The Coke Machine - Michael Blanding [30]
Perhaps because of his unusual ascent, Goizueta immediately declared the company would no longer be afraid to take risks. “There are no sacred cows,” he announced, up to and including Coke’s secret formula. “Reformulation of any or all of our products will not stand in the way of giving any of our competitors a real or perceived product advantage.” Case in point, he oversaw the introduction in 1982 of Diet Coke, violating the sacred dictum that Coke was a “single thing coming from a single source”; within two years, it had become not only the best-selling diet drink, but also the number three soft drink overall. That success led to the act of ultimate hubris: changing the sacred formula of Coke.
The company should have known better. While developing Diet Coke, marketers discovered that the word “Coke” alone was enough to drive sales: When they tested Tab against Pepsi, it lost by a 4 percent margin; when they poured the same drink into a Diet Coke can, however, it caused customer preference to jump 12 points. Despite these findings, marketing chief Sergio Zyman led a two-year search for a new sugar-sweetened formula that would beat Pepsi in blind taste tests, finally hitting upon a sweeter version that consistently outranked Pepsi by 6 to 8 points. The project was so secret the company didn’t even tell its advertising agency McCann until January 1985, just three months before its introduction.
Company executives stood up before a packed press conference on April 23, 1985, forever after known as “Black Tuesday” among the Coke faithful. Unfortunately for Coke, word of the change had already leaked. The day before, Pepsi had taken out a full-page ad in The New York Times declaring victory in the Cola Wars with the statement “The Other Guy Just Blinked.”
As Goizueta followed a montage of cowboys, the Grand Canyon, and the Statue of Liberty onto the stage, the press corps leaped: “To what extent are you introducing this product to meet the Pepsi Challenge?” “Have you simply added more sweetness to make it more competitive with Pepsi?” In the face of such direct questions, Goizueta temporized. New Coke wasn’t any sweeter than old Coke, he said, rather it had a “rounder . . . bolder . . . more harmonious flavor.” Pepsi had nothing to do with it.
The press didn’t buy it, and neither did the public. Anguished calls and letters came pouring into Coke headquarters—more than 400,000 by the end of the ordeal. “You’ve taken away my childhood,” read one. “Changing Coke is like God making the grass purple,” sputtered another. Finally, Coke capitulated. “We have heard you,” Goizueta assured consumers at a press conference in July announcing old Coke would return. Pepsi continued to bask, with CEO Roger Enrico rushing out a book, The Other Guy Blinked, in which he sneered: “I think, by the end of their nightmare, they figured out who they really were . . . caretakers. . . . All they can do is defend the heritage they nearly abandoned.”
History, however, hasn’t exactly seen it that way. Within a year after its release, New Coke faded into oblivion, while “Coke Classic” again topped Pepsi in market share. It was the ultimate triumph of image over reality. Consumers rejected the two sodas they actually liked better in blind taste tests, in exchange for the one whose brand image made them feel better.
Marketing exec Zyman, who was responsible for the debacle more than anyone, later claimed the disaster was all but intentional. “A lot of people said it was a big fat mistake.