The hard-nosed men of the New York Stock Exchange yesterday made a snap judgment on the most sensational news in the mighty American soft drinks industry for 99 years. Without even trying the new, sweeter formula Coca-Cola, they backed the initial shock reaction of the amateurs: it tastes more like Pepsi.
By lunchtime yesterday Coca-Cola shares had taken another 1.50 cent pounding on top of the 1.60 they sustained in late trading after the new formula was officially unveiled on Monday, despite the assurances of Coke’s chairman, Mr Roberto Goizueta, that the new taste is smoother, rounder and bolder, not to mention more harmonious. Reporters disagreed.
This was exactly what buoyant Pepsi-Cola executives had hoped for when they ran a street party just a few blocks from Coca-Cola’s Manhattan press conference beneath a banner proclaiming ‘taste the Real real thing,’ and announced a staff holiday tomorrow. Its shares rose comfortably, although at the time of writing, Coke’s dominant share of the £23bn US soft drinks market remains 21.8% to Pepsi’s 17%.
What is at stake is no laughing matter – not at least for Coca-Cola and Pepsi whose products compete in 155 countries, in a market worth $50bn, as symbols of US Multinational capitalism. Coca-Cola has not lightly decided to alter the formula which the Atlanta dentist, John S Pemberton, concocted in 1886.
As all the world knows, the formula ‘Merchandise 7X’ is a secret mixture of water, sugar, caramel, phosphoric acid, vanilla, caffeine, extract of coco leaves, cola nuts and the mystery 7X, but the success of its own Diet-Coke, not to mention caffeine free Coke, plus the steady rise of rivals, notably Pepsi, had persuaded Coca-Cola’s executives to tamper with it. New Coke, which will be world-wide by Christmas, will be slightly sweeter, have two fewer calories per 12 ounce can and a nice new silver and gold touch on the famous red and white logo.
Pepsi says it represents a loss of nerve after an 87-year-old poker game between the two companies, but Coca Cola has tested the new product on 190,000 people in the US and Canada and they like it better than old Coke by 55 to 45% in a blind test, even more when they’re told which is the new one – and by an encouraging, but undisclosed, margin over Pepsi, says Coca-Cola.
Production of old-fashioned Coke ended yesterday and the customers can start passing judgment on May 8.
Not all consumers liked the new formula and within three months Coca-Cola reintroduced the old drink as Coca-Cola Classic. New Coke became Coke II, which lingered in parts of the US until 2002, when it was stopped entirely.