Managers' Forum ~ Business Case Reviews

This past July, Coca-Cola Enterprises had one of their worst public relations nightmares in its 113-year history.  Coca-Cola had to recall a total of 25 Million gallons, or 17 million cases of Coca-Cola from France, Belgium,
Netherlands, and Luxembourg.

The public relations fiasco started June 8th 1999.  Students in Bornem, Belgium noticed that the coke they had purchased had a bad smell.  School administrators called the Coca-Cola Enterprises (CCE) plant that morning to
complain. CCE is a European bottler owned 40% by Coca-Cola.  CCE has bottling plants located in Antwerp, Dunkirk and Ghent.  Antwerp had delivered 20 cases of coke that morning. Later that afternoon the students began feeling ill. The following day a total of 39 students were sick, some were brought to the local hospital.  Blood test were done but they came back normal.  When the plant picked up two cases from the school, they reportedly had a "acid type of odor."  That night CCE decided to recall all drinks made from June 2nd through June 4th.  At the same time in the town of Belsele, City officials called and complained of bad smelling coke from their vending machines. These products were produced in the Dunkirk plant.  Although the smell was reported, nobody became ill.  On June 10th in the Belgian City of Bruges seven students and one teacher became ill after consuming cans of Coca-Cola. Now Coca-Cola realized that a crisis was occurring.

    On June 11th, Wim Zijerveld a senior executive from CCE was assuring the Belgium Health Minister Mr. Luc Van den Bossche that there was no risk in drinking coke products.  As timing would have it, a call came in during the meeting and reported that fifteen more students from a school in Harelbeke, Belgium had become sick drinking Coke and Fanta Orange Soda (a coke product).  Fanta is produced at a third plant in Belgium.  At this time Mr. Luc Van Bossche stated that "he does not negotiate; I decide."  He took control over the situation and banned all sales of all Coca-Cola soft drinks that came from the three plants Antwerp, Dunkirk, and Ghent.

 Because of this ban, CCE recalled all coke products from the three plants.  However CCE continued to mishandle the situation by not giving clear information to the public.  On June 14th, six days after the first report of
illness, a school director made a call from his school in Lochristi, outside of Ghent, Belgium.  He was asking about the safety of the schools two vending machines.  CCE told him that there was no real problem but to remove all cans
stamped with the letter codes DU, DV, and DW.  School officials followed the instructions, told the students that the coke products in the machines were safe.  Shortly after 10:00 am, during a school break students came into the office to complain of sickness.  In all thirty-eight students became ill.  The Director called back to CCE and reported the "problem was bigger than you think" He was then told that the morning list was incomplete and that he should have also removed cans coded DX and DP as well as the earlier ones. The problems continued, on June 15th in France all cans of soda from the Dunkirk plant were banned.  Hundreds of people were reportedly feeling sick. France officials complained that not timely enough information was provided by CCE.

 Now with the additional problems reported in France, Coca-Cola finally put its public relations damage control into action.  CCE held a news conference on the night of June 25th in Brussels to explain the cause of the illnesses.  The problem was reportedly traced to two separate reasons.  The first was a bad batch of carbon dioxide at the Antwerp plant and "fungicide problems" at the Dunkirk plant.  Unfortunately the damage had already been done.  CCE and Coca-Cola international did not react quickly enough.  When they did react the information was slow in getting out and often misleading. CCE hired experts to test the returned samples.  The expert, Mr. Kroes's reported that there was no health risk.  After such delays and misleading information many people did not have any confidence in CCE's or Mr. Kroe's report.  Only after the heavy lobbying in person by Coke Chairman Douglas Ivester, did Belgium and France let CCE resume normal sales and production in the two plants.  With the repeated mishandling of this incident, many people in Europe have lost confidence in the ability to drink Coca-Cola products. This mistrust will take months if not years to dissipate.  Coke has put quality controls in both plants to stop a repeat problem, but it is too little too late.  At least 100 people became legitimately sick in the two countries.  CCE and Coca-Cola did not respond quickly enough to stop the spread of tainted Coke products.  Nor did they respond truthfully to the government officials or the public.  Clearly Coca-Cola should have handled
this in a more direct and efficient manner.

Reference's:

Cola Stains - Anatomy of a Recall, The Wall Street Journal; New York; June 29th, 1999; By staff reporters Nikhil Deogun and James R. Hagerty, Steve Stecklow and Laura Johannes.

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