“I’ve had an uneasy feeling about Coca-Cola ever since a fellow by the name of Roberto Goizueta was named chairman and chief executive officer of the Coca-Cola Company of Atlanta, Ga., U.S. of A,” a columnist for Alabama’s Aniston Star newspaper wrote. “Roberto Goizueta, if memory serves me correctly, is from Havana, Cuba. Imagine that…”
The executive was, indeed, born in Cuba in 1931, just prior to the implementation of broad reforms that would deliver women the right to vote, minimum wage for workers in the cane fields and an eight-hour workday. By the time Goizueta was 10, the country had elected Democratic Socialist-backed president, Fulgencio Batista, and instituted a new constitution.
The year a 26-year-old Fidel Castro and brother Raul were imprisoned for leading a revolution, Goizueta graduated from Yale with a bachelor’s degree in chemical engineering and answered a help wanted ad from a Cuban Coca-Cola bottler. During a vacation in Miami, following Castro’s swearing in as Prime Minister, Goizueta and his family defected to the United States.
The decision was driven by the rise of a new government, but in the waning days of the Cold War, his family history was enough to convince at least one columnist that Coca-Cola’s new CEO was leading a revolution inside that most American of companies. His chosen tool was the most devious imaginable: Coke was getting a new recipe.
Goizueta’s plan had nothing to do with a communist Hail Mary, of course. It was simple capitalism. In less than 40 years, Coca-Cola’s 60% market share had dipped to nearly 20%, and the culprit was clear. The “Choice of a New Generation” was ascendent in the decade of Reagan. In 1985, Pepsi featured prominently in a hit time travel comedy. The film’s star, Michael J. Fox, appeared in ad spots for the beverage, which would also employ the likes of Lionel Richie, Tina Turner and David Bowie. A year prior, the King of Pop was set on ablaze by an errant firework while shilling the stuff.
Coca-Cola had lost the youth of America, but Goizueta had a plan. A year after being named chief executive, he told a meeting of the beverage company’s top managers, “There are no sacred cows in the way we manage our business, including the formulation of any or all of our products.” The first two offerings from Goizueta’s boardroom revolution, Diet and Cherry Coke, would prove enduring hits. The third firmly established the limitations of a strategy without at least a few sacred cows.
Over the course of the preceding century, Coke’s recipe had become the stuff of American mythology. In his autobiography, Charles, the son of founder Asa Griggs Candler, notes that his father, “initiated me into the mysteries of the formula. No written memorandum was permitted. No written formulae were shown. Containers of ingredients, from which the labels had been removed, were identified only by sight, smell and remembering where each was put on the shelf.”
Goizueta and fellow executives believed they’d found a suitable replacement in a formula that had initially been concocted during the process of creating Diet Coke (18 years after Diet Pepsi hit the market). They launched “Project Kansas,” which found the company making the first substantial change to the recipe in nearly a century. Documents outlining the strategy compared it to global warfare, noting,
In its size, scope and boldness, it is not unlike the Allied invasion of Europe in 1944. This is not just another product improvement, not just a repositioning or new product introduction. Kansas, quite simply, can not, must not fail.
As in the planning of a major military operation, it is necessary to understand the risks clearly, to plan contingencies, to build in the mobility to deal with those risks as they arise to confront the operation at various stages. In a meeting of the Core Strategy Group in Fort Lauderdale earlier this month, we took a look at the lessons to be learned from the 1944 Allied invasion, “Operation Overlord.”
The invasion led to a total Allied victory in less than a year. It was a broad strategic thrust that marshalled the ultimate resources of the allies to totally upset the strategic balance then existing. Its success changed the character of the war. If it had failed, the course of the war, if not its eventual outcome, would have been drastically altered.
Less than 80 days after launching, New Coke failed.
The formula had consistently tested off the charts in focus groups, and the initial push in April saw increases in the company’s stock price and market share. Surveys pointed to satisfied customers. The new flavor was sweeter than its predecessor — a direct response to Pepsi. Goizueta described it as, ''smoother, rounder, yet bolder, more harmonious.” There were some stumbles out of the gate, including reports that Pepsi had fed journalists questions at a massive press conference in Manhattan.
The backlash began the month New Coke launched. The American South was especially harsh to the Atlanta conglomerate, believing it had surrendered to New York-based Pepsi. A professor from the University of Mississippi told The Chicago Tribune, ''Changing Coca-Cola is an intrusion on tradition, and a lot of Southerners won’t like it, regardless of how it tastes.” Another resident compared Coca-Cola to an even more ubiquitous beverage, explaining, “you don’t change water.'' The company was inundated with 40,000 calls from irate consumers.
"There is only one person who likes the new Coke and that is Bill Cosby,” a woman told The Los Angeles Times. “I want to get thousands of letters, and my husband and I will take them down to Atlanta and give them to the Coca-Cola company."
Cosby, who reportedly drank up to 15 Cokes a day at the height of his soda addiction, was brought on in 1982. The future disgraced comedian’s Coca-Cola pitch revolved around its being less sweet than Pepsi. He ended his campaign, worried that the newer, sweeter flavor would hurt his credibility. Max Headroom, who arrived in the world the same year as New Coke, took Cosby’s place.
Speaking with The L.A. Times in June, a former Coke executive called the beverage, “the band playing on the Titanic,” adding, “Harvard Business School will be using this decision as a case study for years to come.” Even Castro took aim, claiming that New Coke was “a sign of American capitalist decadence.” By July the company announced that it was bringing the original formula.
In 1995, Coca-Cola marked 10th anniversary of the beleaguered beverage with a party. Goizueta, who remained CEO until his death two years later, never expressed any regret about the move.
“We set out to change the dynamics of sugar colas in the United States, and we did exactly that - albeit not in the way we had planned,” he told employees. “But the most significant result of ‘new Coke’ -- by far -- was that it sent an incredibly powerful signal ... a signal that we really were ready to do whatever was necessary to build value for the owners of our business.”
Sources:
All Afizz Over the New Coke https://content.time.com/time/subscriber/article/0,33009,959449-1,00.html
New Formula Woes: Coke Furor May Be ‘The Real Thing’ https://www.latimes.com/archives/la-xpm-1985-06-27-mn-10732-story.html
To Southerners, New Coke Just Isn’t It https://www.chicagotribune.com/news/ct-xpm-1985-04-28-8501250712-story.html
New Coke Didn’t Fail. It Was Murdered. https://www.motherjones.com/food/2019/07/what-if-weve-all-been-wrong-about-what-killed-new-coke/