• by J. Walker Smith , Op-Ed Contributor, July 10, 2024

Remember New Coke?

Most people remember it as a cautionary tale that goes something like this. In 1985, Coke changed the taste of its classic namesake brand with a new formula -- informally dubbed New Coke -- that was instantly rejected by consumers. Thoroughly chastened, Coke did an about-face, took it off the shelves and brought back the original. Even so, Coke was hurt. Moral of the story? Pay attention to consumers. And don’t mess with iconic brands.

It’s a good story, but it’s not entirely accurate, and there’s more to it. Which is worth revisiting because what really happened offers lessons that are particularly pertinent today.

The best history of New Coke is Thomas Oliver’s 1986 book, "The Real Coke, The Real Story" (which I used to give away to staff and clients). Here’s the thumbnail version.

In 1975, in an effort to jumpstart retail sales in the South, where Coke had long held a commanding lead, Pepsi experimented with local ads in the Dallas market showing a blind taste test in which Coke drinkers picked Pepsi. This so-called Pepsi Challenge was a hit, so Pepsi rolled it out nationally. Coke took it as an affront to "The Real Thing," as Coke had been calling itself since 1969. It could not go unanswered.

For years already, Coke and Pepsi had been one-upping one another with rule-breaking appeals to the up-and-coming generation of rule-breaking Boomers. To tackle the taste test challenge, Coke embarked on a top-secret research project to do the ultimate in rule-breaking -- changing its formula.

Coke was under pressure in the seventies. Its leadership was aging. Bottler relationships had to be renegotiated. Diversification into other businesses, like the movies, was distracting management. Competitive innovation was abounding. The growth of Coke’s soft drink business was slowing. Change felt imperative.

Over a three-year period, Coke conducted thousands of blind taste tests to arrive at a formulation that was strongly preferred. Coke also did thousands of branded taste tests to assess branded preference. Coke was not tripped up by a lack of research, rigor or customer-centricity.

Research showed that Coke faced a dilemma. People loved the taste of the new formula, but not the idea of messing with Coke.

Management decided that however much people liked Coke as a cultural icon, the brand needed to signal change. At first, New Coke seemed like the right decision. Press was glowing. Consumers were favorable.

But then a sprinkle of negativity spiraled up into a storm of bad publicity and complaints.

The Coke brand is too prominent culturally for anything to slip by without riveting scrutiny, especially not a new formula. Coke underestimated this. Coke management felt that the cultural moment was all about change, not nostalgia. They assumed that people would eventually come around to the better-tasting formulation. Not so.

Roughly 80 days after introducing the new formula, Coke brought back the original as Coca-Cola Classic (a name that it kept until 2009). The new version was not pulled. It stuck around under one name or another until 2002.

Ultimately, though, the missteps with New Coke worked to Coke’s benefit. News about Coke filled the headlines. Curiosity got people to try the brand again, both new and original. Passion for the brand was reignited. Sales picked up. Brand perceptions improved. The stock price rose.

Coke came out stronger. Because of the way Coke responded.

Faced with a negative turn of events due to its miscalculation, Coke did not dig in its heels and refuse to adjust. Instead, Coke owned up to its mistake, apologized for it, and revised its strategy. Coke let go. Coke pivoted without delay. Coke did not leave consumers in suspense or drag things out until it had no other options. It let go. Coke snatched success from the jaws of defeat by doubling down on the good feeling that was stirring up all the negative reactions.

The lesson of New Coke is that there often comes a time when we must let go. Best laid plans can get waylaid by events. True in everything, from business to careers to politics. Modern marketing is rooted more than ever in an experimental culture. With that must come the discipline of failing up -- test, learn, revise. And sometimes, let go.