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How the 'Blood Feud' Between Coke and Pepsi Escalated During the 1980s Cola Wars

Was the unpopularity of New Coke actually a blessing in disguise for Coca-Cola?
Cola Wars

The great Cola Wars of the 1980s were a battle between Coca-Cola and PepsiCo for dominance. The disastrous introduction of “New Coke” in 1985 appeared to set Coca-Cola back. Yet by the end of the year, it was clear the “mistake” had actually helped Coca-Cola’s sales, allowing Coke to retain its spot as the largest-selling soda over Pepsi.

The two companies were both well-established by the time the Cola Wars broke out. Coca-Cola dated back to 1886, when a pharmacist in Columbus, Georgia invented the drink and began selling it to soda fountains. Six years later, the Coca-Cola Company was founded by an Atlanta pharmacist who’d secured the recipe (which contained small amounts of cocaine until 1929). Up in North Carolina, another pharmacist invented his own sugar-drink in 1893. After seeing the success of Coca-Cola, he changed his soda’s name from “Brad’s Drink” to “Pepsi-Cola” in 1898 and founded the Pepsi-Cola Company in 1902.

Over the next several decades, Coke emerged as the more popular soda. Starting in 1931, its famous Santa Claus ads marketed it as a refreshing drink you could enjoy year round. Meanwhile, the Pepsi-Cola Company struggled financially and went through several reorganizations. (In 1965, it merged with Frito-Lay, Inc. to become PepsiCo, Inc.) But in 1975, Pepsi started a marketing campaign that gave Coke a run for its money: the “Pepsi Challenge,” a blind taste test showing more people preferred Pepsi over Coke.

“The Pepsi Challenge was not just a marketing gimmick—it was true,” says David Greising, author of I'd Like the World to Buy a Coke: The Life and Leadership of Roberto Goizueta, Coca-Cola's CEO. Internal studies at Coca-Cola “confirmed what the Pepsi Challenge was showing, which is that if you just look at the taste of the beverage, consumers preferred Pepsi,” which had a “sweeter, more syrupy flavor.”

New Coke

Coca-Cola Company CEO Roberto Goizueta (left) and President Donald R. Keough toast each other with cans of "New Coke", which the company switched to after 99 years of the previous formula.

Coke was still outselling Pepsi, but its market share was declining as Pepsi’s was rising. “Part of the problem with the success of the Pepsi Challenge was that Coke had fallen into a malaise as a brand,” he says. “People were in love with the notion of Coca-Cola, but they weren’t necessarily drinking Coca-Cola.” 

In response, Coca-Cola started doing a few things differently. In 1982, it released its first drink to share Coke’s name: Diet Coke. The next year, it released caffeine-free versions of Coke and Diet Coke. CEO Roberto Goizueta also got the company to use corn syrup instead of sugar to reduce the cost of production.

That switch to corn syrup opened the door for bigger changes to the original Coke’s recipe. On April 23, 1985, Coca-Cola announced it was changing the secret formula for the flagship drink. The “New Coke,” as it became known, would have a sweeter taste, more similar to the Pepsi that consumers favored in blind taste tests.

Yet instead of being thrilled, people were outraged that they couldn’t buy the original Coke anymore. And Pepsi happily capitalized on the backlash. In one Pepsi commercial, a young girl upset about New Coke takes shots at the company’s integrity—“First they said they were ‘The Real Thing,’ then they said they were ‘It’”—then tries her “first Pepsi” and declares she now knows why Coke changed. A voiceover declares that Pepsi is “The Choice of a New Generation.”

READ MORE: The New Coke Flop

Yet former Coke fans didn’t just abandon the drink for Pepsi like the girl in the commercial. Instead, they organized. Grassroots organizations like “Old Cola Drinkers of America” sprung up around the country to petition the company to change the recipe back. On July 11, 1985—less than three months after Coca-Cola announced the formula change—the company announced it would bring back the old formula under the brand name “Coca-Cola Classic.”

Meanwhile, the company continued to sell New Coke as regular “Coca-Cola.” Despite the negative public reaction, some people at the company still thought New Coke would eventually overtake Coca-Cola Classic, which the company could then retire.

New Coke

Cans of New Coke and Coca-Cola Classic on display during a news conference in Atlanta, 1985.

“Obviously that never did happen, because of the way that New Coke’s image was tainted out of the gate,” Greising says. “They were never able to convince consumers of what was evident in the taste tests, which was that they preferred New Coke.” The company rebranded the new drink as “Coke II” in 1992, but it never took off and Coca-Cola discontinued it in 2002.

Overall, the New Coke debacle was a financial success for Coca-Cola. “People all of a sudden wanted to actually taste the beverage again, and not just kind of feel good about it,” Greising says. Coca-Cola continued to top Pepsi’s yearly sales going forward. In 2010, for the first time, both Coke and Diet Coke surpassed Pepsi’s sales, leading the Wall Street Journal to run a headline declaring Diet Coke the winner in the Cola Wars. But one could also argue the wars never ended.

“This is a blood feud between the two companies, the likes of which we have rarely seen in the history of business,” Greising says. “The high point of the Cola Wars in some ways was the 1980s, but the Cola Wars have continued and are still being fought today.”

Just look at the current marketing. In 2019, Coca-Cola announced it was bringing back New Coke for a limited time. And if reading that makes you want to go out and buy a classic Coke, then it looks like the gimmick worked.

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