Carey could learn a lesson from Coke
competitor, but further threats were looming on the horizon in the shape of diet colas and energy drinks. Traditional consumers increasingly embraced Pepsi, while the Baby Boomer generation went for the zero-sugar option, or, horror of horrors, the newfangled, caffeine-overloaded stuff. Coke’s market share had plummeted from a post-WWII high of 60 per cent to under half that in 40 years; worse, what slice remained was mainly down to historic old-school contracts. Panic set in, and the secret recipe that created the drink in the rst place was ushed away. Does this sound familiar?
Coke’s executives had commissioned market research, eld staff had set up tasting sessions, and focus groups comprising regular consumers and new generationals had been thoroughly debriefed. Everything had been done by the book – and the results showed that Coke had no option but to ditch the old recipe. The mantra was: “New Coke or no Coke”.
Just 12 per cent of diehards indicated they would rebel; the rest (including, crucially, many Boomers) enthused about the new taste. And that’s where things went horribly wrong: in the process of crunching the numbers, the company assumed the uptake for the new recipe would more than offset lost traditionalists who didn’t like it.
So it seemed initially, for sales immediately leapt eight per cent as the launch hype prompted people to try the revised product. But then the company’s assumption made an ass of the entire strategy: New Coke bombed as traditionalists expressed their outrage, with one lobby group receiving over 60,000 call-ins demanding the classic recipe be reinstated. The company obliged after 79 days, and New Coke stubbornly spluttered on (albeit renamed Coke II) for a number of years, while Classic Coke’s sales rocketed.
F1 itself offers a recent parallel in the form of the knee-jerk changes made earlier this year to its qualifying format, and the initial stubborn refusal of the sport’s masters to revert to the old system that had served it so well since 2010. Twenty-eight days after introduction they made a U-turn, but only after proposing a hybrid version. Fortunately, though, there was no Quali II recipe operating in parallel.
Therein lies the moral: Carey and Co do need to freshen up F1, for not only is it coming under pressure from in-house ‘diet’ products such as WEC and Formula E, but, equally, from other, more energetic, sporting genres. In addition the new ‘Boomers’, known as ‘Millennials’, have adopted different lifestyles from their elders, being more ecologically and environmentally aware. Thus the question facing Carey is: ‘How far to go?’
Does he go the full nine yards and make dramatic changes to the sport’s format and swingeing improvements to its media palette, risking a defection of F1’s traditional fan base while hoping to attract the Millennial audience? Or does he initially offer a hybrid F1 in the hope of straddling the divide, then gradually ramp up the changes?
Without doubt the latter option seems less precarious, but, equally, F1 needs to tap into those unaccessed audiences ASAP before all chances of switching them are lost, and one thing F1 does not have is a lot time. Contracts are running out, TV ratings are down 30 per cent over ve years and promoters are pushing for sanctioning-fee reductions in the face of dwindling live attendances.
Plus, just to ratchet up the pressure on Liberty, the media company does not have the option of ‘New F1 or No F1’, or running F1 II alongside Classic F1.