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The brand brouhaha began back in 1980, when Goizueta and Keough were picked for Coca-Cola's top jobs. They were determined to reverse a disturbing trend. Over the previous decade, Pepsi had been steadily gaining on Coke. Using a brash advertising campaign built around the "Pepsi Challenge" slogan, the rival cola was becoming increasingly popular with younger drinkers, who seemed to prefer its sweetness to the crisper taste of Coke. The inroads were largest in supermarkets, where Pepsi in 1977 actually overtook Coke in sales. Because of its dominance in the fountain and vending-machine trade, however, Coke still holds an overall 22% to 19% edge. Each point represents about $200 million in sales.
The taste question became crucial to Coke. While developing diet Coke, which appeared in 1982, the company came up with a new and sweeter formula. To test just how well a cola containing it would go over, Coke embarked on the most exhaustive and far-reaching research program in its history. In all, nearly 200,000 consumers were asked to participate over a three-year period.
The results were close, but they persuaded Coke executives that they were on the right track. When asked to compare unmarked beverages, 55% of the drinkers favored new Coke over old Coke. When both drinks were identified, the margin rose 6 points.
For a while the company considered putting out the new Coke under a different name. Goizueta vetoed that approach on the ground that it would lead to market confusion. The company was already selling regular, diet and caffeine-free versions, and a cherry Coke was on the way.
As Coke now concedes, its test marketing was flawed. Among other things, Coca-Cola neglected to inform consumers that choosing new Coke meant saying farewell to old Coke. "We failed to tell the tasters graphically enough that their preference for the new would mean that they would never be able to taste the original Coke again," explained Ira Herbert, vice president for worldwide marketing.
Even Goizueta's father spoke out against the switch when it was announced in April. Telephoning from his Mexico City home, the elder man told his son that the move was a bad one, and jokingly threatened to disown him. Last week, the Coca-Cola chairman said, his father called "to take me back in."
No one watched the gathering rebellion more closely than Brian Dyson, the president of Coca-Cola USA. A lanky native of Argentina, Dyson had the duty of monitoring overnight reports on consumer reaction. By late May, the findings were looking bad. Dyson concluded that "people had fallen in love with the memory of old Coke" and wanted little to do with the new one.
With a crisis approaching, Dyson ordered that results of the June 20 survey be sent to him while he attended a reunion at his family's Argentine ranch. Aides telephoned the report to Buenos Aires, where it was tape-recorded and driven six hours to the Dyson spread. It arrived as the executive was dining on a freshly slain and roasted heifer. Reading the document, Dyson realized that consumer anger was reaching critical levels. Says he: "You can get a wonderful perspective on some problems when you are half a world away."