20 years ago today, New Coke fizzed out

Bungle: The rollout of a Pepsi-like substitute for original Coke proved to be a classic lesson in misreading your market.

April 23, 2005|By Scott Leith | Scott Leith,COX NEWS SERVICE

ATLANTA - It was April 23, 1985, and longtime Coke bottler Frank Barron Jr. gathered with luminaries at a celebratory dinner at New York's `21' Club for what he and others believed would be a sure-fire success for Coca-Cola Co.

Barron, a bottler from Rome, Ga., stood up to toast and praise a new brand called New Coke. "We were all for it," he said.

But soon, the introduction of New Coke - and the retirement of the original formula - would come to be considered by many as the greatest marketing bungle of all time. Though Coke would return with Classic Coke in a matter of months, the damage was done.

Now, 20 years to the day after that failed introduction, the lessons live on for those who were closely involved. A fresh look at the New Coke saga reveals how much the beverage industry has changed, so much so that some wonder if there would be the same, almost universally negative reaction if Coke were to be reformulated today.

"My guess is it wouldn't have the same reaction at all," said Don Keough, Coke's president in 1985 and, today, on the board of directors. "Think of the number of products that now carry the Coke name and the proliferation of products generally."

Two decades later, the truth is that Coke Classic isn't the brand it once was - though it remains the country's favorite soft drink, with sales of 1.8 billion cases versus 1.2 billion for Pepsi-Cola in 2004.

Now consumers can choose from offerings that include bottled water, energy drinks, sports drinks and teas.

Soft drinks make up about 74 percent of what the industry dubs liquid refreshment beverages. They held a larger share of the market when New Coke came out. That helps explain why New Coke was such a huge deal in 1985. "It's a little hard to imagine today," said Frederick Allen, author of Secret Formula, a Coke history. "It was that big of a story."

The bottom-line lesson: Coke's flawed marketing research showed people would prefer the taste of New Coke. Problem was, researchers didn't ask how people would react if old Coke disappeared.

Most Coke insiders bought into the plan, Keough and Barron among them. Quietly, though, a few feared the change.

Retiree Marc Hamburger, who was supposed to plan a worldwide launch of New Coke, reacted with "utter astonishment" when he first heard of plans to change the original formula.

New Coke was meant to taste more like rival Pepsi, which had needled Coke successfully with the Pepsi Challenge taste test. Hamburger said Coke's attempt at a better-tasting product "didn't consider the multidimensional nature of taste."

Coke's top brass - led by the late Roberto Goizueta, flashy former marketing head Sergio Zyman, Keough and others - decided to concede defeat. The mea culpa came July 11, 1985, at an Atlanta press conference to announce the creation of Coke Classic.

Harold Burson, a heavyweight in public relations, also was a central player. He advised the company to be contrite, though he, too, had been a true believer in New Coke.

Today, the image of Coke Classic is quite different. With obesity on the rise, many people question the wisdom of drinking too many regular soft drinks. School after school has removed them.

In 2004, sales of Coke Classic dropped by 3 percent in the United States, according to Beverage Digest.

Maybe, Allen pondered, the New Coke mess hurt the long-term strength of the brand. After all, Coke had survived decade after decade of various controversies.

"New Coke introduced the concept of change and fallibility," he said. "In my view, the New Coke fiasco contributed to the change of the landscape."

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