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
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
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.