1 00:00:03,090 --> 00:00:05,005 More than 10,000 drinks every second, 2 00:00:06,093 --> 00:00:10,097 generating over $2 billion in sales a day. 3 00:00:12,621 --> 00:00:17,669 And in the 1970s, one brand is synonymous with soda. 4 00:00:17,713 --> 00:00:20,020 - Coca-Cola was this exalted product. 5 00:00:20,063 --> 00:00:22,022 It was the drink God consumed. 6 00:00:23,414 --> 00:00:26,330 But a forgotten rival rises from the ashes 7 00:00:26,374 --> 00:00:30,030 to launch an all out assault on Coke. 8 00:00:30,073 --> 00:00:32,728 - Pepsi. 9 00:00:32,771 --> 00:00:33,685 Igniting a bitter war. 10 00:00:33,729 --> 00:00:35,557 - A little taste test is a joke. 11 00:00:35,600 --> 00:00:37,863 - Come up with a formula that beats Pepsi 12 00:00:37,907 --> 00:00:41,128 in a taste test every single time. 13 00:00:41,998 --> 00:00:44,566 Between two of the most iconic brand names 14 00:00:44,609 --> 00:00:46,089 in history. 15 00:00:46,133 --> 00:00:48,570 - Coca-Cola people wouldn't even utter the name Pepsi. 16 00:00:49,962 --> 00:00:52,530 - Americans love a particular brand. 17 00:00:52,574 --> 00:00:54,402 And they're fanatics. 18 00:00:54,445 --> 00:00:56,317 The battle between Coke and Pepsi 19 00:00:56,360 --> 00:00:59,407 spawns new products and new innovations. 20 00:00:59,450 --> 00:01:00,930 - No one has ever paid anyone $5 million 21 00:01:00,973 --> 00:01:02,366 for a celebrity endorsement. 22 00:01:02,410 --> 00:01:05,065 And only one cola will be crowned King. 23 00:01:05,108 --> 00:01:07,589 - Get them on the phone with me right now. 24 00:01:07,632 --> 00:01:10,070 This is Cola Wars. 25 00:01:34,006 --> 00:01:36,139 It's the early 1970s, 26 00:01:36,183 --> 00:01:37,793 the Vietnam War is raging. 27 00:01:39,011 --> 00:01:41,753 The Cold War has reached its third decade. 28 00:01:41,797 --> 00:01:43,799 And after nearly 20 years of growth, 29 00:01:45,192 --> 00:01:47,368 the US economy is in freefall. 30 00:01:48,325 --> 00:01:49,805 - 1970s were a bad time. 31 00:01:49,848 --> 00:01:52,155 You have high unemployment and high inflation 32 00:01:52,199 --> 00:01:53,330 at the same time. 33 00:01:53,374 --> 00:01:56,246 Arab oil producing countries put an embargo 34 00:01:56,290 --> 00:01:58,379 on selling oil to the United States. 35 00:01:58,422 --> 00:02:01,251 - When the oil crises of the early 1970s 36 00:02:01,295 --> 00:02:04,820 hit the United States, families took it very hard. 37 00:02:04,863 --> 00:02:07,475 People are earning incredibly low wages 38 00:02:07,518 --> 00:02:09,999 and that required them to think about 39 00:02:10,042 --> 00:02:12,306 how they could keep costs down. 40 00:02:12,349 --> 00:02:15,613 - There is a moment in which everyone has to take stock. 41 00:02:15,657 --> 00:02:17,615 Will the economy rebound? 42 00:02:17,659 --> 00:02:19,313 How long will this last? 43 00:02:19,356 --> 00:02:21,750 All of these questions have to be negotiated. 44 00:02:23,055 --> 00:02:24,318 But there's still one product 45 00:02:24,361 --> 00:02:26,842 that offers Americans a sugary escape, 46 00:02:28,800 --> 00:02:32,152 and it's remained unchanged for the last 40 years. 47 00:02:33,240 --> 00:02:34,502 Coca-Cola. 48 00:02:34,545 --> 00:02:37,026 - You know, people they are looking for 49 00:02:37,069 --> 00:02:39,202 something that was distracting. 50 00:02:39,246 --> 00:02:41,509 And you know, I mean sugar does wonders 51 00:02:41,552 --> 00:02:42,858 with everything, right? 52 00:02:45,252 --> 00:02:46,688 - Coca-Cola was mom. 53 00:02:46,731 --> 00:02:48,037 It was apple pie. 54 00:02:48,080 --> 00:02:49,691 It was your trusted friend. 55 00:02:49,734 --> 00:02:51,345 It was always there for you. 56 00:02:51,388 --> 00:02:52,955 There was nothing like it. 57 00:02:53,912 --> 00:02:55,914 Since 1886, 58 00:02:55,958 --> 00:02:58,700 Coca-Cola has grown from a local health tonic 59 00:02:58,743 --> 00:03:01,224 into a global superpower. 60 00:03:01,268 --> 00:03:04,488 And in the 1970s, it's woven into the fabric 61 00:03:04,532 --> 00:03:06,011 of everyday life. 62 00:03:06,055 --> 00:03:09,058 - Coke had always been seen as the perfect product. 63 00:03:09,101 --> 00:03:11,539 There were other companies as well doing the same thing, 64 00:03:11,582 --> 00:03:15,064 but no one had done it on the level of Coca-Cola. 65 00:03:16,283 --> 00:03:18,372 After 50 years of chipping away, 66 00:03:18,415 --> 00:03:21,201 one small competitor has still only captured 67 00:03:21,244 --> 00:03:24,856 6% of Coke's market share, Pepsi. 68 00:03:24,900 --> 00:03:29,600 - Pepsi was created in 1898 in a pharmacy in North Carolina. 69 00:03:29,644 --> 00:03:31,254 Pepsi was labeled a failing brand 70 00:03:31,298 --> 00:03:36,303 and a man named Charles Guth ended up buying Pepsi 71 00:03:37,304 --> 00:03:39,262 and he became rather successful. 72 00:03:39,306 --> 00:03:43,397 But when sugar was rationed during the second World War 73 00:03:43,440 --> 00:03:45,877 and only Coca-Cola got the contract 74 00:03:45,921 --> 00:03:47,575 from the United States government, 75 00:03:47,618 --> 00:03:50,230 then the bottom completely fell out. 76 00:03:52,014 --> 00:03:54,756 In New York by the early 70s, 77 00:03:55,931 --> 00:03:57,933 Coke is outselling Pepsi three to one 78 00:03:57,976 --> 00:04:00,457 in grocery stores and soda fountains. 79 00:04:00,501 --> 00:04:01,676 - What do you have for me? 80 00:04:01,719 --> 00:04:03,068 - Coca-Cola it had always been the best, 81 00:04:03,112 --> 00:04:05,680 but now Pepsi had a terrible market share. 82 00:04:05,723 --> 00:04:07,595 It was worse, not only than Coke, 83 00:04:07,638 --> 00:04:09,771 but it was worse than Dr. Pepper. 84 00:04:09,814 --> 00:04:11,729 Chairman of the board, Don Kendall 85 00:04:11,773 --> 00:04:14,906 has been searching for ways to cut into Coke's market share 86 00:04:14,950 --> 00:04:18,170 and overtake them as the number one soda brand in the world. 87 00:04:18,214 --> 00:04:21,130 - Kendall earned his stripes by heading 88 00:04:21,173 --> 00:04:22,914 the international operation. 89 00:04:22,958 --> 00:04:24,960 He actually tripled sales. 90 00:04:25,003 --> 00:04:28,920 He was a very smart, shrewd incisive man. 91 00:04:28,964 --> 00:04:31,967 - Kendall had a very strong point of view. 92 00:04:32,010 --> 00:04:34,796 When you can't outspend your competitor, 93 00:04:34,839 --> 00:04:36,319 you have to be smarter. 94 00:04:36,363 --> 00:04:37,929 Kendall is desperate to find out 95 00:04:37,973 --> 00:04:39,627 if Coke's higher sales 96 00:04:39,670 --> 00:04:42,586 are because of their massive spending advantage, 97 00:04:42,630 --> 00:04:44,545 or if it's a matter of taste. 