Launching New Coke-INSEAD

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“It was nice knowing you. You were my friend for most of my 35 years. Yesterday
I had my first taste of the New Coke and to tell the truth, if I had wanted a Pepsi, I
intro of new coke: neg reactions that inc over time
Coke mngment press conf & apologized
would have ordered a Pepsi not a Coke. Pred saif new coke will be flagship but return of old classic coke
news all over- nobrand recieved so much atten, or misjudged public sentiment
product tested so much, how reject?
Monkeying with the recipe is akin to diddling with the U.S. constitution.”1
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These are just two of the thousands of reactions Coca Cola USA received during the first few
months after the introduction of New Coke on April 23, 1985. Most of the reactions to the
product change were negative. Even worse, the reactions increased in number and negativity
over time. As a result, on July 11, 1985, the top management of the Coca-Cola Company
announced at a press conference the return of the old formula as “Coca-Cola Classic” and
apologised to the public, without admitting, however, that New Coke had been a failure. In
fact, Brian Dyson, president of Coca-Cola USA, stressed the fact that New Coke would
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remain the company’s flagship brand. The return of old Coke was front-page news all over
the country. The TV networks interrupted their daytime programs to broadcast the news.
Many new products fail, but no failure has ever received as much public attention as the
failure of New Coke. Never before had a major corporation told the American people that it
was sorry and begged for forgiveness. How could a world-class marketer have so badly
misjudged consumer sentiments about one of the world’s most powerful brands? How could a
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product that was tested extensively and had been preferred by so many consumers in tests be
rejected with such passion by an entire nation?
Cola consump doubled-why? Inc availab, affordab, adv
3 players:
US Soft Drink Industry

Concentrate producers: blend ingred and add sweetners-coke & pepsi
Bottlers: bottled or canned drink and delivered to cust-majorly indep franchises with territory exclusivity
retailers: sold via food stores(42%), fountains, vending mach, outlets-Coke dominated fountain channel +food store 1/3 coke sales:
By the mid eighties soft drinks had become the most consumed liquid in the USA. The annual
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consumption of soft drinks more than doubled between 1965 and 1984 to 150 litres per capita
(see Exhibit 1). This growth had been fuelled by increased availability, affordability and
advertising and occurred primarily in the age groups up to 34 years. Many industry experts
did not believe growth could continue at the same rate. The market was considered mature
and the fight for market share was expected to intensify. The cola segment of the soft drink
industry held the dominant share in 1984 with 67 percent.
No
Three major participants were involved in the production and distribution of soft drinks:
concentrate producers, bottlers and retail outlets. Concentrate producers blended the necessary
ingredients and added artificial sweetener for diet soft drinks. Besides the two dominant
companies, the Coca-Cola Company and PepsiCo, owners of two of the world’s best-known
brand names, a number of other national companies including 7-Up, Dr Pepper and Royal
Crown produced and sold concentrate. Financial results for the major concentrate producers
are given in Exhibit 2.
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Bottlers purchased the concentrate and added carbonated water and high fructose corn syrup
(for regular soft drinks). They bottled or canned the soft drink and delivered it to customer
accounts. In themed-eighties, most bottlers were independent franchises with an exclusive
right for a particular territory. A smaller number of franchises were owned by the concentrate
producers.
1 Thomas Oliver, The Real Coke, The Real Story (New York: Random House, 1986).
Copyright © INSEAD 1
This document is authorized for educator review use only by Moeen Butt, Lahore University of Management Sciences until July 2018. Copying or posting is an infringement of copyright.
[email protected] or 617.783.7860
t
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Soft drinks were sold through food stores (42%), fountains (20%), which included fast food
outlets such as McDonald’s, vending machines (12%), and other outlets (26%). The fastest
growing channels in the sixties and seventies were supermarkets, convenience stores and fast
food outlets. Soft drinks were among the top 5 product categories sold by food stores.
Historically, Coca-Cola dominated the fountain channel, where it continued to outsell its
nearest competitor by more than two to one. Food stores accounted for a third of Coca-Cola’s
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sales. History: formed by pharmisist as syrup/drugstore to cure hangover/headache
Later mixed Carbonated water to make soda
SKirt bottle became the most recognizable images
Robert Ceo-ambition put coke' arms reach of desire' - lifestyle advertising
W W II role-Gen Eisenhower follow troops everywhere for 5c.end of war had64 bottling plants all over, mostly at govt exp
70% MS softdrink world: visible sign of capitalism, some part of everyday life, didnt consider any competitor.
The Coca Cola Company

