The Old is the New

In the world of big business epic fails are common.  But, however, in the Machiavellian world of marketing an epic fail may not always be an epic fail – it may actually be a carefully crafted, rousing success.

There is a mystery here, and it involves the machinations behind the creation of the epic fail known wistfully (by some) and disparagingly (by others) as “New Coke” [The product had New Coke 1985only one “official” name at the time of introduction: Coca-Cola.  It was meant to supplant the old formula, and needed no new name.  Before its discontinuation in 2002 it was formally called “Coke II”].

The story of Coca-Cola, the carbonated beverage, is well documented and is part of American folklore.  In brief, it was a concoction invented in Atlanta (not the first of its kind, by the way – there were many such carbonated elixirs available when this particular formula was created in the late 1800s). Its maker, a local pharmacist, sold the beverage over-the-counter. The original did contain cocaine (an early imitator cut right to the chase by naming its product “Dope Cola”).  After 1903, this was altered to a flavoring obtained from spent coca leaves that contained no cocaine at all. 

This early formula was somewhat successful on a small scale.  But a man named Candler, through some real shenanigans, procured the recipe, the rights to the name, and built a monster out of the syrupy drink by the turn of the 20th century.  The Coca-Cola juggernaut, as it exists today, is the by-product of this man’s aggressive marketing, chicanery, and sensibilities in the early 1900s. 

Big Love
The debacle in the 1980s over “New Coke” was academic.  The “original” pharmacy formula was altered as soon as it was co-opted.  Later, the cocaine was first lowered in concentration, then removed, and the formula has been tampered with countless times since its rise to market dominance. In 1935, for example, Coca-Cola sought kosher certification from an Atlanta rabbi; this necessitated two changes to the formula.  It was certified kosher and kosher for Passover (and, incidentally, halal and vegetarian).  The most recent known change was the removal of real sugar in favor of high-fructose corn syrup. So, the “original” Coca-Cola is not original in any significant way.  The “recipe” is allegedly kept in a vault at Coca-Cola headquarters – the real question is which recipe, exactly, is in there?

Marketing is criticalPepsi has always been more adventurous when keeping apace of trends.  Even its logo is not considered the sacred cow the stodgy 19th century script of Coca Cola is. Pepsi Cola had targeted its marketing toward a much younger crowd starting in the 1960s.  Pepsi took bigger risks in its advertising (more controversy, more close-to-now celebrities hawking theBill Cosby product). Coca-Cola had Bill Cosby once as a spokesperson.  [Ironically, he pitched the drink extolling its less-sweet taste than Pepsi, and later the company brewed up a product that was actually sweeter than Pepsi.  Also, to show how truly brilliant Bill Cosby is, instead of taking cash for his endorsement deal he settled for enough shares of the Coca-Cola organization to net him a roughly 1% ownership in this leviathan.  Very savvy – 1% of Coca-Cola is very big money.] 

Coca-Cola settled uncomfortably into old age (its consumer demographics reflected that fact).  Pepsi was taking risks constantly – remember Crystal Pepsi?  By 1983, Pepsi had seriously eroded Coca-Cola’s sales – Pepsi outsold Coca-Cola in stores, with Coca-Cola leading in vending machines and fast food joints.  The former bridesmaid was now the bride.

Coca-Cola was suffering; they no longer dominated the market. Something had to change.  And this is where the picture gets a bit odd.  Coca-Cola needed a product to directly compete with the slightly sweeter, hipper Pepsi.  Simply putting a new product on the shelf as a reformulation (let’s call it “Pepsi-Like” for now) would have been disastrous.  Unless the new formulation was much  different (like Vanilla Coke), and could not be perceived by the public as a replacement for its tried-and-true Coca-Cola, the product did not stand a change of surviving.  It had to be presented as an improvement, not a replacement.   People would not buy Pepsi-Like if “The Real Thing™ was sitting right there on the shelf.  Sure, some people would try it; it might even be a better product and preferable, but the human animal is nothing else if not snobbish.  This beverage, if it was to replace Coca-Cola, could have been manufactured in diamond-encrusted cans, with gold flakes and absinthe in the drink itself, and it would have failed as long as the original Coca-Cola remained available.

Coca-Cola field tested a new formula with focus groups.  These participants were then asked if they would buy and drink this formula if it were the only Coca-Cola.  Although most claimed they would, a small vocal minority (roughly 10% of those tested) alleged they were incensed at the very idea, and they might stop drinking Coca-Cola altogether. Coca-Cola did not let this minority ruin their plans, however [These malcontents are the same kind of people who will love an underground rock band until the band becomes successful; then they call the band “sell-outs” when they become popular].

The ensuing public “outcry” proves New Coke was a failure before the first case ever shipped. In 1985 Coca-Cola did the unthinkable and announced (and this is the crucial issue, the real reason for the failure) it was reformulating its flagship beverage and replacing it with “Pepsi-Like” (the material did not have an official name as yet).  It became colloquially known as “New Coke”. 

The negative public response was all out of proportion to the event.  The media hysteria was absurd.  News crews scrambled around capturing footage of slavering Coca-holics buying up every can, bottle, case, and six-pack of their favorite "original" elixir before it was “gone forever” [which was probably never the intent as will be seen]. 

But Coca-Cola was much smarter than that.  They weren’t blindly shooting themselves in the foot.  Coca-Cola wanted New Coke on the market.  It also needed to revive its flagging grand old dame.  As the Volstead Act proved (in the 1920s: Prohibition) the instant anything is taken away that item suddenly becomes the most valuable prize to the masses. 

