Coca-Cola Co.'s problems in Europe spread further yesterday, despite efforts by the soft drink giant to reassure the public that its products are safe in the wake of the company's biggest recall ever.
Health officials in France said yesterday that more than 80 people in that country reported becoming sick after consuming Coca-Cola products, according to news service reports. Coca-Cola said yesterday that it had not been informed by the health ministry or anyone else of such problems. Previously, more than 100 children were reported sick in Belgium after drinking Coke products.
The possible spread of Coke-related illness to another country was bad news for the world's biggest soft drink maker. Coca-Cola officials were working yesterday with officials in France, Belgium, the Netherlands and Luxembourg to lift bans on some of the company's products that were imposed after reports last week of ill consumers in Belgium. Saudi Arabia, meanwhile, also said it would ban some Coca-Cola products by banning the import of all drinks manufactured by the company in Belgium.
Coca-Cola said Tuesday that its investigation found two separate incidents that resulted in sub-par products. In one case, Coca-Cola was bottled in Antwerp with carbon dioxide (the ingredient that puts the fizz in the drink) that wasn't up to standard. In another, cans of Coke were shipped to Belgium in wooden pallets treated with a chemical that adhered to the bottoms of the cans.
Coke came in for heavy criticism in Europe for its handling of the product recall, with Belgian Health Minister Luc Van den Bossche criticizing the company for communicating through news conferences rather than through official channels. Coke yesterday defended its handling of the incident, but one expert on crisis management said yesterday the company hadn't done all it could to dispel concerns.
Steven Fink, president of Lexicon Communications Corp., a crisis management and strategic public relations firm based in Los Angeles, said that Coke hadn't explained how the two production errors occurred. "How did it happen, and what are they going to do to ensure the health and safety of the consumer going forward?" he said.
Fink said he was basing his comments on media reports. "I don't know as much as Coke does, and I'm not trying to play Monday morning quarterback," he said. But he added, "Any time a government, let alone three or four governments, bans your products, you have a serious crisis on your hands."
Coca-Cola chairman and chief executive Douglas Ivester issued a statement yesterday saying the company is "taking all necessary steps" to ensure the quality of its products in Europe. "The Coca-Cola Co.'s highest priority is the quality of our products," said Ivester, who said that 113 years of success was riding on that quality. "That trust is sacred to us."
Coke's product quality problems in Europe come during a year when the global giant is already suffering from weaker than normal volume in some key markets and while it is engaged in regulatory battles to acquire Pernod-Ricard SA's Orangina soft drink line in France and Cadbury Schweppes PLC's non-U.S. operations.
Merrill Lynch Global Securities analyst Emanuel Goldman said that both the context in which the incidents occurred and the fact that there were two unrelated incidents in the same region compounded Coca-Cola's problems. But he said he believed the company was handling the incident well. Goldman said that Coca-Cola Enterprises, the bottling empire that is partially owned by Coke, would probably have to take a charge related to the incidents, but that the impact on Coca-Cola would be negligible.
The incidents began last week when the company was notified of complaints related to bottled Coke sold in Belgium. Company spokesman Rob Baskin said the company acted immediately, sending teams to identify the source of the problem. Baskin said the company then quickly removed suspect bottles from the shelves, withdrawing approximately 2.5 million bottles within 36 hours. He said the company also acted swiftly after complaints about canned soft drinks began to surface on Friday.
Goldman noted that Coke's annual volume is about 90 billion liters a year. "The amazing thing is that this kind of situation is so rare," he said. "The reason is that when it comes to quality control, Coke is second to none."
Investors took Coke's plight in stride. Coca-Cola closed yesterday at $63.87 1/2, up 12 1/2 cents. Coca-Cola Enterprises closed at $33.50, down 68 3/4 cents.
CAPTION: Coca-Cola employee Christophe Bruynswick removes cans from a vending machine in France yesterday after illnesses were reported.