Coca-Cola was first formulated by Dr. John Pemberton, an Atlanta pharmacist, to be sold as a
cure for both hangovers and headaches. Asa Candler, who bought the rights from Pemberton
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in 1889, expanded the business by selling the syrup to drugstores, where it was mixed with
carbonated water and served at soda fountains. He also sold the first bottling franchise
covering almost the entire USA to two Tennessee businessmen for $1. A standard 6½-ounce
“skirt” bottle was designed. This bottle design became one of the most recognisable images in
the world.
In 1923, Robert W. Woodruff, whose father had purchased the Coca-Cola Company from
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Candler a few years earlier, became CEO. His ambition was to put Coke “within arm’s reach
of desire.” He initiated “life style” advertising, which emphasised the product’s role in a
consumer’s life rather than its attributes. The overseas business was developed principally
through export. During World War II Coca-Cola bottling plants followed American troops
around the world to meet General Eisenhower’s request “that every man in uniform gets a
bottle of Coca-Cola for 5 cents wherever he is and whatever it costs.” By the end of the war,
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there were 64 bottling plants worldwide, built at government expense. This action allowed
Coca-Cola to establish a dominant position in most of Europe and Asia, which it still holds
today.
After the war, Coca-Cola ruled the soft-drink world. It outsold its nearest competitor by ten to
one and held 70 percent of the cola segment. In meetings, Coca-Cola executives would only
discuss the growth of their own brand and never refer to any competitor by name. Abroad
No
Coca-Cola typified America as no other symbol did and in many countries it was the most
visible sign of capitalism. At home it was as much part of everyday life as applie pie and
baseball. Coca-Cola was a proud, conservative company, which was run by a network of
“good-old-boys.” Except for a few changes early this century, the formula was never changed
and a closely guarded secret known to only a handful of executives.
Pepsi also by pharmacist, not as strong, bankrupt many time,
New ceo Alfred changes:
Beat Coke Battle cry
PepsiCo Several sizes: 24 for fam consump
new adv: pepsi gen( knew cant change formed pref of coke consumers so new youth.baby groomers
focused on super markets
Like Coca-Cola, Pepsi-Cola was formulated by a pharmacist in the South of the USA and
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expanded through a network of franchised bottlers. However, it was not as strong and came
close to bankruptcy several times in the first half of this century. Alfred Steele, a former
Coca-Cola executive, became CEO in 1950 and blew new life into the company by making
“Beat Coke” the company’s battle cry. He introduced several new bottle sizes, including a 24-
ounce bottle for family consumption, and initiated new advertising campaigns. He focused on
sales through supermarkets, which grew quickly as the population moved to the suburbs, and
t
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expanded PepsiCo’s international operations. As a result, revenues more than tripled in the
fifties.
In the sixties, both PepsiCo, with Diet Pepsi and Mountain Dew, and the Coca-Cola
Company, with Sprite, Tab, and Fresca, introduced several new products, but the latter did not
use the name of its flagship brand.
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To grow further, PepsiCo executives understood that it was far more difficult to switch older
consumers who had formed their taste preferences over many years of consuming Coca-Cola
to Pepsi than to attract the next generation of consumers. This next generation happened to be
the baby-boomers and became the “Pepsi Generation.” This advertising campaign
communicated a youthful way of life not to be confused with Coca-Cola’s nostalgic, small-
town American image. The campaign was extremely successful. It established Pepsi as a
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strong number two in the market and reduced Coke’s lead to a two to one margin. In the past,
Pepsi sold its concentrate at a 20% discount compared to Coca Cola, but in the seventies it
reached parity with its rival. Moreover, together with the focus on supermarkets, the
campaign made Pepsi number one in supermarket sales by 1975.