98 00:04:45,894 --> 00:04:50,159 And in 1974, Kendall sinks much needed financial resources 99 00:04:50,202 --> 00:04:53,641 into a secret large scale operation to find out. 100 00:04:53,684 --> 00:04:54,903 - Where are we on that? 101 00:04:56,208 --> 00:04:58,820 - To compete head-to-head with Coca-Cola, 102 00:04:58,863 --> 00:05:01,170 in some desperation Don Kendall 103 00:05:01,213 --> 00:05:06,175 decided to do this blind taste test with Coke and Pepsi. 104 00:05:06,610 --> 00:05:10,353 And he would have people sip and tell which one they liked. 105 00:05:10,397 --> 00:05:13,008 Kendall has tasked his second in command, 106 00:05:13,051 --> 00:05:15,663 CEO John Sculley, to lead the project. 107 00:05:18,666 --> 00:05:19,928 - You've run the numbers. 108 00:05:21,059 --> 00:05:23,235 Based on the blind taste test folks prefer Pepsi 109 00:05:23,279 --> 00:05:24,846 52% of the time. 110 00:05:28,763 --> 00:05:30,112 I know, it's not, 111 00:05:31,069 --> 00:05:33,855 not quite what we were hoping. 112 00:05:42,733 --> 00:05:43,865 - That's all we need. 113 00:05:47,912 --> 00:05:51,829 - For Don Kendall realizing that a slim majority 114 00:05:51,873 --> 00:05:56,573 of consumers will pick Pepsi in blind taste tests. 115 00:05:56,617 --> 00:06:00,185 He decided they would capitalize on that. 116 00:06:00,229 --> 00:06:01,839 Don Kendall uses Pepsi's 117 00:06:01,883 --> 00:06:06,017 slim margin of victory to launch a bold assault on Coca-Cola 118 00:06:06,061 --> 00:06:09,412 filming a series of commercials featuring everyday Americans 119 00:06:09,456 --> 00:06:11,414 picking Pepsi over Coke. 120 00:06:12,502 --> 00:06:15,418 He names the campaign, The Pepsi Challenge. 121 00:06:15,462 --> 00:06:17,725 - I want you to tell me what you picked, okay? 122 00:06:18,334 --> 00:06:19,379 - Pepsi. 123 00:06:19,988 --> 00:06:21,555 - Pepsi. 124 00:06:21,598 --> 00:06:25,254 - Consumers at shopping centers and malls and parking lots 125 00:06:25,297 --> 00:06:26,734 blind taste testing. 126 00:06:26,777 --> 00:06:29,040 I mean, it was really quite remarkable. 127 00:06:30,999 --> 00:06:33,741 - It becomes increasingly important for competitors 128 00:06:33,784 --> 00:06:36,265 to be able to identify their product is superior. 129 00:06:36,308 --> 00:06:38,746 And marketing will become absolutely essential... 130 00:06:39,790 --> 00:06:42,445 because really sometimes it was very little difference 131 00:06:42,489 --> 00:06:43,751 between these products. 132 00:06:43,794 --> 00:06:45,143 - You know, it's one thing to say, 133 00:06:45,187 --> 00:06:47,407 "Oh, my car is faster than the other guy's car." 134 00:06:47,450 --> 00:06:49,583 You can quantify that kind of stuff. 135 00:06:49,626 --> 00:06:53,413 It was the first time that superiority claims 136 00:06:53,456 --> 00:06:58,287 were being made on something as ephemeral as taste. 137 00:06:59,462 --> 00:07:01,769 It was very, very bold marketing. 138 00:07:03,858 --> 00:07:06,556 The Pepsi Challenge is a huge success. 139 00:07:06,600 --> 00:07:10,473 As it propels the company into the national consciousness. 140 00:07:10,517 --> 00:07:15,435 Annual sales skyrocket from 775 million cases per year 141 00:07:16,218 --> 00:07:18,089 to nearly 940 million. 142 00:07:18,133 --> 00:07:20,135 - Pepsi hadn't caught up with Coke, 143 00:07:20,178 --> 00:07:23,399 but it was no longer a drop in Coke's bucket. 144 00:07:24,705 --> 00:07:28,230 This was a real major competitor. 145 00:07:31,059 --> 00:07:33,278 And Coke had to acknowledge that. 146 00:07:33,322 --> 00:07:35,063 They just couldn't avoid it anymore. 147 00:07:39,371 --> 00:07:40,808 - The Pepsi Challenge. 148 00:07:42,374 --> 00:07:44,986 So, what's our move? 149 00:07:46,857 --> 00:07:49,120 Robert Woodruff has been chairman of Coca-Cola 150 00:07:49,164 --> 00:07:52,297 since taking over from his father in 1923. 151 00:07:52,341 --> 00:07:54,343 In his five decades in charge, 152 00:07:54,386 --> 00:07:57,651 the visionary Woodruff has overseen an unprecedented era 153 00:07:57,694 --> 00:08:00,480 of innovation from the invention of the six pack 154 00:08:00,523 --> 00:08:04,048 to the automatic soda fountain to the modern vending machine 155 00:08:04,092 --> 00:08:07,095 and has turned the brand into a global icon. 156 00:08:08,400 --> 00:08:10,315 But for the first time in decades, 157 00:08:10,359 --> 00:08:14,145 Woodruff is facing a direct threat to Coke supremacy. 158 00:08:14,189 --> 00:08:17,192 - For Woodruff, Pepsi's marketing, 159 00:08:17,235 --> 00:08:20,500 just ungentlemanly behavior. 160 00:08:20,543 --> 00:08:24,242 You were never supposed to refer directly to your competitor 161 00:08:24,286 --> 00:08:26,331 and you certainly weren't supposed to do anything 162 00:08:26,375 --> 00:08:28,203 like the blind taste test. 163 00:08:30,031 --> 00:08:30,858 - Paul? 164 00:08:32,555 --> 00:08:34,252 - It's a stunt. 165 00:08:34,296 --> 00:08:36,167 A cheap gimmick. 166 00:08:36,211 --> 00:08:37,734 I'll talk to advertising, 167 00:08:37,778 --> 00:08:39,867 come up with a counter-marketing campaign. 168 00:08:41,042 --> 00:08:42,565 That little taste test is a joke. 169 00:08:43,740 --> 00:08:46,090 And we'll make sure the whole world knows it. 170 00:08:46,134 --> 00:08:47,396 - Everyone in agreement? 171 00:08:53,054 --> 00:08:56,623 Goizueta, any thoughts? 172 00:08:58,668 --> 00:09:00,583 Unlike most of Coke's executives 173 00:09:00,627 --> 00:09:02,585 who have been in place for years, 174 00:09:02,629 --> 00:09:05,762 a young Cuban immigrant named Roberto Goizueta 175 00:09:05,806 --> 00:09:08,243 has recently been promoted to Vice-President 176 00:09:08,286 --> 00:09:09,897 of Research and Development. 177 00:09:09,940 --> 00:09:11,376 - As a chemical engineer, 178 00:09:11,420 --> 00:09:15,380 Goizueta gets hired in Cuba to work for Coca-Cola. 179 00:09:15,424 --> 00:09:17,426 Then Fidel Castro comes to power 180 00:09:17,469 --> 00:09:19,733 and Cuba becomes a communist society. 181 00:09:19,776 --> 00:09:22,910 Goizueta decides to defect to the United States 182 00:09:22,953 --> 00:09:24,433 and eventually gets a job 183 00:09:24,476 --> 00:09:26,740 with Coca-Cola Headquarters in Atlanta 184 00:09:26,783 --> 00:09:29,003 working his way up through the ranks. 185 00:09:29,046 --> 00:09:32,441 At age 35 he was the youngest person ever 186 00:09:32,484 --> 00:09:34,922 appointed to his position. 187 00:09:38,969 --> 00:09:39,753 - Maybe... 188 00:09:41,755 --> 00:09:43,844 Maybe we run some taste tests of our own. 189 00:09:44,932 --> 00:09:47,282 On the off chance that Pepsi's right, 190 00:09:47,325 --> 00:09:48,457 we should find out why. 191 00:09:50,633 --> 00:09:52,766 - That's a waste of time. 192 00:09:53,680 --> 00:09:55,769 America loves Coca-Cola. 193 00:09:55,812 --> 00:09:58,206 No taste test is going to change that. 194 00:09:59,294 --> 00:10:02,297 - Goizueta was a pragmatic businessman 195 00:10:02,340 --> 00:10:06,649 and he was one of the few people who actually recognized 196 00:10:06,693 --> 00:10:10,784 that Pepsi became a totally serious challenger. 