Coca-Cola was no different than alcohol in that sense.  Changing the formula did nothing except create demand for the “old” failing formula (which had been losing market share to Pepsi).  Hillbilly outrage (and the loudest opponents were Southern) over “Co’ Cola” was ridiculous [And during the “raging debate” those most nearly suicidal over the situation seemed solely fixed in the hillbilly faction – at no time was there ever any large-volume televised news stories or blurbs involving, say, a college professor discussing rationally why he or she missed the “old Coca-Cola”.  It was always some screaming, overweight, apoplectic redneck howling about how "this new thang ain’t nuthin’ like Co’ Cola”.  The reality is almost no one could tell a marked difference in a blind taste test.  In side by side comparisons, people could tell there was a subtle difference in flavor between the two beverages, old and new, but they could not name which was the “original” and which was the reformulation]. 

Keeping things in perspective was difficult – the product generating this outrage was not a finely aged cognac or a splendidly subtle wine.  It was a syrupy, carbonated, caramel-colored beverage, that costs about 12 cents per can (including the cost of the aluminum can) to make and move from its distribution centers. It does not have notes of oakiness or a bouquet redolent of lilac.  It is soda pop, not the Elixir of Life.

Ads ca. 1985, cans over the life of New CokeCredit: Bill G. Chambers, 2011

But given the hue and cry one would think the Coca-Cola buying public had summarily been shot in the face.  “New Coke” was finally christened and was a modest success, simply because if one wanted Coca-Cola’s “taste” that was the closest thing to it.  So Coca-Cola had its new competitor to Pepsi on the shelves.  But that did not end the “controversy”.  Less than three months (77 days) after New Coke hit the markets, in July 1985 it was announced the “old” Coca-Cola was coming back.  New Coke sales leveled off to “old” Coca-Cola sales (mass defection did not occur).    Ultimately, the “original” Coca-Cola was mysteriously returned to shelves, relaunched with much fanfare and an elated public as “Coca-Cola Classic”.  The diehards rejoiced; the hillbillies were in their heaven.

By the end of the year, the “old” Coca-Cola was outselling both the new version and Pepsi.  But, did anyone ask what, if anything might have been done to Coca-Cola Classic before it was returned to the market?  The Coca-Cola aficionados were all happy to have it back.  How does one know that the “original” wasn’t quietly modified and then brought back without press or announcements?  One doesn’t.

And why bring back something the company thought needed replacing? This is where Coca-Cola is either the most remarkably brilliant, Machiavellian corporation in the world or the stupidest company to ever stay in business. First, Coca-Cola claimed they were responding to public demand for the “old” Coca-Cola.  Since when has any company ever gone against what it thinks are its own best interests due to public sentiment?  Never – the numbers told them it was the right thing to do.  It just made for better press to claim it was public pressure (although Coca-Cola did receive a lot of complaints about the product, if they didn't want to bring back the "old" for their own reasons, they would not have).  New Coke was only a glimmer in terms of sales.  Pepsi trounced it.  Fighting fire with the ultimate fire, “old” Coca-Cola returned.  And Coca-Cola had its two top drawer products on the shelves.  New Coke was around as a solo act just long enough for some people to prefer it to Pepsi and to the “old” formula, so it had a home.  The “classic” version already had its fan base slavering for its “return”, and the increases in sales were a win-win for the Coca-Cola Company.

So, what happened?  Examining putative scenarios yields some interesting possibilities.  First, assume that Coca-Cola, as stated, simply wanted to re-tool its tried-and-true, updating the flavor, so to speak.  They introduced the new version, rightly and smartly pulling the old off the shelves to give the new product a chance.  If this scenario is the correct one, the New Coke was an epic fail.

The second scenario, and seemingly closer to the realm of probability is that Coca-Cola was having trouble competing with Pepsi.  Its reformulation was not to “improve” the old stand-by, but to create something closer to Pepsi in taste that could then be marketed as “new”.  And, again, as with the first scenario, to give this new beverage any chance of survival they had to pull the classic version off the shelves.  The intent may have been to drop the “classic” version, but in the wake of poor sales, the “old” style, revamped, was brought back.

The third, and most probable scenario hints at something more “sinister”: Coca-Cola’s “original” version was having its market share eroded by Pepsi (Pepsi had displayed none of Coca-Cola’s qualms over the years in playing with its reputation, its logo, its formulae – Pepsi goes where it thinks it needs to be). Coca-Cola needed their Pepsi-Like product on the market.  But, they knew it would fail for all the obvious reasons.  Thus, by pulling the old product, Coca-Cola created a niche for New Coke with the clear intention of increasing demand for the no-longer-available “classic”, guaranteeing increased sales when it was brought back.  This gave Coca-Cola two high-end products where Pepsi now only had its “original”.  And the American public was snookered into buying it.

It is most likely Coca-Cola had no intention of doing away with what is now called “Classic Coca-Cola”.  If they had really wanted to change the formula, it would have been done without press fanfare or hoopla.  They could have made the changes gradually over several months – the buying public would have acclimated easily enough to subtle taste differences (and there is a difference in taste between the two formulae).  Even the “new, improved” formula was itself modified (without press notice) just a short time after its introduction – the acidity level was dropped to allow the sweeter taste to come through more robustly. No, the intent appears clear: bolster the ailing brand by creating a false demand, and open up a more youthful market with a “New & Improved” product. 

New Coke: epic fail?  Or epic fail that resurrected “classic” Coca-Cola?   Or successful at what it was designed to do – be the second-tier product (younger, hipper) for the stodgy Coca-Cola Company?  The real truth about “the real thing” may never be known.


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