Coca Cola Pr Crisis in Belgium

COCA-COLA CRISIS IN BELGIUM, 1999. Introduction The assignment given was to choose a case with an governing body or person that suffered a PR crisis, and didnt be intimate it correctly from a PR perspective, such as miss-communications with stakeholders, media etc. I chose to write about the crisis that happened in Belgium in 1999. I ordain analyze the steps the association took towards to solve the issue, explain what they did wrong, and give my own opinion on how they couldve traded it better. I will end my case with a final conclusion, and what the situation is today. But firstly I will starting fourth dimension by talking a little bit about the Coca-Cola Company.Company Profile The Coca-Cola Company is the global drawing card in the soft-drink industry, with world headquarters located in Atlanta, Georgia. Coca-Cola and its subsidiaries employ nearly 30,000 people worldwide. Syrups, concentrates and drinkable bases for Coca-Cola, the companys flagship brand, and to a gre ater extent than 160 other soft-drink brands argon manufactured and sold by Coca- Cola and its subsidiaries in nearly two hundred countries around the world. Approximately 70 percent of volume sales and 80 percent of profit behave from outside the United States. The europiuman market provides 26% of the companys US$18B in revenues.Coca-Cola owns a 49% share of the European soft drink market, compared to Pepsi-Cos 5%. Coca-Colas Corporate missionary post Statement We exist to create value for our share owners on a long-term basis by building a business that enhances The Coca-Cola Companys trademarks. This also is our ultimate shipment. As the worlds largest beverage company, we refresh that world. We do this by developing superior soft drinks, both carbonated and non-carbonated, and paying nonalcoholic beverage systems that create value for our Company, our bottling partners, our customers, our share owners and the communities in which we do business.In creating value, we succe ed or croak based on our ability to perform as worthy stewards of several spot assets 1. Coca-Cola, the worlds most recognized trademark, and other highly valuable trademarks. 2. The worlds most effective and permeating distribution system. 3. Satisfied customers, to whom we earn a good profit selling our products. 4. Our people, who are ultimately responsible for building this enterprise. 5. Our abundant resources, which must be intelligently allocated. 6. Our strong global leadership in the beverage industry in particular and in the business world in general.Additionally, Coca-Cola has a stated commitment to tender responsibility through philanthropy and good citizenship. The companys reputation for good corporate citizenship results from charitable donations, employee volunteerism, technological assistance and other demonstrations of support in thousands of communities worldwide. Coca-Cola Management From 1984 to 1997, Robert Goizueta ran Coca-Cola like a ship in pipe dow n waters as we may say, it was going smoothly. In his 13 years at the helm of reverse as CEO, Goizueta transformed coulomb from an Atlanta cola company to an international brand phenomenon.Analysts and employees alike viewed Goizueta like a God. In 1997, Doug Ivester succeeded Roberto Goizueta as CEO of ampere-second following Goizuetas death from lung cancer. Ivester, an employee of the company since 1979, had previously been Goizuetas right hand financial engineer and later his chief operating officer. On the confront of it, the transition would appear seamless. Doug Ivester has often been exposit as a very rational man with a bulldog leadership style. James Chestnut, Coca-Colas chief financial officer, says Ivester is a terribly rational manager.He states, Doug believes everything should go through a logical sequence. Hes fixed on where he wants the company to be. Ivesters recent focus had been on two potential acquisitions to increase Coca-Colas presence in Europe Orangi na in France and Cadbury Schweppes. The tactics Ivestor pursued to acquire Orangina and Schweppes, however, has been met with much criticism, especially by Europeans. A July article appearance in Fortune magazine summarized the conventional wisdom this way the way Coke went about the acquisitions arrogantly, urgently, intensely absolutely reflects Ivesters personality.And its not working. Other analysts who have followed Coca- Cola for years believe that if Goizueta were tranquillize running the company, controversy surrounding the recall in Europe would not be festering as it was under Ivester. The Source of the Problem The outbreaks appeared to be military campaignd by two sources, contaminated carbon dioxide and fungicide sprayed on wooden pallets used to transport the product. The contaminated carbon dioxide gear up its way into the product at a bottler in Belgium.The company was unable to determine whether the carbon dioxide was already contaminated when the bottler rece ived it or whether defilement occurred later, at the bottling facility. In an converse with the Wall Street Journal, Anton Amon, Coca-Colas chief scientist, said that, contrary to Coke procedure, the plant wasnt receiving certificates of analysis from the supplier of the gas, Aga Gas AB of Sweden. This certificate vouches for the purity of the CO2. A CCE spokesman sustain this statement and acknowledged that the company did not test the CO2 batch at the Antwerp plant.In either case, key quality control procedures were not followed. At the Coca-Cola bottling facility in Dunkirk, France, the plant received wooden pallets that had been sprayed with a fungicide that left a medicinal odor on a number of cans. Jennifer McCollum, a spokeswoman for Coca-Cola, described the substance as p-chloro-m-cresol or PCMC, a chemical commonly found in wood preservatives and cleanup fluids. The Environmental Chemicals Data and Information Network (ECDIN) states that PCMC can be absorbed through t he skin and cause redness, burning sensation, pain and skin burns.If inhaled, the chemical can cause symptoms such as cough, sore throat, brusqueness of breath, headache, dizziness, nausea, vomiting, unconsciousness, and may cause effects on the central nervous system, liver and kidneys. These more severe conditions are said to require large doses or chronic exposure to the chemical. Coca-Cola said that the substance was sprayed on around 800 pallets used to transport cans produced in Dunkirk to Belgium. The supplier of the pallets was said to be Dutch. The company, however, declined