197 00:10:16,703 --> 00:10:18,226 - Run the counter-programming. 198 00:10:21,316 --> 00:10:25,146 - Woodruff wasn't in complete denial of the Pepsi Challenge. 199 00:10:25,189 --> 00:10:27,975 They refuse to admit that anybody can seriously 200 00:10:28,018 --> 00:10:30,542 have a preference for Pepsi. 201 00:10:30,586 --> 00:10:34,155 Basically, he didn't want to change anything. 202 00:10:34,198 --> 00:10:35,286 Robert Woodruff's failure 203 00:10:35,330 --> 00:10:37,462 to recognize the Pepsi threat, 204 00:10:37,506 --> 00:10:40,640 opens the doors to a fight for cola dominance 205 00:10:42,163 --> 00:10:44,687 that will be waged for years to come, 206 00:10:44,731 --> 00:10:47,342 leading to even more of the best known products 207 00:10:47,385 --> 00:10:51,346 on the planet and the most infamous in history. 208 00:11:15,631 --> 00:11:17,372 By the mid 1970s, 209 00:11:17,415 --> 00:11:19,548 the conflict in Vietnam has ended 210 00:11:19,591 --> 00:11:22,333 and the country falls deeper into a recession. 211 00:11:23,770 --> 00:11:25,206 - So after the Vietnam War, 212 00:11:25,249 --> 00:11:27,164 there's this kind of hangover effect. 213 00:11:27,208 --> 00:11:29,384 Hundreds of thousands of people unmployed 214 00:11:29,427 --> 00:11:30,733 and they found themselves at the mercy 215 00:11:30,777 --> 00:11:32,996 of forces beyond their control. 216 00:11:33,040 --> 00:11:34,563 - People are living in conditions 217 00:11:34,606 --> 00:11:36,434 in which they're working multiple jobs 218 00:11:36,478 --> 00:11:39,611 and they have very little financial resources to draw from 219 00:11:39,655 --> 00:11:41,178 in order to purchase food. 220 00:11:41,222 --> 00:11:45,879 So fast food is often the reasonable and practical choice 221 00:11:45,922 --> 00:11:48,316 for people under a lot of pressure. 222 00:11:48,359 --> 00:11:51,754 At a time when a big Mac costs only 15 cents, 223 00:11:51,798 --> 00:11:55,758 fast food offers an affordable meal for an entire family. 224 00:11:55,802 --> 00:11:57,194 By the end of the decade, 225 00:11:57,238 --> 00:12:00,154 McDonald's will have over 6,000 franchises 226 00:12:00,197 --> 00:12:02,243 all across the country. 227 00:12:02,286 --> 00:12:06,769 And only Coca-Cola is served exclusively 228 00:12:06,813 --> 00:12:08,815 at every single one. 229 00:12:08,858 --> 00:12:10,817 - Coke owned the market. 230 00:12:10,860 --> 00:12:13,428 People would go to fast food restaurants 231 00:12:13,471 --> 00:12:16,257 and be shocked if they would serve Pepsi. 232 00:12:21,697 --> 00:12:23,090 Pepsi President Don Kendall 233 00:12:23,133 --> 00:12:26,093 is fresh off the success of the Pepsi Challenge 234 00:12:26,136 --> 00:12:27,616 and his market share is growing 235 00:12:27,659 --> 00:12:29,792 for the first time in a decade. 236 00:12:29,836 --> 00:12:32,795 Now, he's looking for new ways to defeat Coke 237 00:12:32,839 --> 00:12:35,450 and become the world's best-selling cola. 238 00:12:35,493 --> 00:12:36,712 - I want Pizza Hut. 239 00:12:36,756 --> 00:12:38,148 I want Taco Bell. 240 00:12:38,192 --> 00:12:39,454 I want KFC. 241 00:12:40,672 --> 00:12:43,458 I don't care what it costs. 242 00:12:43,501 --> 00:12:47,462 Just put the contract on my desk and I'll sign it. 243 00:12:50,944 --> 00:12:53,468 But Kendall isn't satisfied signing deals 244 00:12:53,511 --> 00:12:56,297 to just serve Pepsi in restaurants. 245 00:12:56,340 --> 00:13:00,214 In 1978, he invests over $1 billion 246 00:13:00,257 --> 00:13:03,043 to buy the restaurant chains themselves. 247 00:13:03,086 --> 00:13:06,394 - At the time, the notion of a soft drink company 248 00:13:06,437 --> 00:13:09,789 acquiring restaurants was quite shocking. 249 00:13:11,878 --> 00:13:14,576 - By acquiring these restaurant chains, 250 00:13:14,619 --> 00:13:18,362 Pepsi could be assured that only Pepsi would be sold 251 00:13:18,406 --> 00:13:21,148 at all of these stores, nothing else. 252 00:13:21,191 --> 00:13:23,106 So it was the shrewd move. 253 00:13:24,542 --> 00:13:28,285 - To think this plan out and then go ahead and do it. 254 00:13:28,329 --> 00:13:30,113 He had to be pretty ruthless. 255 00:13:31,549 --> 00:13:34,552 Now selling Pepsi in over 5,000 restaurants, 256 00:13:34,596 --> 00:13:38,339 profits increase by $3 billion a year, 257 00:13:38,382 --> 00:13:40,776 fueling Kendall's continued assault 258 00:13:40,820 --> 00:13:42,343 on Coca-Cola's dominance. 259 00:13:42,386 --> 00:13:45,868 - That just shows what an underdog can do 260 00:13:45,912 --> 00:13:47,739 with enough perseverance, 261 00:13:47,783 --> 00:13:50,742 enough imagination with risk-taking. 262 00:13:50,786 --> 00:13:52,614 You may not be number one, 263 00:13:52,657 --> 00:13:55,835 but you're a very, very threatening number two. 264 00:13:59,926 --> 00:14:01,405 900 miles away, 265 00:14:02,580 --> 00:14:04,887 Coke's vice-president of research and development 266 00:14:04,931 --> 00:14:07,194 recognizes the growing threat 267 00:14:07,237 --> 00:14:10,893 and uses his background in chemistry to fight back. 268 00:14:10,937 --> 00:14:14,375 - He had an incredible understanding of Coca-Cola 269 00:14:14,418 --> 00:14:16,072 down to its very formula, 270 00:14:16,116 --> 00:14:19,510 the cinnamon oil, lemon oil, orange oil, 271 00:14:19,554 --> 00:14:22,426 and the vast amounts of sugar. 272 00:14:22,470 --> 00:14:23,863 So he struck out on his own. 273 00:14:24,559 --> 00:14:26,387 Goizueta starts experimenting 274 00:14:26,430 --> 00:14:30,217 with ways to cut costs and increase profits. 275 00:14:30,260 --> 00:14:33,698 - Goizueta is willing to do anything necessary. 276 00:14:33,742 --> 00:14:36,266 And sugar was expensive. 277 00:14:36,310 --> 00:14:40,227 So he became obsessed with high fructose corn syrup. 278 00:14:42,969 --> 00:14:46,189 - Chemists invent high fructose corn syrup. 279 00:14:46,233 --> 00:14:48,800 They're basically taking glucose 280 00:14:48,844 --> 00:14:51,107 and converting it into a fructose. 281 00:14:52,282 --> 00:14:55,851 Things like corn syrup are used to replace cane sugar 282 00:14:55,895 --> 00:14:58,462 in order to keep their costs low. 283 00:14:58,506 --> 00:15:02,162 High fructose corn syrup is 1.5 times sweeter 284 00:15:02,205 --> 00:15:05,165 and roughly one quarter the cost of cane sugar. 285 00:15:06,296 --> 00:15:08,646 But widely consider to have a different flavor, 286 00:15:08,690 --> 00:15:10,257 it has failed to catch on. 287 00:15:12,041 --> 00:15:13,129 - Which is which? 288 00:15:13,173 --> 00:15:14,914 No, no, no, no wait, don't tell me. 289 00:15:33,367 --> 00:15:35,064 This is sugar, that's corn syrup. 290 00:15:39,677 --> 00:15:42,811 - So he would take a certain amount of the syrup, 291 00:15:42,854 --> 00:15:47,033 mix it with a standard amount of the carbonated water 292 00:15:47,076 --> 00:15:50,993 and Goizueta became convinced that high fructose corn syrup 293 00:15:51,037 --> 00:15:52,952 didn't change the taste. 