Blind test showed consumers prefered coke- "pepsi challenge"born- started Dallas then spread everywhere
Coke view of pepsi: rutheless, unpleasant, no loyalty, no regard of tradition, young mba
Pepsi: reservations: too prod focused, distracted from image adv but it was too late- spread like wildfire.
The Pepsi Challenge Coke response: first rediculed misleading, own test showed same result, inc mkting dramatically, Price discounting
op
Despite its overall success, Pepsi remained a marginal player in the South. Almost by
accident, the manager of a Pepsi-owned bottling franchise in Dallas, Texas, came across blind
taste test results, which indicated that consumers preferred Pepsi to Coke. He used these tests
in a TV commercial to proclaim Pepsi’s superiority. The “Pepsi Challenge” was born.
At Coca-Cola headquarters in Atlanta people were shocked. They never liked Pepsi, a
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company made up of young, ambitious MBAs, who had no regard for tradition. Coke
considered Pepsi as ruthless, unpleasant, and without loyalty.
Coca-Cola USA, which was responsible for the marketing of Coca-Cola in the USA,
responded quickly, but rather clumsily. First, it tried to show that Pepsi’s advertising was
“misleading.” When its own tests confirmed Pepsi’s results, it tried to ridicule the taste tests.
Pepsi’s market share in Dallas, Texas, quickly jumped from 6% to 14%. Based on this
No
success, the Pepsi Challenge was extended to other American cities, despite reservations by
marketing executives at PepsiCo’s headquarters, who thought it was too product focused and
distracted from the image advertising that was so successful in the past. By the time the Pepsi
Challenge campaign was stopped in 1983, it was airing in about 90 percent of the markets.
In the wake of the Pepsi Challenge, advertising expenditures increased dramatically. Coca-
Cola more than doubled its advertising between 1975 and 1980 from $34 million to over
$70 million and Pepsi matched its rival. See Exhibits 3 and 4 for more detailed market share
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and advertising data, respectively. Moreover, Coca-Cola initiated major retail price discounts
in selected markets. By the late 1970s, price discounting was widespread.
60/70- focused on int oper which accounted for 62% rev, compared to 20% pepsi
Domestic distractions/issues: water treatment equp, wine/spring water, film studio, FTC inquiry
exclusive franchise rights, battle bottles on changes in franchise contyracts
Roberto became CEO-resolved:changed theme adv "Coke it is"instead "coke and asmile"
Launched diet coke: 3rd best, 1st best in diet segment
t
other extensions like cherry coke
os
Leadership Change at Coca-Cola
Throughout the sixties and seventies, the Coca-Cola Company focused largely on its
international operations. By 1980, international sales accounted for 62 percent of Coca-Cola’s
soft drink sales, compared to 20 percent at PepsiCo. Coca-Cola’s domestic attention was
diverted by diversification attempts into such areas as water-treatment equipment, wine,
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spring-water and a film studio, a decade long inquiry by the FTC into the granting of
exclusive franchise territories, and a protracted battle with its bottlers over a change in the
franchise contract.
These distractions were compounded by uncertainties about the leadership of Coke, which
were resolved in 1980 when Roberto Goizueta became CEO and Don Keough president of the
Coca-Cola Company. Goizueta promised radical changes and demanded a renewed focus on
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growth in the US soft drink market. The advertising theme was changed to “Coke is it” from
“Have a Coke and a Smile”, which was considered too soft. Bottlers considered weak were
replaced.
In 1982, the “Coke” brand name was used for the first time when Diet Coke was launched.
This was a major departure in strategy. Diet Coke became the most successful new product
introduction in the eighties. By the end of 1983, it was the best-selling diet soft drink in the
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USA, and by 1984 the third best-selling soft drink overall, replacing 7-Up. A flurry of other
successful brand extensions followed including Cherry Coke and Caffeine Free Coke. People
at the Coca-Cola Company were riding high and ready to tackle any challenge.
The Coca-Cola Reformulation

