Coca-Cola's Belgian Crisis - The Public Relations Fiasco

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Case Details:

Case Code : MKTG097
Case Length : 12 Pages
Period : 1999
Pub Date : 2004
Teaching Note : Not Available
Organization : Coca Cola
Industry : Beverages - Carbonated Soft Drinks
Countries : Belgium, Europe

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

The Fiasco

The Belgian crisis broke out on June 08, 1999. Thirty-three children aged between 11 and 13 of St. Mary School in Bornem, Brussels, complained of headaches, discomfort, dizziness and nausea. A few vomited and were sent home. The school management then made efforts to find out why so many students had fallen ill.

The enquiry revealed that students had drunk Coke shortly before they began complaining of their illness. The Coke had arrived at the school packed in cases of 20-centiliter glass bottles that were shipped from Coca-Cola's bottling plant in Antwerp.

The same day, the plant's management was called and briefed about the children falling ill after drinking Coke.

A few plant managers visited the school to assess the situation, but, for some reason, decided not to take the remaining Coke stock back with them...

The Explanation

With things not going their way, Coca-Cola's executives came forward with an explanation of what had gone wrong. They claimed that their experts had investigated the problem by testing the suspect batches for chemicals and the tests showed nothing toxic in the beverages...

The Aftermath

Coca-Cola's financial performance suffered a major setback due to the Belgian crisis. The recall had a negative impact on Coca-Cola's overall second-quarter net income in the fiscal year 1999, coming down by 21% to $942 million.

Moreover, the entire operation of removing and destroying recalled products cost Coca-Cola Enterprises $103 million (£66 million).

The recall led to a 5% decline in the bottler's revenues and a fall in cash operating profit by 6%...

Exhibits

Exhibit I: The Coca-Cola Promise
Exhibit II: Coca-Cola's Quality Statement
Exhibit III: The Coca-Cola Safety Policy
Exhibit IV: Coca-Cola - History of Purity