294 00:16:07,967 --> 00:16:08,968 - Thanks for seeing me. 295 00:16:10,186 --> 00:16:11,971 - You've got five minutes. Let's hear it. 296 00:16:13,537 --> 00:16:16,149 - Tell me how much do you know 297 00:16:16,192 --> 00:16:18,281 about high fructose corn syrup? 298 00:16:22,242 --> 00:16:24,070 It's an artificial sweetener, 299 00:16:24,113 --> 00:16:27,160 astronomically cheaper to manufacture than cane sugar, 300 00:16:27,203 --> 00:16:29,640 but it tastes exactly the same. 301 00:16:31,816 --> 00:16:33,905 - Woodruff after all these years, 302 00:16:33,949 --> 00:16:36,038 he had created this whole mystique 303 00:16:36,082 --> 00:16:38,562 around the Coca-Cola formula 304 00:16:38,606 --> 00:16:40,521 and was very, very protective of it. 305 00:16:42,349 --> 00:16:46,483 - So, you're suggesting we change Coca-Cola's recipe? 306 00:16:47,658 --> 00:16:49,225 The same recipe that's been unchanged 307 00:16:49,269 --> 00:16:50,661 for nearly a hundred years? 308 00:16:54,361 --> 00:16:56,319 Is that what you're suggesting? 309 00:16:59,279 --> 00:17:00,758 - Goizueta was a chemist 310 00:17:00,802 --> 00:17:05,067 and he regarded it simply as a formula. 311 00:17:05,111 --> 00:17:08,375 And he had said, "There are no sacred formulas." 312 00:17:12,596 --> 00:17:14,250 - Back during World War II, 313 00:17:14,294 --> 00:17:16,035 when the government rationed cane sugar, 314 00:17:16,078 --> 00:17:19,734 you yourself approved switching Coca-Cola to a beet sugar. 315 00:17:19,777 --> 00:17:22,911 What I'm suggesting is the exact same thing. 316 00:17:22,954 --> 00:17:26,480 We'd simply be switching to another kind of sugar. 317 00:17:36,490 --> 00:17:37,360 - Okay. 318 00:17:39,232 --> 00:17:41,582 In 1980 with Woodruff's blessing, 319 00:17:42,670 --> 00:17:43,932 Coca-Cola introduces 320 00:17:43,975 --> 00:17:46,587 high fructose corn syrup in its recipe. 321 00:17:48,980 --> 00:17:53,159 Goizueta's use of the ingredient pioneers a massive change 322 00:17:53,202 --> 00:17:55,813 in the soda industry and has food brands 323 00:17:55,857 --> 00:17:59,121 like Heinz and Kellogg's quickly following suit. 324 00:17:59,165 --> 00:18:01,471 - Goizueta takes a risk, huge risk 325 00:18:01,515 --> 00:18:03,908 and was incredibly successful. 326 00:18:06,520 --> 00:18:07,825 With the change, 327 00:18:07,869 --> 00:18:12,091 company profits soar by $150 million per year. 328 00:18:15,485 --> 00:18:17,618 - Goizueta proves to Robert Woodruff 329 00:18:17,661 --> 00:18:19,620 he's a brilliant chemist and scientist, 330 00:18:19,663 --> 00:18:22,275 but also had great business acumen. 331 00:18:24,886 --> 00:18:27,541 - How would you like to run the company? 332 00:18:35,331 --> 00:18:37,290 In March, 1981, 333 00:18:37,333 --> 00:18:40,249 Roberto's Goizueta, a Cuban American immigrant 334 00:18:40,293 --> 00:18:44,775 is named CEO of the largest soda empire on earth. 335 00:18:44,819 --> 00:18:48,039 - Everything you're eating has been brought to this country 336 00:18:48,083 --> 00:18:50,172 in this culture by an immigrant. 337 00:18:50,216 --> 00:18:53,306 And I think that more and more are entering 338 00:18:53,349 --> 00:18:55,873 executive positions, board positions 339 00:18:55,917 --> 00:18:57,571 and they're solving problems. 340 00:18:57,614 --> 00:18:59,399 You know, so this notion of it, 341 00:18:59,442 --> 00:19:02,663 what is American is very fluid. 342 00:19:04,882 --> 00:19:09,496 - Roberto Goizueta had an unerring, unswerving devotion 343 00:19:09,539 --> 00:19:13,935 to Coca-Cola and he was willing to take chances. 344 00:19:13,978 --> 00:19:16,633 He was willing to go out on a limb. 345 00:19:17,939 --> 00:19:19,767 Now in charge and armed 346 00:19:19,810 --> 00:19:21,203 with the windfall profits 347 00:19:21,247 --> 00:19:23,771 from the inspired switch to corn syrup, 348 00:19:23,814 --> 00:19:25,338 Goizueta will risk it all 349 00:19:25,381 --> 00:19:27,209 and the Coca-Cola reputation 350 00:19:27,253 --> 00:19:30,995 to try to bring Pepsi to its knees. 351 00:19:36,827 --> 00:19:38,264 In the late 1970s, 352 00:19:38,307 --> 00:19:40,222 American rates of obesity, heart disease and diabetes 353 00:19:40,266 --> 00:19:41,571 are on the rise. 354 00:19:41,615 --> 00:19:43,965 In response in 1977, 355 00:19:44,008 --> 00:19:46,881 the US Health Department releases the first guidelines 356 00:19:46,924 --> 00:19:48,187 on Americans diet. 357 00:19:49,231 --> 00:19:52,713 - It is led by doctors and physicians 358 00:19:52,756 --> 00:19:54,802 raising the concerns around 359 00:19:54,845 --> 00:19:56,847 what the American diet should be. 360 00:19:56,891 --> 00:19:59,937 And the reality is people are thinking about 361 00:19:59,981 --> 00:20:03,114 what they believe is healthy food. 362 00:20:03,158 --> 00:20:05,726 As a result by the mid 1980s, 363 00:20:05,769 --> 00:20:08,250 there was a massive boom in fitness videos, 364 00:20:08,294 --> 00:20:11,688 diet clubs, and gyms all raking in millions. 365 00:20:13,995 --> 00:20:15,953 For the first time in half a century, 366 00:20:15,997 --> 00:20:18,521 the soft drink industry is struggling. 367 00:20:19,696 --> 00:20:22,482 - So all of these diet and nutrition trends 368 00:20:22,525 --> 00:20:23,918 impact these companies 369 00:20:23,961 --> 00:20:26,399 and these companies are now willing 370 00:20:26,442 --> 00:20:28,749 to cater to the concerns of consumers. 371 00:20:32,143 --> 00:20:33,928 - Okay, what else? 372 00:20:33,971 --> 00:20:35,495 With the future prospects 373 00:20:35,538 --> 00:20:38,237 of the unhealthy soft drink business looking bleak, 374 00:20:38,280 --> 00:20:40,282 Don Kendall is desperate for ideas 375 00:20:40,326 --> 00:20:41,979 to keep pace with their rival. 376 00:20:42,937 --> 00:20:44,982 - Coca-Cola is outpacing us on ad spending 377 00:20:45,026 --> 00:20:47,115 by 150 million a year. 378 00:20:47,158 --> 00:20:49,422 Sales a drag until we can find a way to keep up. 379 00:20:51,685 --> 00:20:55,297 - Well, short of me finding $150 million in my desk drawer. 380 00:20:55,341 --> 00:20:56,124 What have we got? 381 00:21:01,825 --> 00:21:02,826 Oh, come on. 382 00:21:02,870 --> 00:21:03,566 You guys are the marketing wizards. 383 00:21:03,610 --> 00:21:04,785 What are your big ideas? 384 00:21:09,093 --> 00:21:10,617 - Sir? If I may. 385 00:21:14,273 --> 00:21:15,796 - I'm sorry. Who is this? 386 00:21:17,232 --> 00:21:18,146 - My new assistant. 387 00:21:20,366 --> 00:21:22,498 - Does he have a name? 388 00:21:22,542 --> 00:21:24,631 - Roger Enrico, sir. 389 00:21:28,417 --> 00:21:31,681 - Roger Enrico was an interesting guy. 390 00:21:31,725 --> 00:21:33,335 He was very young at the time 391 00:21:33,379 --> 00:21:36,382 and he had served over at General Mills 392 00:21:36,425 --> 00:21:37,687 as the brand manager for, 393 00:21:37,731 --> 00:21:39,646 I believe it was Wheaties. 