One good source on this would be Citizen Coke: THE MAKING OF COCA-COLA CAPITALISM by Bartow Elmore (Ohio State). I don't have my copy handy here at home, but the dissertation on which it is based is available online. Both have a full chapter on Coke's use and sourcing of coca extracts (ch. 3 in the dissertation) that note " Originally the Coca-Cola formula called for coca leaf extract containing roughly 3/2001h of a grain of cocaine per serving, but company president Asa Candler decided to eliminate the miniscule narcotic content by 1903 in the face of growing consumer fears about the adverse health effects of cocaine addiction." (emphasis mine, p.131). Concerned about taste, however, the company replaced this with "decocainized coca leaves" and kola nut extract, which was internally called "Merchandise #5." The sourcing of this material-- really a waste product of the cocaine processing industry --is the focus of the book chapter, following the author's pattern of one chapter for each of the major ingredients (water, sugar, caffiene, etc.)
Later in the book Bartow notes that there was no real reason to keep the coca byproduct (deconainized leaves) in the formula except to maintain the "secret formula" recipe, stating that "there seemed to be no real material use for the coca extract other than to protect the company's brand image." They just wanted to keep the word "coca" in the product name. He draws heavily on Paul Gootenberg's Andean Cocaine: The Making of a Global Drug for the context of this chapter. One interesting factor is that Coke did not own plantations in Peru or processing plants, so was buying on the wholesale market. By the 1880s there was so much global demand for coca that the security and price of that supply came into question, so by removing coca from the product (except for the near-valueless "decocainized" leaves) the soft drink company was lowering its costs and severing its ties to the licit coca market.
In an article that summarizes the arguments of his book, Bartow writes about FBN (Federal Bureau of Narcotics) files which "...reveal how Coke worked with the FBN to secure exclusive access to legal coca imports into the United States after 1914 when the federal government criminalized coca trafficking. The FBN approved special exemptions in federal counternarcotics legislation allowing Coca-Cola to contract with the Stepan Chemical Company in Maywood, New Jersey, to purchase decocainized coca leaf extract, or coca leaf fluid leftover after cocaine processing. The FBN, however, aggressively denied other applicants seeking legal coca imports into the United States, including many rival soft drink companies. By restricting buyer access to coca leaves, the federal government helped to create a monopsony for Coca-Cola, thereby keeping prices for this exotic ingredient down. " See Bartow J. Elmore. "Citizen Coke: An Environmental and Political History of the Coca-Cola Company." Enterprise & Society 14, no. 4 (2013): 717-731. https://muse.jhu.edu/.
As for the response among consumers, I'd suggest looking at For God, Country, and Coca-Cola by Mark Pendergrast. I don't have a copy at hand but recall it covers the formula, consumer demand, and the rise of Coca-Cola in this period in great detail.
While we're waiting for a full direct answer, you might be interested in this earlier one from /u/LukeInTheSkyWith:
(If it's not clear - I've modified the title of the thread in the link to give you an idea of what info you'll be getting that's related to this question. Cheers!)
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