A Little Hard To Swallow

Coca-Cola officials were out to reassure the public last week when they arrived at a Paris news conference calmly sipping from their trademark red-and-white cans. But that bit of spin quickly backfired. When a group of journalists heckled them, the only response one official could muster was: "I'm thirsty, OK?"

The moment capped a week full of missteps by Coca-Cola. The company was trying to quell a widening--and widely exaggerated-- health scare in Europe over the safety of its soft drinks. It started two weeks ago when several dozen Belgian school children became nauseated after drinking Coke from glass bottles that had been filled at a plant in Antwerp. Two days later another group of Belgians complained of digestive problems after drinking from cans dispensed by vending machines in Dunkerque, France. By last Friday Belgium, France, Luxembourg, the Netherlands and Spain had all imposed at least partial bans on Coke products, and the company had transformed a conference room in Brussels into an international crisis center.

How did a few isolated incidents of nausea balloon into a public-relations nightmare? Partly because the public was already on edge about food safety. The revelation earlier this month that a batch of animal feed in Belgium had been contaminated with dioxin convulsed the country. The subsequent panic led several nations to ban Belgian pork and chicken and toppled the government of Belgian Prime Minister Jean-Luc Dehaene.

But Coke's slow public response has made matters worse. Said a French official, "It took 48 hours and the extreme measure of recalling almost everything... to get them to give us some more information." Coke had the following explanation for the two bouts of illness: the first Belgian outbreak was caused by "bad" carbon dioxide, which tainted drinks produced at its plant in Antwerp; in Dunkerque, France, meanwhile, a fungicide on the wooden pallets used for transporting beverages left a foul odor on the cans. Belgium's Minister of Public Health, Luc Van den Bossche, said Coke's account didn't give a "satisfactory and conclusive explanation for the symptoms." For the world's best-known brand, that was a bad position to be in. Says Scott Galloway, CEO of Prophet Brand Strategy in San Francisco, "There's nothing that can trash a brand faster than the perception that it's not taking a health scare seriously."

Coke hasn't been trashed by any means. But the scare is one more bit of bad news for Coke's European operations. The company is trying to buy both Orangina and Cadbury-Schweppes' soft-drinks business, but antitrust authorities have rebuffed its initial proposals. Yet Coke continues to count on Europe, and particularly on France, as an area of rapid growth. "This is a very serious situation because this product scare goes to the very heart of the integrity of their brand image," says Marc Cohen, beverage analyst with Goldman, Sachs in New York. "It's going to be very important that they do the right thing to secure that brand image and secure consumer confidence in their brand."

Cohen doesn't fault Coke execs for being slow to respond. He says they were "deliberate" in their public response only because they worried about being out of sync with the local governments. "I think they've been working with government officials to try to get on the same page and to prepare themselves to be very public about their messages with consumers when the time's appropriate." The trouble is, for millions of European consumers, the appropriate time was last week.


49% of all soft drinks
3% of total daily fluid intake

Benelux/Den.*    202

France            96

Germany          200

Great Britain    122

Spain            219