394 00:21:39,689 --> 00:21:41,996 A very smart, shrewd man. 395 00:21:42,039 --> 00:21:43,476 A whiz at marketing. 396 00:21:45,652 --> 00:21:46,479 - Okay, Enrico. 397 00:21:48,916 --> 00:21:49,830 What's your big idea? 398 00:21:55,052 --> 00:21:57,794 - Maybe the move is to beat them in a whole new category. 399 00:22:00,406 --> 00:22:01,189 - Such as? 400 00:22:04,714 --> 00:22:05,976 - Caffeine-free. 401 00:22:12,722 --> 00:22:14,376 In addition to the negative health effects 402 00:22:14,420 --> 00:22:16,987 of sweeteners, studies at the time 403 00:22:17,031 --> 00:22:20,121 site caffeine as a potential contributor to ulcers, 404 00:22:20,164 --> 00:22:22,384 heart disease and bladder cancer. 405 00:22:22,428 --> 00:22:25,735 - Both Coke and Pepsi are rife with caffeine. 406 00:22:25,779 --> 00:22:27,215 You know, cola at this point 407 00:22:27,258 --> 00:22:28,782 was the main source of caffeine 408 00:22:28,825 --> 00:22:31,393 for the American food consumer. 409 00:22:31,437 --> 00:22:33,047 At just 38 years old, 410 00:22:33,090 --> 00:22:35,658 Roger Enrico makes the unprecedented move 411 00:22:35,702 --> 00:22:38,705 of removing the highly caffeinated cola nut 412 00:22:38,748 --> 00:22:41,882 from the Pepsi formula and develops a new weapon 413 00:22:41,925 --> 00:22:43,274 in the Cola Wars. 414 00:22:43,318 --> 00:22:47,757 In 1982, Enrico unleashes Pepsi Free. 415 00:22:47,801 --> 00:22:51,239 - Roger Enrico was incredibly entrepreneurial. 416 00:22:51,282 --> 00:22:53,067 It's really kind of amazing 417 00:22:53,110 --> 00:22:57,071 that most of these great brands that we see 418 00:22:57,114 --> 00:22:58,594 how the recipes change, 419 00:22:58,638 --> 00:23:00,074 how the ingredients change, 420 00:23:00,117 --> 00:23:03,556 how they have to pivot when adversity strikes. 421 00:23:04,774 --> 00:23:06,385 The product is an instant hit 422 00:23:06,428 --> 00:23:08,082 with health conscious Americans. 423 00:23:09,344 --> 00:23:12,434 In its first year, Pepsi sells nearly 2 billion 424 00:23:12,478 --> 00:23:13,870 12 ounce cans, 425 00:23:13,914 --> 00:23:16,917 bringing in a $500 million payday. 426 00:23:18,484 --> 00:23:21,487 - For Enrico, he was very, very effective 427 00:23:21,530 --> 00:23:24,707 in ushering Pepsi into a new age. 428 00:23:24,751 --> 00:23:28,450 - Pepsi's was the Rodney Dangerfield of soft drinks. 429 00:23:28,494 --> 00:23:31,584 Until the mid '80s, it didn't get no respect. 430 00:23:38,765 --> 00:23:41,158 In Atlanta, Roberto Goizueta 431 00:23:41,202 --> 00:23:43,596 readies an immediate response 432 00:23:43,639 --> 00:23:46,250 with a health conscious product of his own. 433 00:23:46,294 --> 00:23:49,776 Taking on the fitness craze with a low-calorie soft drink, 434 00:23:49,819 --> 00:23:53,432 he calls Diet Coke. 435 00:23:53,475 --> 00:23:55,390 - Soft drinks are loaded with sugar, 436 00:23:55,434 --> 00:23:59,481 but Diet Coke begins using a new sweetener called aspartame 437 00:23:59,525 --> 00:24:01,657 which we know as NutraSweet. 438 00:24:01,701 --> 00:24:04,704 That was said to be healthy. 439 00:24:04,747 --> 00:24:06,227 To sell Diet Coke, 440 00:24:06,270 --> 00:24:08,229 Goizueta takes advantage of a revolutionary 441 00:24:08,272 --> 00:24:09,709 advertising tool, 442 00:24:09,752 --> 00:24:11,450 cable television. 443 00:24:13,060 --> 00:24:16,498 - So by the mid '80s, TV really just explodes. 444 00:24:16,542 --> 00:24:20,328 - 24 hours a day you have things that you wanted to see 445 00:24:20,371 --> 00:24:21,982 oftentimes simultaneously. 446 00:24:22,025 --> 00:24:24,375 And that's something that had never been experienced before. 447 00:24:24,419 --> 00:24:28,510 Cable television spread immediately and rapidly. 448 00:24:28,554 --> 00:24:31,382 ♪ Introducing Diet Coke 449 00:24:31,426 --> 00:24:32,949 ♪ You're gonna drink it 450 00:24:32,993 --> 00:24:34,821 ♪ Just for the taste of it 451 00:24:34,864 --> 00:24:38,433 - Diet Coke was one of the best product introductions 452 00:24:38,477 --> 00:24:40,043 of all times. 453 00:24:40,087 --> 00:24:43,003 They basically carpet-bombed the country with advertising. 454 00:24:43,046 --> 00:24:48,225 They were able to piggyback on all the brand recognition 455 00:24:48,269 --> 00:24:51,664 that Coca-Cola had built up over decades and decades 456 00:24:51,707 --> 00:24:55,711 of advertising and Diet Coke just took off. 457 00:24:55,755 --> 00:24:58,148 Diet Coke obliterates Pepsi Free, 458 00:24:58,192 --> 00:25:01,064 becoming the bestselling diet drink in the US 459 00:25:01,108 --> 00:25:04,285 and eventually the number two soft drink overall, 460 00:25:04,328 --> 00:25:06,026 behind only Coca-Cola. 461 00:25:10,944 --> 00:25:12,772 But Don Kendall still recognizes 462 00:25:12,815 --> 00:25:16,950 the ingenuity of his young marketing savant, Roger Enrico. 463 00:25:16,993 --> 00:25:19,387 Got a minute. 464 00:25:19,430 --> 00:25:20,214 - Oh Don. 465 00:25:23,652 --> 00:25:24,697 What can I do for you? 466 00:25:25,959 --> 00:25:27,569 - Oh, I'm assuming you've heard. 467 00:25:27,613 --> 00:25:30,354 Sculley accepted a position as CEO at Apple Computers. 468 00:25:31,355 --> 00:25:32,182 - Huh. 469 00:25:33,444 --> 00:25:34,837 Do you know who's taking his place? 470 00:25:36,839 --> 00:25:37,536 - You. 471 00:25:42,018 --> 00:25:43,063 Congratulations. 472 00:25:46,936 --> 00:25:49,286 - When Roger Enrico's appointed CEO of Pepsi, 473 00:25:49,330 --> 00:25:51,593 he was 38 years old. 474 00:25:51,637 --> 00:25:54,335 - Enrico who's one of the youngest presidents 475 00:25:54,378 --> 00:25:56,032 of any major corporation. 476 00:25:56,990 --> 00:25:58,600 - He was a ferocious marketer. 477 00:25:58,644 --> 00:26:01,472 He was the hardest worker anyone had ever seen. 478 00:26:01,516 --> 00:26:03,083 He was an original thinker. 479 00:26:04,650 --> 00:26:05,825 - Thank you. 480 00:26:05,868 --> 00:26:07,522 Thank you, sir. 481 00:26:07,566 --> 00:26:09,350 - Coca-Cola's still number one, 482 00:26:09,393 --> 00:26:11,004 Diet Coke is number two 483 00:26:11,047 --> 00:26:13,267 and Pepsi-Cola is number three. 484 00:26:13,310 --> 00:26:16,270 And I'm sure a very difficult time for Enrico 485 00:26:16,313 --> 00:26:18,707 to become president of the company. 486 00:26:18,751 --> 00:26:20,666 With Coca-Cola sales once again 487 00:26:20,709 --> 00:26:22,624 dominating the soft drink market, 488 00:26:22,668 --> 00:26:25,279 it's up to the untested Roger Enrico 489 00:26:25,322 --> 00:26:28,499 to fire the next shot in the Cola Wars. 490 00:26:28,543 --> 00:26:32,199 And what comes next will be the biggest marketing maneuver 491 00:26:32,242 --> 00:26:33,113 of all time. 492 00:26:40,163 --> 00:26:41,208 It's 1981 and youth culture 493 00:26:41,251 --> 00:26:42,644 is driving television advertising. 