A New Formula Early 1985

You are advising Roberto Goizueta, chairman and chief executive of The Coca-Cola Company.

Coca-Cola’s lead over Pepsi has been shrinking for years. Company researchers have developed a sweeter formula that beat both the original Coca-Cola and Pepsi in blind taste tests.

Known information

Nearly 200,000 consumers took part in taste tests of the new formula, and most preferred it.
Coca-Cola’s share lead over its main competitor has declined for 15 years in a row.
Pepsi has been winning attention with advertising based on blind taste tests.
Selling two versions of the flagship cola side by side could confuse shoppers and split the brand.

Reveal what happened (spoilers: decide first)

Fact

What actually happened

Coca-Cola replaced its original formula with the new one. (Replace the original)

The new formula was announced on 23 April 1985. Many customers reacted with anger: by June the company was receiving about 1,500 calls a day on its consumer hotline. On 11 July 1985, 79 days after the announcement, the company brought back the original formula as “Coca-Cola Classic”.

Important

Possible consequences · Analysis and speculation, not fact

Keeping the original might have avoided the backlash but left the company still losing ground to Pepsi. Some marketing writers even argue the episode strengthened loyalty to the original brand, though that is disputed.

History does not reveal what would definitely have happened under the other choice. Many factors could have changed the outcome.

Context · Why it was decided this way

The taste tests measured which drink people preferred in a sip. The company later said it had underestimated how attached many customers were to the original as a familiar part of their lives.

Sales of Coca-Cola Classic recovered strongly after its return. Goizueta later said the company had changed the dynamics of the cola market, “albeit not in the way we had planned.”