Everything Everywhere Daily: History, Science, Geography & More - The Cola Wars

Episode Date: November 20, 2021

In the 1980s, two superpowers battled each other for global supremacy. Across the world, the two goliaths collided on almost every front. In the end, it left a landscape littered with millions dead…..tired of listening to their commercials. Learn more about the Cola Wars and how they changed economics, culture, and soft drinks, on this episode of Everything Everywhere Daily. Learn more about your ad choices. Visit megaphone.fm/adchoices

In the 1980s, two superpowers battled each other for global supremacy. Across the world, the two Goliaths collided on almost every front. In the end, it left a landscape littered with millions dead. Tired of listening to their commercials. Learn more about the Cola Wars and how they changed economics, culture, and soft drinks on this episode of Everything Everywhere Daily. Do you ever climb into bed ready to sleep only to have your mind start racing the moment your head hits the pillow?

thoughts bouncing around, replaying the day or jumping ahead to tomorrow? That is exactly why Catherine Nikolai created Nothing Much Happens. Each episode is a gentle, cozy bedtime story where, well, nothing much happens. No drama, no tension, nothing you need to follow closely. Just soft narration, calming repetition, and soothing sensory details designed to help your mind slow down and your body relax. It's not about entertainment, it's about rest. And millions of listeners around the world use it every night to quiet their thoughts and finally fall asleep.

If you've ever struggled to shut your brain off at night, this might be exactly what you've been missing. You can listen to Nothing Much Happens wherever you get your podcasts. Episodes are every Monday and Thursday. Technically speaking, the Cola Wars actually started in the 19th century. The original recipe for Coca-Cola was created by John Sideth Pemberton, who was a Confederate veteran of the Civil War. He suffered an injury during the war, which led to his morphine addiction.

He created Coca-Cola in an attempt to create a painkiller using cocaine. Yes, that is actually all true, but the story of a morphine-addicted Confederate soldier creating one of the world's most popular products will be left for another episode. The Coca-Cola Corporation was founded in 1896, and two years later in 1898, Caleb Bradham of North Carolina, renamed the beverage he created known as Brad's Drink and called it Pepsi Cola. I'm pretty sure you'll agree that Pepsi is a far better name than Brad's Drink. The Pepsi Cola Corporation was created in 1902. The two companies competed against each other from the beginning.

The truth is that the two products were, and are, not that radically different from each other. Even if you have a preference for one over the other, the preference usually isn't so great that you wouldn't take the other if it was the only thing available. Moreover, the recipes for Coke and Pepsi were for the most part set in stone. It's a very strange economic model where there wasn't a lot of room for innovation. Coke was what Coke was and Pepsi was what Pepsi was. They could do their best to convince people to buy their product, but they weren't coming out with new models of the product every year. So, because they really couldn't compete on product, they resorted to competing with advertising. Coca-Cola famously created the modern

version of Santa Claus, and much of their advertising in the early 20th century was selling a very wholesome, folksy image of their product. Both Coke and Pepsi also heavily emphasized point-of-sale advertising, with signs at restaurants and stores encouraging people to consume their product. During the Great Depression, Pepsi switched from a 6.5-ounce bottle, which both companies used and sold for 5 cents, to a 12-ounce bottle for 5 cents. Packaging and pricing was one of the areas where the companies could actually innovate. During the Second World War, both Coke and Pepsi competed with each other throughout the entire conflict. Coke worked closely with the government and was exempt from sugar rationing. Pepsi, however, had to import sugar from Mexico because they didn't get an exemption.

Coke was given special status with the U.S. Armed Forces and actually built 64 bottling plants overseas to meet the demands of the military. During the war, soldiers consumed 5 billion bottles of Coca-Cola. Pepsi complained to the federal government about the favoritism which Coke received, but nothing ever happened. Basically, Pepsi constantly found themselves at number two behind Coke. And for those of you who would be thinking, what about Royal Crown or RC Cola? Forgetting about RC Cola in the Cola Wars is like forgetting that Bulgaria was in the access powers during World War II, or forgetting that Aquaman was a member of the Justice League. So, a number two Pepsi was pretty much the state of things throughout the entire 20th century. In 1972, 18% of cola consumers said they drank Coke exclusively, whereas only 4% claimed to consume Pepsi exclusively.

Then in 1975, Pepsi did something which seemed pretty innocuous. but was the first salvo in what would become known as the Cola Wars. They began a marketing campaign known as the Pepsi Challenge. The Pepsi Challenge was a really simple gimmick. Pepsi would set up booths and mall, shopping centers, and other public places, and asked people to take a blind taste test with Coke and Pepsi. And of course, they filmed many of these taste tests where people would choose Pepsi and then use them in television commercials.