494 00:26:42,688 --> 00:26:44,211 A game so challenging, 495 00:26:44,254 --> 00:26:46,474 you need this combat control panel to play it. 496 00:26:46,517 --> 00:26:48,302 - The rise of the American teenager 497 00:26:48,345 --> 00:26:53,133 was something that was a phenomenon in the 1950s. 498 00:26:53,176 --> 00:26:54,656 Well, in the 1980s, 499 00:26:54,700 --> 00:26:58,660 you have the adolescent now extended into the 20s 500 00:26:58,704 --> 00:27:01,184 with disposable income. 501 00:27:01,228 --> 00:27:04,100 Without the burdens of a mortgage, kids, 502 00:27:04,144 --> 00:27:06,668 that now becomes a major focus 503 00:27:06,712 --> 00:27:09,149 of anybody who wants to sell products. 504 00:27:09,192 --> 00:27:10,977 And so the entire kind of commercial culture 505 00:27:11,020 --> 00:27:13,066 gets geared to the young. 506 00:27:14,676 --> 00:27:17,984 On August 1st, MTV officially launches 507 00:27:18,027 --> 00:27:21,857 triggering a new era of pop stardom like never before. 508 00:27:21,901 --> 00:27:26,688 - MTV combined entertainment, music, information, 509 00:27:26,732 --> 00:27:30,170 hangout culture and videos as radio 510 00:27:30,213 --> 00:27:35,654 into one unified form of inclusion 511 00:27:35,697 --> 00:27:39,179 for a demographic of people 18 to 34. 512 00:27:39,222 --> 00:27:40,789 And I think that's something 513 00:27:40,833 --> 00:27:44,706 that effectively changed everything. 514 00:27:44,750 --> 00:27:50,233 MTV's importance to the evolution of humankind 515 00:27:50,277 --> 00:27:51,887 cannot be understated. 516 00:27:51,931 --> 00:27:53,149 To keep up with Coca-Cola's 517 00:27:53,193 --> 00:27:54,977 surging Diet Coke sales, 518 00:27:55,021 --> 00:27:59,242 Pepsi's new CEO needs another revolutionary idea. 519 00:28:00,722 --> 00:28:04,204 Using the new cultural shift toward the power of celebrity, 520 00:28:04,247 --> 00:28:06,902 Roger Enrico makes a bold proposition 521 00:28:06,946 --> 00:28:09,339 unlike any CEO before him. 522 00:28:09,383 --> 00:28:10,732 - I'm not sure how to phrase this, 523 00:28:10,776 --> 00:28:12,560 so I'm just gonna come right out and say it. 524 00:28:12,603 --> 00:28:13,387 - Okay. 525 00:28:15,476 --> 00:28:18,174 - I want to pay Michael Jackson $5 million 526 00:28:18,218 --> 00:28:19,480 to be the face of Pepsi. 527 00:28:21,787 --> 00:28:25,747 - Michael Jackson is the biggest thing since sliced bread. 528 00:28:25,791 --> 00:28:30,186 And at the height of his popularity Enrico decides 529 00:28:30,230 --> 00:28:33,537 I am going to get the biggest pop star on the planet 530 00:28:33,581 --> 00:28:34,800 to endorse Pepsi. 531 00:28:35,626 --> 00:28:36,845 Michael Jackson 532 00:28:36,889 --> 00:28:39,239 is fresh off the success of thriller, 533 00:28:39,282 --> 00:28:42,721 which will go on to sell over 66 million records, 534 00:28:42,764 --> 00:28:45,593 making it the best selling album in history. 535 00:28:45,636 --> 00:28:47,421 Leading the "Guinness Book of World Records" 536 00:28:47,464 --> 00:28:51,077 to dub him the most successful entertainer of all time. 537 00:28:52,600 --> 00:28:54,167 - You want to pay him $5 million? 538 00:28:55,168 --> 00:28:56,343 - Yes. 539 00:28:56,386 --> 00:28:58,606 For two commercials and a concert tour. 540 00:29:00,695 --> 00:29:05,091 Oh, also Coca-Cola is interested in him. 541 00:29:11,488 --> 00:29:15,362 - Well, then you better do it quick. 542 00:29:18,321 --> 00:29:22,369 - If you can latch in with advertising a potential consumer 543 00:29:22,412 --> 00:29:26,242 at the age of 16 and then grow with them, 544 00:29:26,286 --> 00:29:28,418 then you have a lifetime consumer. 545 00:29:28,462 --> 00:29:30,464 And ultimately for advertisers 546 00:29:30,507 --> 00:29:33,772 being able to create lifetime consumers 547 00:29:33,815 --> 00:29:35,948 at a far younger age than ever before 548 00:29:35,991 --> 00:29:40,779 effectively it made commerce an industry unto itself 549 00:29:40,822 --> 00:29:42,650 like it had never been before. 550 00:29:42,693 --> 00:29:44,826 Roger Enrico inks Michael Jackson 551 00:29:44,870 --> 00:29:48,787 to the largest celebrity endorsement contract in history, 552 00:29:48,830 --> 00:29:52,051 equal to over $12.5 million today. 553 00:29:53,443 --> 00:29:57,534 And in 1984, filming begins on his first Pepsi spot. 554 00:29:57,578 --> 00:29:59,710 - And famously what they did was they leaked 555 00:29:59,754 --> 00:30:02,104 the amount that had been spent on him. 556 00:30:02,148 --> 00:30:05,499 And it became this big moment 557 00:30:05,542 --> 00:30:08,371 where this brand, the number two soda 558 00:30:08,415 --> 00:30:11,244 got the number one pop star on the planet. 559 00:30:11,287 --> 00:30:13,724 - Now, unfortunately, during the filming 560 00:30:13,768 --> 00:30:16,989 of one of these ads in the very last take 561 00:30:17,032 --> 00:30:21,994 Michael Jackson's hair, through a wayward fireworks, 562 00:30:22,037 --> 00:30:24,953 caught fire and he was taken to the hospital 563 00:30:24,997 --> 00:30:27,521 and it caused a big sensation. 564 00:30:32,700 --> 00:30:35,659 - That only served to grow 565 00:30:35,703 --> 00:30:38,967 the legend of Michael and Pepsi even more. 566 00:30:39,011 --> 00:30:40,360 When the ads air, 567 00:30:40,403 --> 00:30:41,840 they're an instant sensation 568 00:30:41,883 --> 00:30:44,755 seen by 99% of the American public 569 00:30:44,799 --> 00:30:47,280 dozens of times over a series of months. 570 00:30:49,891 --> 00:30:51,371 - Yes. Come on in, have a seat. 571 00:30:53,286 --> 00:30:56,376 The campaign boosts sales by nearly $2 billion, 572 00:30:57,812 --> 00:31:02,251 leading to a massive 7.7 billion in total sales for 1984. 573 00:31:03,383 --> 00:31:06,212 - Michael Jackson really became the linchpin 574 00:31:06,255 --> 00:31:08,779 of Pepsi is cool. 575 00:31:08,823 --> 00:31:09,998 Pepsi is hip. 576 00:31:10,042 --> 00:31:12,174 Pepsi is where we want to be. 577 00:31:12,218 --> 00:31:14,046 Coke still doesn't have that. 578 00:31:20,835 --> 00:31:23,229 At Coca-Cola, Roberto Goizueta 579 00:31:23,272 --> 00:31:25,405 watches the company post a net loss 580 00:31:25,448 --> 00:31:28,582 in market shares for the first time in decades. 581 00:31:29,757 --> 00:31:32,412 And the brand that once seemed invincible 582 00:31:32,455 --> 00:31:34,588 is suddenly exposed. 583 00:31:37,112 --> 00:31:37,983 - Yeah. 584 00:31:39,549 --> 00:31:40,899 Whoa, slow down. 585 00:31:42,770 --> 00:31:45,773 What do you mean Burger King is pulling out. 586 00:31:45,816 --> 00:31:48,776 No, you get them on the phone with me right now. 587 00:31:50,082 --> 00:31:52,649 I don't care. Just do it. 588 00:31:53,868 --> 00:31:58,264 - It was the conception that Coke lost to Pepsi 589 00:31:58,307 --> 00:32:00,919 with their marketing and with their advertising, 590 00:32:00,962 --> 00:32:02,921 which is why Burger King defected. 