Coke Zero Is Being Pulled From Shelves. Why Kill a Brand With So Many Fans?

People mostly choose cola because they love the taste, not because they expect a healthy drink. Sugar-free cola only keeps the guilt to a minimum.

If you are a diehard fan of Coke Zero, a recent piece of news may leave you a little sad: on the July 26 earnings call, Coca-Cola's global CEO James Quincey told the world that Coke Zero would disappear from shelves entirely starting this month, beginning with the US market.

The news that Coke Zero was being killed off caused a stir. The 12-year-old brand was still one of the ten best-selling sodas in the US last year, and its sales even grew 3.5%. With soda sales falling across the board, Coca-Cola's decision is all the more puzzling.

This sugar-free, calorie-free drink had also done something to repair cola's unhealthy image. As soon as word got out, fans crowded onto social media to mourn it, begging Coca-Cola to reverse the decision and even warning the company not to repeat the New Coke debacle of 1985. American GQ ran a whole piece joking about it: "Rest in peace, Coke Zero. This world is cruel and unkind, and you deserved better." At moments like this it is hard not to marvel at the size of the fanbase.

Of course Coca-Cola is not about to let a popular drink vanish that easily. Along with ending Coke Zero, it announced the birth of a product called Coke Zero Sugar. The ingredients are identical to Coke Zero's, still artificial sweeteners like aspartame. The difference is that the replacement, in taste and in packaging, lines up much more closely with original Coca-Cola. It seems aimed at people who love the thick sweetness of the original but also want to keep their figure.

James Quincey said on the call that the change would help lift profits in Coca-Cola's sugar-free drinks business. Coke Zero had done well, but it had never filled the big hole left by falling sales of the other sugar-free cola, Diet Coke. Rather than let people waver between two sugar-free colas, better to give them new positions now — which also simplifies the choice for fans of the original: sugar or no sugar.

As for why the company did not drop the underperforming Diet Coke instead, that probably has to do with its standing and its position in the lineup. Diet Coke arrived in 1982, not as a tweaked version of the Coca-Cola formula but as an entirely different recipe. Its original target was the new yuppie crowd — young professionals in the urban working class who needed their aerobic exercise. Carried by Coca-Cola's brand pull, it took nearly 20% of the US diet-drink market within a year of launch and became the fourth-best-selling soft drink. In 2011, when Beverage Digest published its annual soda ranking, Diet Coke passed Pepsi to become the second-biggest drink in the US, ruling the American soft-drink market alongside original Coca-Cola.

But Diet Coke's silver packaging and the word "diet" in its name struck male drinkers as too feminine, so in 2005 Coca-Cola aimed at men with a second diet cola, one closer to the original taste: Coke Zero, in black (whose cans will now carry far more of the classic red).

Euromonitor International's figures, however, show that Coke Zero's sales over the past decade fell short of expectations. Sales have generally trended upward, if weakly, but its market share has stayed low. Diet Coke, meanwhile, though its US sales fell 27% over 15 years, still outsells Coke Zero by a wide margin.

By comparison, Pepsi's Pepsi MAX holds an even weaker position in the US sugar-free market. Built to face off against Coke Zero, it launched first in the UK, Australia and Italy in 1993, and did not reach the US — soda's home turf — until 2007, by which point Coke Zero had already been on sale there for a year. So even though Pepsi spent heavily on ads on big stages like the Super Bowl, Pepsi MAX could not match Coke Zero. Around 2010, Coke Zero sold nearly six times as much as Pepsi MAX. And according to Beverage Digest, as the cola industry's sales fell in recent years, Coke Zero's sales slipped 2% year over year in 2014, while Pepsi MAX's dropped 23%.

The slump in carbonated drinks is by now a fact. The World Health Organization and national food-safety agencies are urging people to drink less of them, and to fight obesity and diabetes more and more countries have begun levying a "soda tax" on high-sugar drinks.

US carbonated soft drink sales fell 1.2% in 2016, the 12th straight year of decline, and consumption per person hit a 31-year low. With its core US market under pressure, Coca-Cola's results look poor too. Coca-Cola's latest quarterly report put revenue at $9.7 billion, down 16% year over year, and profit at $1.37 billion, down 60% — the ninth consecutive quarter of falling revenue and the steepest drop of any quarter so far. The report blamed the decline mainly on the sale and restructuring of the bottling business and on exchange-rate swings, but the company had to admit that the carbonated drinks it once took pride in have lost their shine and have all but become the tobacco of a new era.

There is one more curious thing: even as soda volumes fall, sales revenue in the US market rose 2% last year, to $80.6 billion, mostly because Coca-Cola and Pepsi shrank their packages and raised unit prices.

Cola companies have to think up new ways to attract consumers who now flinch at the word sugar. Simply cutting the sugar may not work, as Coca-Cola Life showed — the green-can, health-themed cola the company launched in 2013. Instead of aspartame it used stevia, an extract from the leaves of the natural stevia plant, as its sweetener. Even with a third fewer calories than standard cola, it still contained 22 grams of sugar, while the World Health Organization advises keeping daily sugar intake under 25 grams. So Coca-Cola Life ended up in an awkward spot: before it could reach the rest of the world, China for instance, it had already withdrawn from the UK, Australia and other countries.