to name the company, stating only that it was not unmatched of their regular suppliers.The foul odor is believed to have caused numerous symptoms, including upset stomachs, headaches and nausea after drinking the product. Dr. Hugo Botinck, medical checkup director at St. Josephs Clinic in Belgium and one of the first physicians to see these patients, stated in an interview that affected persons were treated for, headaches, dizziness, nausea and muscular vibration. He added that, some of them were vomiting, but there was no fever. Bottling and multinational Distribution One of Cokes greatest strengths lies in its ability to conduct business on a global scale while maintaining a multilocal approach.At the heart of this approach is the bottler system. Bottling companies are, with only a some exceptions, locally owned and operated by independent business people, native to the nations in which they are located, who are contractually authorized to sell products of The Coca-Cola Company. These facilities package and sell the companys soft drinks within certain territorial boundaries and under conditions that ensure the highest standards of product quality and uniformity. Coca-Cola Enterprises (CCE) manages most of the European bottlers. The Coca-Cola Company controls a 40% provoke in CCE. Coca-Cola Belgium.Belgium was introduced to Coca-Cola in 1927. Today Belgium is among the w orlds top 20 countries in terms of per capita employment of Coca-Cola products. The Coca-Cola Company currently employs close to 2,000 people and serves up to 30,000 restaurants, supermarkets and other customers in that country. Coca-Cola France. Coca-Cola was introduced in France in 1933. Coke has been the number- one soft drink in France since 1966 with total sales doubling over the past octette years. Coca- Cola France employs more than 1,000 french citizens and has invested more than 3 billion francs in local economy since 1989.Today, French consumers drink an average of 88 servings of Coca- Cola products each year. External Factors Involved In whitethorn and June of 1999, it is fairish to say that Coca-Cola executives vastly underestimated the sensitivity of European consumers to food pollution issues in light of the existing social and political environment. Contributing to the anxiety was the mad-cow crisis that had taken place three years earlier. Additionally, the Coke incident coincided with a recent governmental ban on the slaughter of pork and poultry in Belgium.Earlier in June, cancer-causing dioxin was found in a large shipment of meat, which was believed to have originated through contaminated animal feed. In the end, this poop forced the resignation of Belgian Prime Minister Jean-Luc Dahaene as well as the countrys health minister. With the Belgian government facing elections on June 13, all political platforms were under scrutiny. In the awaken of the Coke crisis, European government agencies were scrambling to protect their reputations as watchdogs, taking a high-profile role in contamination issues.Consumers had previously considered Coke invulnerable to contamination concerns due to the artificial, manufactured nature of the product. In addition to its proximity to other food scares in Europe, the crisis also occurred at a time when Coke was looked upon unfavorably by the European Commission. Earlier in 1999, Coke had made plans to acquire Cadbury Schweppes brands around the world. The European Commission was strange to this acquisition, viewing Coca-Cola as excessively dominant. The company was forced to scale back its acquisition plans. Coca-Colas ResponseBy the time the recall was completed, 249 cases of Coke-related sicknesses were report throughout Europe, concentrated primarily in Belgium. A total of 15 trillion cases of product were recalled costing the bottler, Coca-Cola Enterprises (CCE), an estimated $103 one million million dollars. When the outbreak began, Coca-Cola executives waited several days to take action. Viewing the issue as low-priority, an apology to consumers was not issued until more than a week after the first exoteric reports of illness. Top company officials did not arrive in Belgium until June 18, ten days after the first incident was reported.The companys casual and muted approach to the crisis was first made evident in its neglect to mention the May 12 incident in which affe cted consumers suffered similar symptoms once the other cases were reported, beginning in June. Ivester remained largely silent, at least publicly, throughout the crisis. He admitted that he happened to be in Cokes capital of France office on June 11, shortly after the first wave of illness reports surfaced, and was briefed in person on the Belgian situation. Ivester and Belgian Coke executives attributed the problem to a bad batch of carbon dioxide and hardly a health hazard. The next day Ivester boarded a plane back to Atlanta, as planned. On June 14, the Belgium government ordered all Coca-Cola products off the market and halted production at bottling plants in Antwerp and Ghent. The government took the lead to protect consumers from the health scare, rather than Coca-Cola management. Coca-Cola issued a statement on June 15 from Atlanta (see Exhibit 1) refuting the contamination claims. On June 16, Ivester released a statement under his name (see Exhibit 2) expressing regret for the problems, but he mostly left the public side of the damage-control campaign to company spokesmen and CCE.On June 18, Ivester realized the magnitude and impact of the crisis and arrived in Belgium for the first time to manage the crisis. Ivesters mission to Europe was his most visible step during the crisis and came only after the number of reported cases had ballooned to more than 200. Coca-Cola officials avoided the media, however, stating afterward that this decision was in response to a request from the Belgian Minister of Health, Luc van den Brossche, asking that the crisis be handled out of the public eye. ConclusionIn conclusion Coca Cola didnt handle the situation properly by not communicating in a timely manner with the stakeholders. The crisis equal vast damages to Coca Colas reputation and total cost of 66 million pounds. The main reason for the mistakes it was the lack of authority of local executives (Ivester). Coca Cola identified the reason for the fails in c ommunications and consequently empowered the local teams to deal with this sort of situation. The lessons from this case study show how significant it is to communicate with stakeholders.