591 00:32:05,619 --> 00:32:08,578 Infuriated by Pepsi's rising popularity, 592 00:32:08,622 --> 00:32:12,104 Roberto Goizueta is determined to regain Coca-Cola's crown. 593 00:32:12,147 --> 00:32:13,279 - Can I have your attention. 594 00:32:13,322 --> 00:32:14,802 By doing the one thing 595 00:32:14,845 --> 00:32:17,587 that has been unthinkable for almost a hundred years. 596 00:32:17,631 --> 00:32:19,502 - From now on your assignment, 597 00:32:19,546 --> 00:32:22,984 your only assignment is to come up with a formula 598 00:32:23,028 --> 00:32:26,466 that guarantees Coke beats Pepsi in a taste test 599 00:32:26,509 --> 00:32:28,642 every single time. 600 00:32:29,817 --> 00:32:30,992 He's going to change 601 00:32:31,036 --> 00:32:33,647 the sacred Coca-Cola formula itself. 602 00:32:35,518 --> 00:32:36,476 - Don't look at me. 603 00:32:38,695 --> 00:32:39,479 Get to work. 604 00:33:08,595 --> 00:33:10,162 - Now in 1985. 605 00:33:10,205 --> 00:33:13,730 And it's certainly the peak of the Cola Wars. 606 00:33:13,774 --> 00:33:15,297 It doesn't get any more intense. 607 00:33:16,168 --> 00:33:19,171 Pepsi had won a battle, but they didn't win the war. 608 00:33:20,607 --> 00:33:22,391 In a response to a flurry of victories 609 00:33:22,435 --> 00:33:24,350 by his greatest rival, 610 00:33:24,393 --> 00:33:27,396 Roberto Goizueta is planning the most radical change 611 00:33:27,440 --> 00:33:30,747 in Coca-Cola's nearly 100 year history, 612 00:33:30,791 --> 00:33:33,011 modifying its sacred formula. 613 00:33:35,709 --> 00:33:38,059 - It was called Project Kansas, 614 00:33:38,103 --> 00:33:42,672 and it was done on secrecy worthy of the CIA, 615 00:33:42,716 --> 00:33:44,935 worthy of the Kremlin. 616 00:33:44,979 --> 00:33:47,199 No one knew about it. 617 00:33:47,242 --> 00:33:50,724 - Coca-Cola and Goizueta we're so obsessed with the idea 618 00:33:50,767 --> 00:33:53,553 that they were going to break the commandments. 619 00:33:53,596 --> 00:33:55,859 They were going to go ahead 620 00:33:55,903 --> 00:34:00,647 and have a dramatic flavor change 621 00:34:00,690 --> 00:34:04,303 that it would go down in history as one of the boldest 622 00:34:04,346 --> 00:34:07,349 and most brilliant moves that he could make. 623 00:34:13,355 --> 00:34:14,617 While the project is a secret 624 00:34:14,661 --> 00:34:16,054 from the rest of the world, 625 00:34:17,316 --> 00:34:20,058 news leaks to Pepsi Headquarters in New York. 626 00:34:21,450 --> 00:34:24,105 - My source tells me it'll either be called Coke Light, 627 00:34:24,149 --> 00:34:26,586 Coke II or New Coke. 628 00:34:26,629 --> 00:34:27,848 - And it's supposed to be what? 629 00:34:27,891 --> 00:34:29,676 Just another new product. 630 00:34:29,719 --> 00:34:31,678 - No, that's the thing, 631 00:34:31,721 --> 00:34:33,071 it's replacing Coca-Cola. 632 00:34:42,993 --> 00:34:44,256 - They're admitting defeat. 633 00:34:48,260 --> 00:34:49,087 We won. 634 00:34:52,481 --> 00:34:54,701 - Enrico realized, Hey, wait a minute. 635 00:34:54,744 --> 00:34:58,922 What this means is that Pepsi was so good, 636 00:34:58,966 --> 00:35:03,797 so effective and so superior to Coca-Cola 637 00:35:03,840 --> 00:35:09,281 that Coca-Cola after 99 years of hammering away 638 00:35:09,324 --> 00:35:12,980 about how great it was had to take its flagship, 639 00:35:13,023 --> 00:35:17,463 iconic product off the market and replace it with a new one. 640 00:35:20,857 --> 00:35:24,165 Meanwhile, Roberto Goizueta forges ahead 641 00:35:24,209 --> 00:35:25,514 with his bold plan. 642 00:35:26,776 --> 00:35:28,648 That's regular, plain old Coca-Cola. 643 00:35:28,691 --> 00:35:29,997 - Okay. 644 00:35:30,040 --> 00:35:33,435 - And this, this is the formula for Diet Coke 645 00:35:33,479 --> 00:35:36,177 but sweetened with the same high fructose corn syrup 646 00:35:36,221 --> 00:35:37,657 found in regular Coca-Cola. 647 00:35:45,404 --> 00:35:46,318 - It tastes better. 648 00:35:47,536 --> 00:35:48,320 - We know. 649 00:35:51,888 --> 00:35:55,327 - The flavor was as though you had mixed two-part Pepsi 650 00:35:55,370 --> 00:35:57,155 to one part Coke. 651 00:35:57,198 --> 00:36:00,288 And the greater lemony note was prevalent. 652 00:36:00,332 --> 00:36:03,987 The taste was eerily like Pepsi. 653 00:36:05,902 --> 00:36:07,513 - Coke had done a lot of research 654 00:36:07,556 --> 00:36:10,342 and they had done focus groups too. 655 00:36:10,385 --> 00:36:12,387 They certainly thought that they would come out 656 00:36:12,431 --> 00:36:14,868 with Coke II, the great fanfare and say, 657 00:36:14,911 --> 00:36:15,999 "We've improved it. 658 00:36:16,043 --> 00:36:18,698 It's the same Coca-Cola, only better." 659 00:36:18,741 --> 00:36:21,048 In the spring of 1985, 660 00:36:21,091 --> 00:36:24,530 Goizueta shuts down production on Coca-Cola 661 00:36:24,573 --> 00:36:28,011 and dedicates all his bottling lines to the new product. 662 00:36:29,361 --> 00:36:32,015 Introducing the new taste of Coca-Cola. 663 00:36:32,059 --> 00:36:34,235 That's right, a new taste of Coke. 664 00:36:34,279 --> 00:36:38,718 on April 23rd, New Coke replaces Coca-Cola 665 00:36:38,761 --> 00:36:40,850 as the flagship product of the largest, 666 00:36:40,894 --> 00:36:44,071 most legendary cola manufacturer in history. 667 00:36:44,114 --> 00:36:45,246 - It is catching on. 668 00:36:45,290 --> 00:36:46,552 The taste is better and newer than, 669 00:36:46,595 --> 00:36:47,509 than, than, than-- 670 00:36:47,553 --> 00:36:49,555 Pepsi! 671 00:36:49,598 --> 00:36:51,687 - You just said the P word. 672 00:36:51,731 --> 00:36:53,515 - I thank you all for coming. 673 00:36:53,559 --> 00:36:55,387 I'm opening up the floor to any questions. 674 00:36:55,430 --> 00:36:56,388 If anybody has any. 675 00:36:57,650 --> 00:36:59,217 - Is it true you've changed the formula 676 00:36:59,260 --> 00:37:01,044 to make Coke more like Pepsi? 677 00:37:02,132 --> 00:37:04,439 - No, I wouldn't say that's accurate at all. 678 00:37:04,483 --> 00:37:07,007 We've improved the flavor profile. 679 00:37:07,050 --> 00:37:08,226 It's better than Pepsi. 680 00:37:20,194 --> 00:37:22,675 - New Coke was absolutely atrocious, 681 00:37:22,718 --> 00:37:24,764 disgusting, undrinkable. 682 00:37:24,807 --> 00:37:25,939 It wasn't good. 683 00:37:27,027 --> 00:37:28,289 And in fact, 684 00:37:28,333 --> 00:37:31,597 the nation overwhelmingly told Coca-Cola that. 685 00:37:31,640 --> 00:37:34,034 - In this day and age it's hard to understand 686 00:37:34,077 --> 00:37:36,776 the visceral reaction so many people had 687 00:37:36,819 --> 00:37:40,954 to the loss of their friend Coca-Cola. 688 00:37:40,997 --> 00:37:43,478 People were convinced that this was almost a betrayal 689 00:37:43,522 --> 00:37:47,613 of the covenant that Coca-Cola had built over the years. 