Coke Scare Comes at Bad Time in Europe

By Patrick Goodenough | July 7, 2008 | 8:06pm EDT

(CNS) – European countries still reeling from a scare involving cancer-causing dioxin in dairy and meat products have been hit by a potentially more costly problem, this one involving the world's most popular soft drink, and one of America's most instantly recognizable brand names.

Crates of Coke and other Coca-Cola have been removed from stores in Belgium, the Netherlands, Luxembourg and now France, after several hundred consumers experienced nausea, headaches and stomach cramps.

Saudi Arabian authorities also pulled stocks of Belgian-bottled Coke and related brands from shelves, and smaller British retailers were on the lookout for supplies of the soft drinks imported from Belgium.

The problems have been traced to two causes, the company reported – inferior carbon dioxide used at one bottling plant in Belgium (carbon dioxide puts the fizz into the drink), and a fungicide which had been sprayed on transport pallets at another plant in France, accidentally contaminating some cans.

The Belgian Health Ministry may announce Thursday that it is lifting of a total government-imposed ban on Coca-Cola sales in that country. Belgian voters kicked out their previous government last Sunday in a result analysts say was linked to anger over its handling of the dioxin scare.

Coca-Cola's Chief Executive Officer, Douglas Ivester, issued a statement from the company's Atlanta headquarters saying it "deeply regrets" the problems in Europe.

He said the company was "taking all necessary steps to ensure that all our products meet the highest quality standards."

The company, already hit by sales slumps reportedly due to economic problems in Latin America, Russia and Asia, faces a major challenge of safeguarding customer loyalty.

Food scares linked to particular brand names can have a devastating effect on consumer confidence and sales, marketing specialists say, although Coke's popularity and reputation may help reduce the damage.

The most serious scare involving a carbonated drink occurred in 1990, when the manufacturers of the upmarket French mineral water Perrier found traces of benzene in their products. The company has still not fully recovered from the incident a decade later.

Perrier withdrew its entire worldwide supply of around 160 million bottles, only to find when its product returned, consumers had developed a taste for rival brands, some of which were cheaper too. In Britain alone, its market share fell from 60 per cent to about nine.

But British consumer specialists praise Coca Cola for acting "coolly and slickly in seeking to contain the damage," the London Times reports. "Branding experts say it has done all the right things, owning up to the problem and taking prompt action."

European markets account for 21 per cent of the company's $19 billion sales. Coca Cola sells a billion drinks a day worldwide.

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