Overhyped Products: New Coke

In the mid-1980s, conspiracy buffs briefly shifted their attention to Atlanta from the grassy knoll and focused their fervid minds on Coca-Cola (KO).

Some believed that New Coke -- rolled out on April 23, 1985, and all but obliterated by the return of the original version on July 11 -- was an elaborate plot to goose sales.

It wasn’t. Instead, it remains a classic tale of failed market research.

New Coke has become a symbol for corporate idiocy and even made a reference on The Simpsons, the hit show on Fox. In an episode first broadcast in 1995, a hobo tells fellow tramps that he invented New Coke, suggesting that his current status stemmed from his decision to change the formula for the first time in 99 years.

In the middle of the marketing catastrophe, Coca Cola’s CEO received a letter addressed to “Chief Dodo” and another irate customer asked for his autograph on the theory that proving one of the dumbest executives in America could write would be worth a fortune.

But New Coke made sense at the time. By the early 1980s, a bunch of Yankees from Purchase, New York, peddling a drink called Pepsi (PEP) were close to knocking Coca-Cola from its perch as the nation’s leading soft drink. Pepsi outsold Coke in supermarkets where customers had a choice, and it was only venues such as fast food chains that kept Coke ahead of Pepsi in total sales.

Worse, the sugared cola market continued to shrink as more consumers turned to diet drinks, citrus-based, and caffeine-free beverages. Coca-Cola needed something new and needed it fast.

In blind taste tests, many preferred Pepsi to Coke. This forced Coca-Cola to think the unthinkable: change the formula for the "temperance drink" created by druggist John Pemberton.

Diet Coke sold well and the company backed into a new formula by replacing its artificial sweeteners with high fructose corn syrup. After extensive testing, the company developed a new drink that many considered tastier and smoother than the original. It looked like Coca-Cola was about to score a marketing coup.

Just one thing: The marketing pooh-bahs never said the new formula was intended to replace the old. The company did this to keep the new product secret. It was a reasonable step in a competitive market that became a fatal mistake because millions of consumers felt they couldn’t part with the original Coke.

“(Coca-Cola) was a brand that played an important part in their emotional lives,” James E. Aisner said in a paper published by the Harvard Business School in 1999.

But production of the old formula ended the same week New Coke was introduced. There were reports of consumers stockpiling Old Coke and some protesters poured the new drink in the gutter for the benefit of TV cameras. Protest groups sprang up, including the grandiloquently named Society for the Preservation of The Real Thing and Old Cola Drinkers of America.

Coca-Cola got the message and quickly brought back the original formula, calling it “Coke Classic.” This was big news and at least one national anchor interrupted a popular soap opera to report it.

Both formulas were available and New Coke was re-branded Coke II. It developed only a modest following. By 1998, the new formula was available only in the Midwest and it quietly faded away about four years later. “Classic” was dropped from cans and bottles of the original formula earlier this year.

Coca-Cola’s official line: “The return of original formula Coca-Cola on July 11, 1985, put the cap on 79 days that revolutionized the soft-drink industry, transformed the Coca-Cola Company and stands today as testimony to the power and taking of intelligent risks.”

The company fed the paranoia of conspiracy buffs by noting that New Coke had allowed millions to reconnect with the original product.

Oh sure, and the Edsel allowed customers to forge a new bond with Ford.