Monday, December 28, 2009

New Coke not a conspiracy?....I think not

I was just watching that CNBC profile of Coke and they brought up the "New Coke Fiasco". I can't help but document my view on what happened.

I've always had a food intolerance to high fructose corn syrup. My favorite soft drink growing up was always Coca-Cola. I never liked Pepsi. That's because they made it with sucrose, always, everywhere. Until 1985. That's when the biggest, most effective marketing organization the world had seen (other than the tobacco companies, granted) made a "stupid mistake". They brought out "New Coke", which was just Old Coke with corn syrup.

They pitched it to compete with Pepsi, but not in the way you might think.

I firmly believe this was no mistake. I think it was calculated to move away from the original formula. I believe that management wanted (or needed) some extra latitude with cost control in their supply chain, but didn't want to alienate any customers by pulling a fast one. So they came out with New Coke - while retiring "Old Coke". If successful, they achieved their goal. But I also believe they had "Classic Coke" in the can, ready to go as a contingency (do you really believe marketeers of this caliper are gonna make a move like this without a backup plan?). Classic Coke came out too fast after New Coke "failed". But Classic Coke wasn't Old Coke. If you read the can, it says "Sucrose and/or High Fructose Corn Syrup".

I'd have to go run the numbers, but I'd be willing to bet the amount of money they "lost" in the New Coke "fiasco" was made back many times over in the first year of buying corn syrup. Remember, those were the Reagan years, the ADM price fixing years. I'm sure Coke was tired of sitting on the sidelines, dealing with the Cubans or Jamaicans and the beet farmers. There was no way to compete on a cost basis with Pepsi (always a corn syrup product).

What do you think?

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