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However, there remained one nagging problem. The Pepsi Challenge had dealt a severe blow
to the Coca-Cola Company. Coca-Cola executives were obsessed with the Pepsi Challenge
and the Nielsen market share data. As Coke – the drink on which the company was founded
on – approached its hundredth birthday, its market share lead over Pepsi was dwindling (see
Figure 1). As Don Keough said, “Coke is number one in the world and should be number one
in every way.”
No
Figure 1: Coca-Cola Versus Pepsi-Cola
12
Market Share
10
Lead (%)
8
6
4
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2
0
1965 1970 1975 1980 1984
Bigst prob: Blow from pepsi challenge, MS , exclusive coke drinkers red 18 to1 2%, pepsi inc 4 to 11%reducing
Coke has twice vending machine, dominated fountain, more shelf space, more adv, price competitive then why?
1984- New formulae beat pepsi in blind test-exclusive pepsi preff, 200k tests(focus,experim)
introd not as line exten but flagship brand- "New"word atdded
Proposition:The best has been made better
t
concerns: cannibalization of coke,
How: Press conference : in 48hrs 80% US ppl knew
os
Research by Roy Stout, director of market research, showed that through the seventies the
share of exclusive Coke drinkers dropped from 18 to 12 percent, while the equivalent number
for Pepsi increased from 4 to 11 percent. He argued that, “If we have twice as many vending
machines, dominate fountain, have more shelf space, spend more on advertising, and are
competitively priced, why are we losing share? You look at the Pepsi Challenge and you have
2
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to begin asking about taste.” Executives at Coca-Cola were afraid that Pepsi could soon
surpass the king of colas and could no longer ignore Stout’s case. Brian Dyson said, reflecting
the frustration at Coca-Cola, “To do nothing means that I am forever condemned to not
touching my product even though I know I can make a better product and move with
consumer tastes. To do nothing means you’re locked out of doing what you do for every other
product. If I do nothing I can’t keep my product modern, and eventually anything that doesn’t
3
change in the face of change will wither and die – that’s the law of nature.”
yo
By the fall of 1984, Coke had found a formula that could beat Pepsi consistently in blind taste
tests. Even exclusive Pepsi drinkers preferred it. This formula was then subjected to extensive
market research, involving thousands of consumers all over the country. Research methods
ranged from focus group interviews to sophisticated experiments in simulated grocery stores.
The purpose of these tests was not only to establish the superiority of the new formula over
Pepsi, but also to examine brand switching behaviour and how consumers would react to
changing Coke. On this last question, results were not unambiguous, but generally indicated
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that consumers would accept a change. They also showed that heavy resistance should be
expected from about 5 percent of the consumers, the most loyal Coke drinkers.
After some lengthy internal discussions, it was decided that the new formula could not be
introduced as a line extension or flanker brand. First, the flagship brand had to be the best
product. Second, two Colas would split Coke’s market share and Pepsi would become the
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number one soft drink. Both thoughts were intolerable for Coca-Cola executives.
At the end of 1984, Coca-Cola’s top management unanimously decided to give Coke a new
taste. A top secret mission was launched under the control of Coca-Cola USA that ended with
the official introduction of New Coke on April 23, 1985 during a huge press conference in
New York City, after nearly 200,000 taste tests conducted in a variety of forms and places.
No
The most difficult part of the introduction was to justify the change to the public. Coca-Cola
executives would categorically deny that Pepsi had anything to do with it. They would not
even mention that New Coke beat Pepsi in taste tests. The change was positioned as “the best
has been made even better” because “the new taste of Coke was shaped by the taste of
4
consumers.” It was decided not to mention the dire situation of the flagship brand and the
possible future financial impact and instead to let the press inform the public about these
problems. Moreover, Goizueta was afraid that a simple announcement of a product change or
improvement would be received with a big yawn. Therefore, the word “new” was used to
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label the lighter and better tasting Coke.
4 Roberto Goizueta during the press conference on April 23, 1985.
t
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Dyson wanted the press conference to create as much awareness of possible. Within 48 hours,
