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The Competition Between Coke and Pepsi

I am writer and blogger. Because I have such diverse interests, I write about a wide range of topics.

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Coca-Cola

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Can you tell the difference between Coke and Pepsi? I suspect that most of you guys would say yes, but statistically, this is not true. In fact, the average person’s ability to differentiate between the two is not much better than random chance. Researchers have been studying this phenomenon for decades at this point with one of the first studies coming from the University of Wichita. In the first part of this study, participants were given Coca-Cola, Pepsi, or RC Cola and they were asked to guess which one was which. Only 41% of participants were able to correctly identify Coca-Cola while 38% identified Pepsi and 35% identified RC Cola. Off the bat, these aren’t very good results given that the majority failed to identify any of them correctly. But, this gets way worse when we take a look at the second part of the study.


The researchers had a feeling that the reason more people were able to guess Coca-Cola correctly was not because they were able to tell the difference but simply because they were more likely to guess Coca-Cola. To confirm this, the researchers gave the participants three cups of the same soda without telling them that it was the same soda. And then, the participants were asked to identify which one was which. As you would guess, the results were quite similar to that of the first part. 45% of participants were able to correctly identify Coca-Cola while 32% identified Pepsi and 25% identified RC Cola. But while most people can’t statistically tell the difference between Coca-Cola and Pepsi, 71% say that they would choose Coke over Pepsi.


One of the top reasons they cite for this preference is a seemingly larger caffeine boost which is quite ironic given that Pepsi is the one with more caffeine. Clearly, Coke has won the branding wars by a mile, but the funny part is that it’s not just competitors who can’t overcome Coke’s branding. Even Coca-Cola themselves can’t overcome Coke’s branding. So, here’s the most notable attempts of companies trying to beat Coke and why they all failed.

The Pepsi Challenge

Likely one of the most valiant efforts against Coke’s dominance was the Pepsi challenge which made its debut in the mid 1970s. By this point, Pepsi and Coke had already been fighting for market share for over 70 years. Yet, it seemed like Coke always had the upper hand. No matter what ads Pepsi ran, who they marketed to, or what endorsements they had, the majority of people simply chose Coke. This made Pepsi quite mad, not just because all of their efforts were wasted but because they strongly believed that they had the superior product. They hadn’t just run a few dozen or even a few hundred taste tests. Pepsi had run 3000 blind taste tests, and the majority preferred Pepsi.


So, in 1975, Pepsi would publicly call out Coke for having inferior taste and challenge viewers to participate in the Pepsi challenge. They set up pop up taste tests at malls, department stores, parks, basically anywhere they could, and they had random people blindly taste Pepsi and Coke. As you would guess, most of them would choose Pepsi, and Pepsi would film their live reactions and compile them into commercials. These commercials were actually super effective as many people decided to give Pepsi a shot. In fact, by 1983, Pepsi was outselling Coke in supermarkets.


There’s rumors that after seeing the success of the Pepsi challenge, Coca-Cola started filming their own Coke challenge. But they never aired this footage because the majority of participants actually ended up choosing Pepsi. So, it doesn’t look like Pepsi was faking their results, but despite this, Pepsi was never able to overtake Coca-Cola in overall market share. The closest they got was in 1980 when Pepsi market share hovered in the high 20s and Coca-Cola market share hovered in the mid 30s. One of the key reasons for this was Coca-Cola’s far larger reach thanks to their dominance amongst soda machines and fast food restaurants. But, while Coca-Cola was able to keep their lead, the Pepsi challenge definitely hurt their ego, and it wouldn’t be long until they fired back with their own new product.

New Coke

In the early 1980s, Coca-Cola began running their own internal taste tests, but instead of having people choose between Pepsi and Coke, they had people choose between Pepsi, Coke, and a new formulation of Coke. Clearly, Coca-Cola was convinced that their original product was starting to lose its flair and that it was time to revamp their formula. This was obviously a bold move, and Coca-Cola definitely did not take this task lightly. They spent years tweaking the flavor and they conducted 190,000 blind taste tests. And it wasn’t until they could definitively prove that their new formulation was the preferred taste that they decided to make the change. And with that, on April 23, 1985, Coca-Cola’s CEO, Roberto Goizueta, proudly announced the launch of New Coke.


Despite their great expectations though, new coke started hitting obstacles from the second it was launched. First of all, the launch of the new coke itself was an admission that Pepsi did in fact have the superior product. And secondly, the new coke was noticeably sweeter than the original coke just like Pepsi. And this was yet another admission that Pepsi was right all along. Pepsi’s executives were ecstatic. After 87 years, they had finally gotten a response from Coca-Cola. Pepsi’s executives were actually so hyped that they gave their employees the rest of the day off. Meanwhile, Coca-Cola’s executives were also super optimistic.


The CEO called new Coke “the surest move ever made” and the president declared that new Coke was the most confident decision he had ever made. While Coke was publicly admitting that Pepsi was right, they now had a product that was definitely better. There’s no way 190,000 taste tests were wrong right? Well, the taste tests were indeed most likely accurate, but consumers didn’t care. Coke fans didn’t want a better Coke, they just wanted Coke. And given that Coca-Cola had discontinued the old version, consumers had no choice but to voice their opinions.