The Pepsi Challenge wasn't just a marketing gimmick. Consistently, and even when tested in a controlled environment, Pepsi would be preferred about 57% of the time. Moreover, Coca-Cola's own internal testing showed the exact same thing. The simple taste test turned out to be a huge milestone in the war between Coke and Pepsi. By the early 1980s, the percentage of consumers drinking Coke exclusively dropped from 18% to 12% and the percentage drinking Pepsi exclusively climbed to 11% from 4%. This was despite the fact that Coke was outspending Pepsi by $100 million in advertising

every year. For the first time in almost a century, Pepsi was almost caught up with Coke. Coke had made some significant changes in the early 1980s. First, in 1980, they switched from sugar as their primary sweetener to high-fructose corn syrup. And that subject, I can assure you, absolutely will be a future episode someday. The other thing they did was, for the first time, put the Coke brand on another product. Their new artificial sweetener product called Diet Coke in 1982. However, Coke itself was still losing market share, both to Pepsi and to the artificially sweetened products. By 1983, their 60% market share had held during World War II had dropped down to 24%. It was in this environment that an idea was floated by Coca-Cola's head of consumer

marketing, Roy Stout. He said, quote, you got to start asking why, if we have twice the shelf space, twice the vending machines, and are competitively priced, are we still losing market share? You look at the results of the Pepsi challenge, and you have to begin asking about taste. End quote. The general comments made about Pepsi was that it was sweeter and had a smoother taste. Coke was considered as having more of a bite or tasting more acidic. Coke's vice president of marketing and its USA president headed a secret project to change the formula of Coke so it was more competitive with Pepsi and taste tests.

They went into the lab and kept tinkering with the taste. They got it to where they won 50% of the tests, and then they were eventually beating Pepsi regularly by 6 to 8%. Basically, everything Coke did was in response to Pepsi. Pepsi set the terms of the debate, and Coke was acting in an entirely reactionary fashion. On April 23, 1985, Coke proudly announced to the world that they were changing the formula to their signature soft drink after 99 years. In fact, the Coke CEO said it was, quote, the surest move the company has ever made, end quote. Everyone began calling it New Coke, the old. old formula was to be retired, and there were no plans to sell it as a separate product.

Coca-Cola stock went up after the announcement, and it made news all over the world. Initial sales of Coke after the announcement actually went up by 8% as people were curious about the new product. However, you probably know what happened next, because it has become a cultural touchstone. The public reaction to new Coke was swift, severe, and extremely negative. Coke received over 40,000 letters complaining about the new formula. The Coke hotline had the number of Paul's quadruple, almost all of them were negative. New Coke was the butt of jokes on late-night television. People began to boo at baseball games when Coke advertisements played in the stadium. Fidel Castro even chimed in, saying it was evidence of American capitalist decadence.

Coca-Cola CEO was Roberto Goyzweeta, who was from a family that fled Cuba. He said Castro's opinion of New Coke was the only time in his life that he ever heard his father agree with him. Consumers had protests in cities where they poured New Coke into the streets, and some people began to try to buy old Coke from overseas. Groups like old cola drinkers of America were formed. Pepsi, for their part, took out a full-page ad in the New York Times declaring victory in the Cola Wars. The day after Coke's announcement, Pepsi gave their employees the day off by saying, quote, by today's actions, Coke has admitted that it's not the real thing. And for those of you who weren't alive back then, one of Coke's slogans was, Coke, it's the real thing. The reaction became so

negative that on July 11th, only 79 days after the announcement, the Coca-Cola Corporation announced that they would be bringing back the old formula under the name Coca-Cola Classic. Behind the scenes, Coke executives assume that Coke Classic would be temporary. It would silence the critics and then eventually just wither away. The new formula would be continued to be sold as Coca-Cola. However, that never happened. In 1992, just seven years later, Coca-Cola reverted to their original formula. New Coke formula was now called Coke 2. Coke continued to use the word classic on its labels until 2009. Coke 2 was only in a few markets by 1998, and by 2002, it was officially retired.

Despite the entire new Coke debacle, Coke sales actually went up after it was announced. In 1985, Coke also released Cherry Coke, which was a big hit. All the attention and publicity surrounding the new Coke rollout, and the subsequent reversal, brought the company an enormous amount of free publicity. In fact, there are conspiracy theories. believe the Coca-Cola Corporation knew the backlash would happen all along, and they did it just to get people to show commitment to the brand. Several decades of interviews with executives involved indicate that absolutely was not the case. So what went wrong? Basically, taste tests where you take a small

sip of something don't really give you an indication of how something really tastes. Studies have found that if you just take a small sip of something, you tend to prefer sweeter tastes, just like Pepsi had. consumers had almost a hundred years to compare Coke and Pepsi, and they always came down on the side of Coke. Pepsi got Coke to second-guess their own successful product, which led them to creating new Coke. The Cola Wars have never really ended. In all of my travels around the world, I've seen local beers and wines in every country, but soft drinks are truly global. How its bottled, package, and advertise might be different, but the product is pretty much the same everywhere. Pepsi, despite their gains in the 1980s, never surpassed Coke in terms of market share. Pepsi had their own interesting share of product launches, aka Crystal Pepsi, which was a

version of Pepsi with no coloring. In a strange epilogue to the story of New Coke, the Coca-Cola Corporation announced in 2019 that they were bringing New Coke back for a limited time promotion, in conjunction with the Netflix series Stranger Things. They created 500,000 cans, and it was only sold online. This time, there was so much demand for New Coke that it actually crashed their servers. The associate producers of Everything Everywhere Daily are Peter Bennett and Thor Thompson. If you'd like to support the show, please join the list of patrons over at patreon.com.

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