80 percent of the U.S. population had heard about the new taste of Coke. It was estimated that
the effect of free publicity equalled to about $100 million in advertising.
Reactions From Competitors and Customers
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Since the date of the press conference was announced a few days ahead of time, PepsiCo had
time to prepare a response. It anticipated the product change and responded with a full-page
ad on the day of the press conference (see Exhibit 5) and sent out a press release declaring
victory. It also provided journalists with a catalogue of questions to be asked at Coca-Cola’s
press conference.
yo
Coca-Cola’s toll-free number was immediately flooded with more than one thousand calls per
day. This number was climbing steadily as time went on. Most people expressed a deeply
negative attitude over the change. This did not concern the project team since consumers
rarely call a company with compliments. The press coverage generally focused on the
increased sweetness of New Coke, questions about calories, and on the fact that the “old”
taste would be withdrawn from the market. It did not mention the product improvement at all.
op
As New Coke was rolled out, the story did not die. The coverage focused entirely on
consumers’ negative reactions. Meanwhile, Pepsi’s commercials made sure that America
knew why Coke changed the “Real Thing.” By mid-May, even non-Coke consumers were
calling the toll-free number in large numbers to complain. Coke executives felt that the protest
was not a rejection of New Coke, but a protest against the loss of old Coke. By June the
public anger started to interfere with the private lives of company employees as they were
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“attacked” by friends and acquaintances. More and more people demanded the return of old
Coke.
In contrast to the negative public outcry reported by the press, Stout’s weekly survey found
general support for New Coke from the start. People indicated that they had heard about it,
tried it, liked it, and would try it again. The most positive reaction came from kids and
teenagers, a major target audience of the reformulation. Seventy percent indicated that they
liked it. New Coke’s overall rating was substantially higher than that of Pepsi. And although
No
national sales were acceptable, Coca-Cola USA decided to cut in half its national advertising
to reduce New Coke’s visibility for a while.
As June arrived, the negative press coverage had not diminished. More worrisome, Stout
detected a downturn in New Coke’s rating. People were no longer expressing an intention to
repurchase. Kids and teenagers had become as negative as adults. While in blind taste tests
New Coke still beat Pepsi, for the first time ever people preferred Pepsi when the brands were
identified. Bottlers, who initially supported the reformulation, started to turn negative.
Do
After lengthy internal discussions Brian Dyson decided to reintroduce the old formula under a
new brand name – Coca-Cola Classic. He still believed that New Coke would eventually
prevail. The introduction of New Coke had several positive consequences. First, the Coca-
Cola Company gained a short-term shelf space advantage as retailers stocked both products.
This advantage, however, vanished as New Coke’s sales waned. Second, and more important,
the public humiliation allowed Roberto Goizueta to accelerate the reformulation of this old-
Announed Press conf date advance-pepsi prepared response: full page ad on victory,
Coke:
Public response: toll free flooded calls negative sentiments, press questioned calories, sweetness, emp attached
Pepsi resp: Ads how ppl knew why coke changes real thing
initially kids preffered, many said they liked it but soon repurchase dropped, everyone turned against it.
Advantages: Roberto changed conservative comp to most proftable/admired
Coke decided to reintroduce old formulae as "Coke classic"
Reduced mkting visibility of new coke for a while
still believed in time new coke will be preffered
Speculators: mating blunder or on purpose/planned
t
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fashioned, conservative company into one of the most profitable and admired businesses.
These positive effects gave raise to speculations that the Coca-Cola Company had planned the
whole thing rather than committing the biggest marketing blunder in history. In response to
these two characterizations Don Keough said, “The truth is we are not that dumb and we are
5
not that smart.”
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Exhibit 1
U.S. Liquid Consumption
1965 1970 1975 1980
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Historical Soft Drink Consumption
Litres per Capita 66.9 84.0 98.4 127.7
As a % of total beverage consumption 9.8 12.4 14.4 18.7
U.S. Market Share by Flavor (%)