Classic Coke

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In the weeks following the announcement, 5000 customers called the company on a daily basis requesting that the original coke was brought back. Within a few months, this number actually grew to 8000 calls per day which forced Coca-Cola to hire more phone operators. Aside from all these angry phone calls, people were publicly showcasing their hatred for new Coke. For example, consumers across America were pouring new Coke down sewer drains. And one guy in Seattle even filed a lawsuit against Coca-Cola to bring back the original Coke. Of course, this lawsuit didn’t go anywhere, but it was a clear sign of just how much people despised the move.


At first, Coca-Cola tried to ignore the resistance as much as possible, likely thinking that it would go away sooner or later. But, as the resistance just continued to get stronger, Coca-Cola finally gave in just 79 days after announcing New Coke. The president of Coca-Cola declared that while they had believed that New Coke was the way forward, in the end, their boss is the consumer, and it was clear what the consumer wanted. Coca-Cola would go on to bring back the original recipe as Coca-Cola classic. And if you’ve ever wondered why old bottles of coke say the word “classic” on them, this is why. Almost instantaneously, the original formula would overtake the new formula in sales and regain its positions as the world’s most popular soda.


Coca-Cola didn’t just kill off New Coke though. They rebranded New Coke as Coke II in 1990 and they kept it around till 2002. While this was likely not a very fun experience for Coca-Cola, this actually turned out to be a massive benefit. The time away from original coke showed people just how much they liked the soda, and loyalty to the drink became stronger than ever before. This positive outcome has prompted many to speculate whether the entire fiasco was planned from the beginning. But I think Coca-Cola’s former president says it best. “The truth is we’re not that dumb and we’re not that smart.”

Why New Coke Failed

In retrospect, it’s clear that neither Pepsi or Coca-Cola’s attempts at displacing the original soda were successful, but why? Every statistic that we know tells us that New Coke and Pepsi tasted better and that people can’t even identify the drink based on the taste. So, why in the world was there such a negative reaction to new Coke? Well, the answer boils down to two parts: the logical side and the emotional side.


From a logical perspective, you could argue that a taste test is not a very good measure of what people would like to drink on a regular basis. One of the main reasons that both Pepsi and New Coke performed better in taste tests was because they were both sweeter than classic Coke. And when you’re only tasting a few sips of each soda, most people are naturally going to choose the soda that’s sweeter. But, when we’re talking about a full can of soda or even multiple cans, it’s likely that people reach flavor fatigue much faster with the sweeter soda. As a result, while people may prefer sweeter options in a taste test, they tend to prefer classic Coke over the long term.


The only problem with this line of reasoning though is that it assumes that people can discern between Coke and Pepsi which is statistically not true. Now of course, if you’re drinking Pepsi and Coke side by side like the taste testers, you can likely tell that they don’t taste exactly alike. But, if you were randomly given one or the other, you likely wouldn’t be able to correctly guess what you were given. Considering this, people’s preference for classic coke likely has less to do with logical reasoning and more to do with emotional reasoning. And a great example of this is the results of yet another study.


In this study, the researchers gave participants two bottles of soda. One was labeled with the letter L while the other was labeled with the letter S, but the contents of the two bottles were identical. Given that it’s the same soda, there should theoretically be no statistically significant difference between people’s preference for either soda. Yet, participants overwhelmingly preferred the soda with the letter S. The explanation for this is actually that the average person tends to like the letter S more than the letter L meaning that it has nothing to do with the soda itself. Some researchers further proved this by giving people Pepsi in a Coca-Cola bottle and Coca-Cola in a Pepsi bottle, and the participants didn’t notice. So clearly, taste was not the factor that was holding back any of these drinks.

Nostalgia

In the end, I think the main reason that Pepsi or Coca-Cola nor any other soda brand can ever displace classic Coke is due to nostalgia. In our extremely fast paced world, everything around is rapidly changing. We don’t have the same phones or computers that we had 10 years ago, but we all still drink the same soda that our parents and their parents drank. And as we all grow older, soda is one of the few things that we come across on a daily basis that remind us of our childhood and how things used to be.


For example, I wasn’t around when New Coke came out, but I do specifically remember an instance relating to classic Coke. Way back in 2007, I was at Seaworld and we had both Coke and Sprite cans, and I remember wondering why the Coke can said classic but the sprite can didn’t. I was only 5 years old at the time and I remember being sad that my drink of choice, Sprite, was not a classic. It wasn’t till 10 years later that I actually found out what the classic meant. And now, whenever I hear about new coke or coke classic, I always think about going to Seaworld as a kid. I suspect this nostalgic feeling is way stronger for someone who’s 50, 70, 90 years old.


Coke is one of the few things that remind them of their own childhoods way back in the 1930s or 40s. And as long as Coke carries this nostalgic significance, it’s gonna be nearly impossible to displace. Do you like Coke or Pepsi? Comment that down below.


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