Coke Zero Sugar has in fact been appearing since last year across about 25 countries and regions, among them the UK, Mexico and the Middle East. Coca-Cola believes the new name, "Coke Zero Sugar," gives consumers a more immediate sense of what is in the can than the old "Coke Zero" did — in Britain, after all, roughly half of consumers did not even know Coke Zero was sugar-free. Last year PepsiCo likewise chose to rename Pepsi Max as Pepsi Zero Sugar.

This June, Coca-Cola made a loud announcement that Coke No Sugar, with all-new packaging and flavor, was launching in Australia. This "preview edition" of the American Coke Zero Sugar was the fruit of five years of company research. Coca-Cola brought in Ogilvy to make a series of "Say Yes" television and outdoor ads for it — reportedly the company's biggest investment in a product launch since 2006. The ads' line, "Say Yes to The Taste You Love," runs in the same vein as Coca-Cola's new slogan from last year, "Taste the Feeling": both want people to pay more attention to what cola tastes like in the first place.

The move can also be read as an extension of the "One Brand" strategy Coca-Cola put forward in 2015. The company wanted a cleaner brand image and simpler choices for consumers, so it decided to gather every cola flavor it makes under the single "Coca-Cola" master brand, keeping what is distinct about each product while extending the appeal of each. Coca-Cola standardized its packaging, used color to tell products apart, and marked each package with its particular traits, such as whether it has sugar and how many calories it carries.

The newly installed CEO may push Coca-Cola to be bolder about stretching the brand. This Coca-Cola veteran, who previously ran the Latin American and European markets, wore jeans to the office on his first day after the promotion, trying to grow a culture inside the company that dares to take risks and try new approaches. He wants Coca-Cola to be a "total beverage company" rather than one that cares only about its core Coca-Cola brand: "If we're not making mistakes, we're not trying hard enough."

For years Coca-Cola succeeded enormously by selling a single product that barely changed. By 2016, 70% of its global drink sales still came from carbonated drinks led by cola. The company has looked quite cautious about change — a habit outsiders joke about as "New Coke Syndrome."

Back in the 1980s, facing Pepsi's forceful attack in the taste wars, Coca-Cola tried to replace the original cola with a brand-new, sweeter New Coke. Before making that call, the company not only ran a secret market-research operation code-named "Project Kansas" but also conducted a blind taste test with 190,000 participants, 55% of whom judged the new formula better than the traditional one. But once the news came out, Coca-Cola's complaint hotline was swamped; consumers could not accept what felt like an emotional betrayal by the brand, and after just 79 days Coca-Cola had to put the old formula back on shelves.

The psychologist Robert Cialdini explains this in his book The Power of Persuasion (《说服力》): people care more about losing what they already have than about gaining something new, and the gap in intensity is roughly three to four times. So for consumers, one more cola to choose from earns far more goodwill than a brand-new cola that replaces the original.

But Coca-Cola, going through the pains of a transformation, will probably have to lose something first. To cut costs further as soda sales fall, the company announced this year that it would eliminate 20% of its corporate staff and keep pursuing an asset-light strategy, shedding bottling operations around the world (last November it sold its China bottling business to COFCO and Swire). At least half of the money saved will go into non-carbonated products.

Halting production of Coke Zero is another side of that slimming down. James Quincey may believe that people mostly choose cola because they love the taste, not because they expect a healthy drink — that sugar-free cola simply keeps the guilt of a cheat meal to a minimum. A sugar-free cola that sacrifices taste to chase a healthy image could well backfire.

Aspartame, the artificial sweetener used in sugar-free colas, has long been disputed over worries that it may cause cancer or premature birth. This July, an article in the Canadian Medical Association Journal said that the data cannot support the conclusion that "non-nutritive sweeteners help with weight management," and that long-term consumption may actually add weight. That echoes a 2013 report in the American Journal of Clinical Nutrition, and a string of earlier papers had already indicated that artificial sweeteners do no small harm to human health.

So in 2015 PepsiCo replaced the aspartame in North American Diet Pepsi with sucralose. The move drew plenty of consumer complaints and sent Diet Pepsi's sales down 10.6% in the first quarter of 2016; some drinkers who disliked sucralose defected straight to Diet Pepsi's rival, Coca-Cola's Diet Coke. Last year PepsiCo announced that it regretted the change and would put the aspartame version back on shelves, though it kept the sucralose one as well, to give consumers more choice.

In its early days Coca-Cola won the market on the American spirit its brand advertised: invention, passion, optimism, freedom. Now, facing consumers who are fussy about taste and mindful of their figures, it has to find a way to strip out sugar and calories. Coca-Cola holds that one premise comes first — stay true to the original taste; past lessons proved how loyal and how besotted people are with the old Coca-Cola formula. Whether the new Coke Zero Sugar can really break through the ceiling Coke Zero hit in sugar-free drinks depends on how it performs from here.

Images in this article, including the cover image, come from Coca-Cola, Pepsi, Urban Fizz and others.