Cola 57.6 58.0 64.0
Lemon-Lime 12.0 12.7 12.6
yo
Pepper 4.1 6.6 5.7
Root Beer 4.4 4.1 3.0
Orange 17.1 14.7 9.0
Others
U.S. Liquid Consumption

(Litres/Capita)
op
Soft Drinks 84.0 97.3 126.5
Coffee 132.1 122.1 100.6
Beer 68.5 79.9 89.9
Milk 84.4 80.7 76.2
Tea 19.2 27.0 27.0
Bottled Water 0.0 4.4 10.0
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Juices 24.1 25.2 25.5

Powdered Drinks 0.0 17.8 22.2
Wine 4.8 6.3 7.8
Distilled Spirits 6.7 7.4 7.4
Subtotal 423.7 468.1 493.2
Imputed water consumption 251.6 207.2 182.0
Total* 675.3 675.3 675.3
No
Source: Foley Sharon, Cola Wars Continue: Coke vs. Pepsi in the 1990s (Harvard Business School Case 9-794-
055).
*Assuming that each person consumes 1.85 litres of liquid per day.
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Exhibit 2
Financial Data for the Leading Concentrate Producers ($ millions)
The Coca-Cola Company PepsiCo, Inc.1

1970 1975 1980 1984 1970 1975 1980 1984
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Soft Drinks, USA
Sales 1,207 1,486 1,714 452 1,065 2,768 2,908
Operating 13.2% 11.1% 11.7% 12.3% 10.4% 8.8% 8.5%
Profit/Sales
Consolidated
Sales 1,446 2,773 5,475 7,364 1,082 2,709 5,975 7,699
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Net Profit/Sales 12.2% 9.0% 7.7% 8.5% 5.2% 4.6% 4.4% 2.8%
Net Income/Equity 23% 21% 20% 23% 16% 18% 20% 12%
7-Up Company2 Dr Pepper Company Royal Crown Corp.3

1970 1975 1980 1970 1975 1980 1970 1975 1980
op
Corporate 117 214 353 65 138 339 172 258 438
Sales
Net 9.0% 9.5% NA 10.5% 8.6% 7.8% 6.3% 5.2% 2.3%
Profit/Sales
Net 24% 24% NA 26% 24% 24% 22% 17% 10%
Profit/Equity
tC
1 PepsiCo’s soft drink sales include sales from company-owned bottlers.

2 7-Up was purchased by Philip Morris in 1978.
3 Royal Crown Corporation is made up of RC Cola and Arby’s, a franchised restaurant system.
No
055).
Do
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Exhibit 3
U.S. Soft Drink Market Share (%)
1965 1970 1975 1980 1982 1984

Coca-Cola Company
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Coke 27.9 28.4 26.2 25.3 24.6 22.5
Diet Coke 0.3 5.2
Tab 1.4 1.3 2.6 3.3 4.0 1.6
Sprite & Diet Sprite 1.5 1.8 2.6 3.0 3.3 3.8
Caffeine Free Coke, Diet
Coke & Tab 1.8
Others 2.8 3.2 3.9 4.3 2.5 2.6
yo
Total 33.6 34.7 35.3 35.9 34.7 37.5
PepsiCo, Inc.
Pepsi-Cola 15.7 17.0 17.4 20.4 20.3 19.1
Diet Pepsi 1.9 1.1 1.7 3.0 3.3 3.2
Mountain Dew 1.4 0.9 1.3 3.3 3.2 3.0
Caffeine Free Pepsi &
op
Diet Pepsi 0.4 2.7
Others 1.0 0.8 0.7 1.1 0.9 0.7
Total 20.0 19.8 21.1 27.8 28.1 28.7
7-Up 6.9 7.2 7.6 6.3 6.7 6.8

