consumer-service team grew from about a dozen people to 180 almost overnight to keep up.

Coca-Cola's leaders had a choice. They could insist they were right, because the data said so, or they could listen. They listened. On July 11, 1985, just 79 days after New Coke launched, the company held a press conference to apologize and announce that the original formula was coming back as "Coca-Cola Classic." Keough told reporters that the company's boss was the consumer. News programs interrupted regular shows to report it, and in the two days after the announcement the hotline took more than 31,600 calls.

Coca-Cola Classic quickly outsold New Coke and, within months, was again the top-selling sugar cola, ahead of Pepsi. New Coke stayed on shelves for years, was renamed Coke II in 1990, and was finally discontinued in 2002.

Some people later suggested the whole thing was a clever plan to make people fall in love with Coke again, but there is no evidence for that. Ten years later, Goizueta described it as a case of "taking intelligent risks." Whatever the intent, the result was a powerful lesson: Coca-Cola had studied what customers tasted, but it had not studied what they valued. And when it found out, it had the humility to change course fast.