Thanks to NPR for their recent story about how today, April 23, 2025, marks the 40th anniversary of what is considered one of the biggest business or product marketing failures of my lifetime — the failed introduction of “New Coke.”
Here's a news report from the time:
Yes, I'm old enough to remember that happening. And I was a soda drinker back then. I probably shouldn't have been. I switched to diet sodas during college (about when I switched from calling it “pop” as I did growing up in Michigan). I also gave up diet sodas “cold turkey” about a decade ago out of concerns over the chemicals and artificial sweeteners. Yeah yeah, I still drink wine and whiskey.
What's a Mistake?
In my book, The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation, I use a dictionary definition of the word:
Mistakes are actions or judgments that turn out to be misguided or wrong.
We identify a mistake through the emergent gap between the “expected outcomes” of a decision and the “actual outcomes.”
The decision makers at Coca-Cola thought the expected outcome would be happier customers and higher sales. That turned out to be misguided and wrong. The actual outcome was a huge consumer backlash… and a rare corporate admission of a mistake.
Coke's Expected Outcome
Why did Coke make that change?
The CBS Evening News report said Coke was losing market share… but they made a common statistical mistake by sharing a two-data-point comparison of Coke's falling market share (see my book Measures of Success for more about that).
This page uses a better approach — a run chart with more data points, going back to 1995.
While Coke has maintained 17-20% market share since 1995, Pepsi has seen a drop from 15.0% in 1995 to 8.3% in 2023.
It's better to describe Coke's market share as a range, as that page did.
Here's a “Process Behavior Chart” view that shows Coke's market share is basically just fluctuating around a stable average of about 19%. It would have been better to have each year's market share, but I stopped digging in that rabbit hole.
Keep Asking Why?
Why was Coke losing market share? Supposedly, blind consumer taste tests showed that people preferred the sweeter taste of Pepsi. So, the new formulation was intended to counter Pepsi's sweetness.
I also remember the “Take the Pepsi Challenge” TV commercials (and this one with “Welcome Back Kotter” star Gabe Kaplan):
After the launch, Coke trumpeted the idea that its product was now winning taste tests. But is that really why people buy or stay loyal to a product?
I still think it's weird how these companies so boldly mention their primary rival in the “cola wars,” as did this Pepsi ad that pokes fun at Coke for changing their formula… and these old men represent the “new generation”?
Was a New Formula the Wrong Countermeasure?
The one thing that Coke might have been mistaken about is that Coke drinkers would want something sweeter. I mean, if they did, wouldn't they have already been drinking Pepsi?
To their credit, Coke did extensive testing and surveys, but they reportedly downplayed the findings (I'm guessing they made the mistake of going with what they wanted to hear):
“Asked if they would buy and drink the product if it were Coca-Cola, most testers said they would, although said it would take some getting used to. About 10-12 percent of testers felt angry and alienated at the thought, and said they might stop drinking Coke.”
Management was said to have rejected the idea that the New Coke should be introduced as an extension of the existing Coca-Cola product line that included Diet Coke and Cherry Coke at that point.
Conspiracy theories have arisen over time as some people, even then, thought it was a clever way to introduce what became known as “New Coke” (and, later, as “Coke II”) along with the old formula being kept on the market as “Coke Classic.”
The company president had a great line about that accusation:
Keough, the company president, answered this speculation by saying “We're not that dumb, and we're not that smart.”
As the commercials at the time said, “Coke is it!” Or “Coke was it”? Or “Coke is it… again”? Credit to Coca-Cola… we're still talking about this today.
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