Dr Pepper 2.6 3.8 5.5 6.0 5.2 5.0
tC
Royal Crown 7.1 6.0 5.4 4.7 3.9 3.1

Other Companies 29.8 28.5 25.1 19.3 21.4 18.9
055).
No
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Exhibit 4
Advertising Spending by Brand in the U.S. ($ millions)
1975 1980 1982 1984

Coca-Cola Company
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Coca-Cola $20.3 $35.6 $44.9 $64.1
Diet Coke 38.0 48.3
Sprite 2.6 10.7 16.2 35.3
Tab 6.5 12.6 22.0 31.8
Total $34.4 $71.1 $125.0 $181.2
yo
PepsiCo, Inc.
Pepsi-Cola $15.0 $39.7 $39.1 $47.8
Diet Pepsi 3.7 11.6 15.0 44.7
Pepsi Light 0.9 5.2 5.4 0.3
Pepsi Free 4.2 20.6
Mountain Dew 2.8 10.2 8.4 11.2
op
Total $25.4 $67.3 $75.3 $124.6
7-Up Company $13.5 $33.4 $32.2 $54.3
Dr Pepper Company $7.8 $18.0 $14.9 $18.8

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Royal Crown Corp. $14.4 $10.0 $16.4 $14.4
Total Industry $114 $241 $317 $490
055).
No
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Exhibit 5
Pepsi’s Full-Page Ad Printed on the Day of the New Coke Introduction
It gives me great pleasure to offer each of you my heartiest
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congratulations. After 87 years of going at it eyeball to eyeball, the
other guy just blinked. Coca-Cola is withdrawing their product from
the marketplace, and is reformulating brand Coke to be more like
Pepsi. … There is no question the long-term market success of Pepsi
has forced this move. … Maybe they finally realized what most of us
have known for years. Pepsi tastes better than Coke.
Well, people in trouble tend to do desperate things … and we’ll
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have to keep our eye on them. But for now, I say victory is sweet, and
we have earned a celebration. We’re going to declare a holiday on
Friday. Enjoy!
Best regards,
Roger Enrico
op
President, Chief Executive Officer
Pepsi-Cola USA
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Source: Enrico, Roger, The Other Guy Blinked and Other Dispatches From the Cola Wars (New York: Bantam
Books, 1987).
No
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INS982
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Launching New Coke
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No
07/2015-4783
This case was written by Markus Christen, Assistant Professor of Marketing at INSEAD. It is intended to be used as a
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basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Additional material about INSEAD case studies (e.g., videos, spreadsheets, links) can be accessed at
cases.insead.edu.
Copyright © 2001 INSEAD
COPIES MAY NOT BE MADE WITHOUT PERMISSION. NO PART OF THIS PUBLICATION MAY BE COPIED, STORED, TRANSMITTED, REPRODUCED OR DISTRIBUTED IN
ANY FORM OR MEDIUM WHATSOEVER WITHOUT THE PERMISSION OF THE COPYRIGHT OWNER.

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US Soft Drink Industry

The Coca Cola Company

The Coca-Cola Reformulation

Figure 1: Coca-Cola Versus Pepsi-Cola

label the lighter and better tasting Coke.

Reactions From Competitors and Customers

1965 1970 1975 1980

U.S. Market Share by Flavor (%)

U.S. Liquid Consumption

Juices 24.1 25.2 25.5

The Coca-Cola Company PepsiCo, Inc.1

7-Up Company2 Dr Pepper Company Royal Crown Corp.3

1 PepsiCo’s soft drink sales include sales from company-owned bottlers.

1965 1970 1975 1980 1982 1984

7-Up 6.9 7.2 7.6 6.3 6.7 6.8

Royal Crown 7.1 6.0 5.4 4.7 3.9 3.1

1975 1980 1982 1984

Total $34.4 $71.1 $125.0 $181.2

7-Up Company $13.5 $33.4 $32.2 $54.3

Dr Pepper Company $7.8 $18.0 $14.9 $18.8

Royal Crown Corp. $14.4 $10.0 $16.4 $14.4

Total Industry $114 $241 $317 $490

It gives me great pleasure to offer each of you my heartiest

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