Coca-Cola Company: Allegations of Pesticides in Soft-Drinks in India

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Coca-Cola Company: Allegations of Pesticides in Soft-Drinks in India

Coca-Cola Company: Allegations of Pesticides in Soft-Drinks in India

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  • 1. Coca-Cola Company: Allegations of Pesticides in Soft-Drinks in India Group# 2
  • 2. Overview of Case  Coca-Cola : World’s No. 1 Brand  Mission: “To refresh the world...”  Product: Syrups & Bottled Beverages  Deterioration of Coca-Cola sales and trust  Presence of pesticides in cans  Pesticides: Lindane, DDT, Malathion & Chlorpyrifos  Causes: Cancer & Immune system Breakdown  Allegations from Centre for Science & Environment (CSE), a reputed NGO
  • 3. Coca Cola’s History  Recipe prepared by John Pemberton, in Atlanta, Georgia in 1886  Initially sold as syrup  Was mixed with soda water  Used to cure physical and mental disorders  Ownership later changed to Mr. Asa Candler  Aggressively, marked its presence all over USA  Growth Model  Concentrated on just producing syrups  Bottling and distribution left to Franchise operations  Military supplier during World War-II @ 5 cents per bottle  Was exempted from sugar rationing  New sales figures made it World powerhouse.
  • 4. Coca Cola In India  Targeted Indian developing market as its potential market  Foreign Exchange regulation Act  1977  Dilution of Coca Cola’s ownership into Indian franchise and subsidiaries  Revealing its secret recipe  Coca Cola exit Indian Market  Coca Cola returns India post liberalisation in 1993  Acquired local soda brands & Indian most trusted brand “Thumps Up  Faced initial problem of low per capita beverage consumption
  • 5. Coca Cola In India (cont.)  New service, distribution & marketing strategy  Price per bottle reduced to 50% of traditional cost  Delivery mechanism for rural penetration  10 ton trucks  Open bay three wheelers  Tri-cycles  Pushcarts  0.7 mn retail outlets
  • 6. Product Line
  • 7. Quality Control Practice
  • 8. Employee Base
  • 9. Initial Problems & Solutions devised in India  Accused for :  Health & Environmental damage by passing bio-solid fertilizers  Depleting Water table  Company’s response towards allegations:  Suspended disposal of bio-solids  Introduction of testing protocols  Rainwater harvesting to raise ground-water level  Released study of Kerala State Pollution Control Board  Showed concentration of heavy metals below prescribed limits
  • 10. CSE Findings  August 5, 2003  12 soft-drink brands charged in & around New Delhi  Contain deadly cocktail of pesticide residues  August 2, 2006  Tested 11-soft drink brands  Results much of same negative  Average 24 times that of (Bureau of Indian Standards) BIS permissible limit  0.5 parts per billion (ppb)  Norm but not legalized
  • 11. Reaction of People towards findings  India reacts to the reports  Seven States & more than 10,000 schools completely or partially banned the products  “Coke Pepsi Quit India” protest  Captured headlines of major news channels & newspapers
  • 12. Coca Cola’s Response  Asserted their commitment towards consumer safety  Company complying with stringent international & national applicable regulations  Released results of Independent study at Central Science Laboratories in UK  Results met purity criteria of European Union for Pesticides  Transparent production system  2000 responses from people  Press releases & reports uploaded in Company’s website  Indirectly questioned credibility of CSE  CSE counter stated that their labs and their equipments complied with 9001:2000 quality standards
  • 13. Expert reviews  Coca Cola underestimated the allegations  More focus on technicalities rather than customers’ emotions
  • 14. What should have been done ?
  • 15. Board Meeting Hello everyone! As you’d be aware of the recent findings by CSE, in which they found the level of pesticides in our product to be more than the permissible level in India. This meeting would primarily focus on how do we deal with this situation and what should be our future strategy, so that we save our customer and save the product. We must learn that such instances provide us a feedback from the society and must be taken seriously at all levels within the organization. We have to work together in this time of crisis, to prevent the overall image of our brand. Before we go to the press, I suggest that we order a probe into this matter and appoint an independent team which tests the authenticity of our product as soon as possible. We can be sure that the Indian press agencies would be ready with difficult questions for us, but we ought to act calmly and responsibly. For the same, I propose the formulation of a crisis management team of 7 people including myself; which will deal with the press on a periodic basis. Also, till the time we reach the roots of this problem, we should withdraw our existing supply from the market, keeping in mind the customer perception of our brand. I know it would probably cost us a lot to do this in short term, but keeping in mind our long term vision and objectives, we must not compromise with the integrity of our product. Since all of you have a rich experience in the industry and I’m sure that you must be having some different plans or ideas which must be considered before we reach the final conclusion. I welcome your comments and suggestions.   
  • 16. Press note Off late there have been a few allegations about the quality standards of our products in India. I would like to tell you that we at coca-cola India understand the gravity of the situation and take these allegations with the earnest of intent. At the centre of our core values lie integrity, accountability, quality and there is no way that we ever will abandon them. As soon as we got to know about the findings of Centre for Science & Environment regarding presence of pesticides in our product, we ordered to withdraw the entire supply of Coca Cola from the markets at the earliest. We value our customers more than anything. Their health is paramount for us. Though we've instructed a probe into the matter, we, with the help of media request our customers not to consume the product until we verify the allegations against it. I want to assure you that our products in India meet the same rigorous standards that we maintain across the world. Maintaining quality standards is the most important element of our business and we would do everything to ensure them. We have constituted an independent 7 member body that will look deeply into the matter. It has industry experts, scientists and socialists so as to look deeply into the matter. Though we are a corporate, but for us its our customers that are our most valuable asset. I request them that today we as a company might be surrounded by clouds of uncertainty but being the brand that we are, i ensure you that we, in the near future will bounce back. After all, the darkest hour is just before the dawn. . . . and the morning that follows is indeed the brightest.