690 00:37:47,656 --> 00:37:51,094 And the American people just rebelled against that. 691 00:37:51,138 --> 00:37:52,574 The unprecedented gamble 692 00:37:52,618 --> 00:37:54,663 to change their renowned formula 693 00:37:54,707 --> 00:37:56,578 could finally end their streak 694 00:37:56,622 --> 00:37:59,189 as the number one cola in the world. 695 00:37:59,233 --> 00:38:00,974 Unless Goizueta can come up 696 00:38:01,017 --> 00:38:03,281 with another revolutionary maneuver. 697 00:38:11,376 --> 00:38:12,290 - Can you describe the taste of New Coke? 698 00:38:14,379 --> 00:38:16,337 Roberto Goizueta has just launched 699 00:38:16,381 --> 00:38:20,515 a newly formulated recipe for Coca-Cola called New Coke. 700 00:38:20,559 --> 00:38:23,997 And the reaction is not at all the victory he expected. 701 00:38:24,040 --> 00:38:25,303 - It's uh... 702 00:38:27,174 --> 00:38:28,306 It's rounder... 703 00:38:29,916 --> 00:38:30,960 smoother... 704 00:38:32,266 --> 00:38:35,487 more harmonious, yet bolder. 705 00:38:44,887 --> 00:38:47,716 The failure of New Coke is so catastrophic, 706 00:38:47,760 --> 00:38:50,502 the company never releases official sales figures. 707 00:38:52,417 --> 00:38:54,027 But all across the country, 708 00:38:54,070 --> 00:38:57,552 millions of cans and bottles go unsold. 709 00:38:57,596 --> 00:38:59,206 - In the 20th century, 710 00:38:59,249 --> 00:39:02,818 a failure in business was seen to be almost a moral failure. 711 00:39:04,254 --> 00:39:08,998 And here the first person to take over since Robert Woodruff 712 00:39:09,738 --> 00:39:11,392 takes a huge risk. 713 00:39:11,436 --> 00:39:14,395 Changes the very fabric of Coca-Cola itself, 714 00:39:14,439 --> 00:39:16,528 falls on his face. 715 00:39:21,924 --> 00:39:24,405 For Pepsi, it's a hard fought victory 716 00:39:24,449 --> 00:39:26,364 after a hundred years of battle. 717 00:39:27,800 --> 00:39:30,019 - Here, take this down will you. 718 00:39:33,283 --> 00:39:37,418 To all Pepsi bottlers and Pepsi-Cola company personnel, 719 00:39:37,462 --> 00:39:41,422 it gives me great pleasure to offer each of you 720 00:39:41,466 --> 00:39:43,511 my heartiest congratulations. 721 00:39:43,555 --> 00:39:46,862 After 87 years of going at it, eyeball-to-eyeball, 722 00:39:47,820 --> 00:39:49,387 the other guy just blinked. 723 00:39:52,651 --> 00:39:54,304 Maybe they just realized 724 00:39:54,348 --> 00:39:56,437 what most of us have known for years, 725 00:39:56,481 --> 00:39:58,047 Pepsi tastes better than Coke. 726 00:39:59,875 --> 00:40:03,749 For now, I say victory is sweet 727 00:40:03,792 --> 00:40:05,403 and we've earned a celebration. 728 00:40:11,017 --> 00:40:13,149 - Enrico was so happy over this, 729 00:40:13,193 --> 00:40:16,022 he put in the full page in the New York Times, 730 00:40:16,065 --> 00:40:19,939 touting the fact that Pepsi-Cola had finally prevailed 731 00:40:19,982 --> 00:40:23,464 over the Coca-Cola company and he gave everyone 732 00:40:23,508 --> 00:40:27,120 in the company a day off to celebrate. 733 00:40:33,692 --> 00:40:35,781 But at Coca-Cola Headquarters, 734 00:40:35,824 --> 00:40:37,260 with his back against the wall, 735 00:40:37,304 --> 00:40:40,699 Roberto Goizueta quickly realizes his mistake 736 00:40:40,742 --> 00:40:43,484 and plans to relaunch the original recipe. 737 00:40:43,528 --> 00:40:46,052 - Despite the hoopla, the ads, 738 00:40:46,095 --> 00:40:49,969 after three months they finally came back 739 00:40:50,012 --> 00:40:52,841 with what they call Coca-Cola Classic. 740 00:40:52,885 --> 00:40:54,669 Coca- Cola Classic. 741 00:40:54,713 --> 00:40:56,758 It's the way you said it should be 742 00:40:56,802 --> 00:40:59,500 because you know what you've always known. 743 00:40:59,544 --> 00:41:02,242 - But the remarkable thing 744 00:41:02,285 --> 00:41:05,506 was that when they brought back Coca-Cola Classic, 745 00:41:05,550 --> 00:41:09,815 it suddenly began outselling Pepsi and gaining market share. 746 00:41:11,294 --> 00:41:13,819 - You know, if you want people to appreciate something, 747 00:41:13,862 --> 00:41:16,865 the best way to do it is just to take it away from them 748 00:41:16,909 --> 00:41:17,953 for a little while. 749 00:41:17,997 --> 00:41:18,998 That's what happened. 750 00:41:20,303 --> 00:41:22,349 - Some people thought that they had actually 751 00:41:22,392 --> 00:41:25,134 done this whole thing as an elaborate marketing stunt, 752 00:41:25,178 --> 00:41:28,442 which was certainly not the case. 753 00:41:29,399 --> 00:41:30,662 They just screwed up big time. 754 00:41:32,577 --> 00:41:34,013 - And in his failure, 755 00:41:34,056 --> 00:41:38,539 Goizueta proves to have the largest success 756 00:41:38,583 --> 00:41:39,845 and becomes a catalyst 757 00:41:39,888 --> 00:41:41,847 for one of the largest periods of growth. 758 00:41:41,890 --> 00:41:44,284 And had Goizueta not taking that risk. 759 00:41:44,327 --> 00:41:47,853 Had he not risked it all, fell on his face, 760 00:41:47,896 --> 00:41:51,247 they could not have generated the amazing sales they had 761 00:41:51,291 --> 00:41:54,033 in the wake of its reintroduction. 762 00:41:54,076 --> 00:41:57,036 And possibly saved Coke in the long run. 763 00:42:00,692 --> 00:42:02,520 After a decade long war, 764 00:42:02,563 --> 00:42:04,870 both companies emerged triumphant. 765 00:42:04,913 --> 00:42:07,873 - The Cola Wars ends up being an environment 766 00:42:07,916 --> 00:42:10,136 of cutthroat competition. 767 00:42:10,179 --> 00:42:12,791 However, I think you had 768 00:42:12,834 --> 00:42:15,794 a profound sense of mutual respect. 769 00:42:15,837 --> 00:42:19,711 And as we see in Brooklyn, "Game recognizing game." 770 00:42:19,754 --> 00:42:22,235 Today, annual revenue from Coca-Cola 771 00:42:22,278 --> 00:42:24,629 totals $32 billion. 772 00:42:24,672 --> 00:42:27,457 And PepsiCo's combined food and soda brands 773 00:42:27,501 --> 00:42:29,285 rake in $64 billion. 774 00:42:30,635 --> 00:42:34,247 - You are either a Coke person or you're a Pepsi person. 775 00:42:34,290 --> 00:42:36,641 It's like, you're a Democrat or you're a Republican. 776 00:42:36,684 --> 00:42:39,469 People still feel really strongly 777 00:42:39,513 --> 00:42:42,429 about their preferred cola brand. 778 00:42:43,778 --> 00:42:45,606 Coke and Pepsi continue to compete 779 00:42:45,650 --> 00:42:48,261 in a soft drink market expected to grow 780 00:42:48,304 --> 00:42:50,655 six and a half percent every year 781 00:42:50,698 --> 00:42:52,613 for the right to declare themselves 782 00:42:52,657 --> 00:42:54,876 the undisputed Kings of Cola. 783 00:42:54,920 --> 00:42:56,443 - It used to be that Coca-Cola 784 00:42:56,486 --> 00:42:58,924 was the best known word on earth. 785 00:42:58,967 --> 00:43:00,882 I don't know what the future will hold. 786 00:43:01,970 --> 00:43:03,581 It'll be interesting to find out.