17-11-2012, 06:27 PM
Crisis management in Belgium: the case of Coca-Cola
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Abstract
Belgium was still reeling from fears over mad cow disease
and from the news that the carcinogen, dioxin, had been
introduced inadvertently into animal feed, when yet
another health crisis rocked it. This new crisis was
precipitated by consumer complaints about an irregular
taste and smell in bottled soft drinks and by reports that
more than 100 consumers had become ill after noticing an
odour on the outside of canned soft drinks. As a result,
The Coca-Cola Company, under instructions from the
Belgian Health Ministry, withdrew its trade-marked
products from the Belgian market. The effects of this crisis
were felt not only within Europe, but also in countries as
far away as Japan and India. Subsequently, the company
identified specific production and distribution problems
which could have contributed to the health crisis.
Pursuant to the Ministry’s order, the company took
immediate steps to remedy those problems, and the
Ministry’s ban was lifted. In addition, an aggressive
marketing campaign was launched in an effort to regain
consumer trust, confidence, and market share.
Nevertheless, this incident resulted in substantial financial
costs to The Coca-Cola Company and in considerable
damage to its global image and reputation.
Introduction
First it was mad cow disease, then it was
tainted animal feed. As Belgians were reeling
from the crisis over cancer-causing dioxin in
animal feed leading to the withdrawal of
certain meats, eggs and dairy products from
supermarkets, yet another health crisis rocked
the nation. The effects were to be felt
throughout Europe with rumblings heard as
far away as Japan and India. This time it was a
soft drink that was the cause for concern. On
14 June 1999, in a move that was to cost more
than $200 million in expense and lost profits
and cause damage to the brand image of the
trade-marked products of The Coca-Cola
Company (CCC), the Belgian Health
Ministry ordered that Coca-Cola trademarked
products be withdrawn from the
Belgian market and warned Belgians not to
drink any Coca-Cola trade-marked products
they had in their homes. Later, France,
Luxembourg and The Netherlands also
banned or restricted the sale of Coca-Cola
products.
The production and distribution of
Coca-Cola
The CCC, with headquarters in Atlanta,
Georgia, USA, is the world’s leading
producer of soft drink concentrates and
syrups, providing consumers with one of the
world’s most popular soft drinks. CCC and its
subsidiaries manufacture, market and
distribute syrups, concentrates and beverage
bases for the Coca-Cola brand and over 230
other brands bearing CCC trade marks that
are sold world-wide. In addition, CCC
provides advertising and other promotional
support for these brands. Coca-Cola
Enterprises (CCE), the world’s largest
producer and distributor of products bearing
CCC trade marks, as well as other bottlers,
buy CCC’s syrups and concentrates and
produce and distribute final soft drink
products. Europe is an important market for
CCC and CCE with approximately 23 per
cent of world-wide sales originating there.
While other bottlers produce and distribute
CCC brands in some European countries,
CCE is the sole licensed bottler in Belgium,
Great Britain, Luxembourg, The
Netherlands, and most of France.
Reasons for recall
According to Coca-Cola Chairman and CEO,
Doug Ivester, in a statement released on 16
June 1999, The Coca-Cola Company, in
cooperation with the Belgian Health Ministry,
withdrew its products from Belgian stores, as
a result of two ‘‘unrelated’’ matters. In the
first case, some consumers complained of an
irregular taste and odor in bottled products.
In the second, more than 100 consumers
(students at six schools) became ill after
reporting an unpleasant odor on the outside
of canned products. Symptoms of the
reported illnesses included headaches,
stomach-aches, shivering and nausea, and
were severe enough to lead to hospitalization
of students in some cases.
Mass hysteria?
Almost four months to the day that the ban
on all CCC trademarked products was lifted,
four students in Tienen, Belgium, went to a
local hospital with complaints they said
resulted from consumption of a Coca-Cola
product. Tests conducted at bottling plants in
Belgium and Great Britain as well as at an
independent laboratory in The Netherlands
confirmed that the products in question were
‘‘normal’’ and of the ‘‘highest quality’’. No
action was taken against CCC or CCE by the
Health Ministry.
Five months later and nine months after the
original incident, Isy Pelc, head of the
psychiatry and psychological medicine service
at Brugmann Hospital in Belgium, said the
children’s illness was due to psychosomatic
reactions caused by unpleasant odors. His
study, based on 110 students who had
claimed illness after drinking Coca-Cola
products and another 40 who had not become
ill, was in line with the findings of two
professors from the Catholic University of
Leuven who had earlier attributed the crisis to
mass hysteria. In an interview, Pelc reported
that ‘‘with this investigation, there is clear
evidence that there was a psychological
contribution to the crisis’’ (Adler, 2000).