Crisis Comms Coca Cola Sample

How does Coca-Cola handle crises? Discuss whether this global leader has succeeded in managing crises from its central offices in Atlanta, with reference to both the Belgium school kids instance and to Dasani in the UK. You must access relevant media remarks from the time in conducting your evaluation.

A crisis is “a major happening with a potentially negative result impacting an organization, company, or industry, as well as its populations, products, services, or good name”; it is also “a sudden and unexpected event that threatens to disrupt an organization’s operations and poses both a financial and a reputational threat.” All organizations need to be prepared for any sort of unexpected crises, as true crises define the companies’ future actions and have lasting implications for organizational climate and profitability. The bigger the organization is, the higher the chances are for a crisis to occur at some point in its development. Crises cannot be predicted, but they should be expected, as managers should anticipate them and prepare for them. In this essay, we will examine two of the best-known crises suffered by the Coca-Cola Company, the one in 1999 in Belgium and the one in 2004 in the UK, focusing on their crisis management. Crisis management can be defined as “a set of factors designed to combat crises and to reduce the actual damages inflicted.” In Belgium, the crisis started when more than 200 consumers, most of whom were children, became sick after detecting an unusual taste and smell in bottled products and on the exterior of the canned soft drinks.

The Belgian authorities stated at that time that the drinks had triggered a blood disorder that caused the destruction of red blood cells among people who had drunk Coca-Cola. Those affected suffered from nausea, chills, headaches, and diarrhea, some of them serious enough to be admitted to the hospital. Trying to manage the crisis from their central offices in Atlanta, Coca-Cola’s message remained for four days that it was simply a bad smell that was causing the sickness and that there was no risk to public health. They agreed that the contaminated batch should be recalled, but they still did not have a clear explanation. Worried about the increasing number of cases, the Belgian Health Ministry ordered on June 14, 1999, that all Coca-Cola trademarked products be withdrawn from the Belgian market and warned Belgians not to drink any Coca-Cola products they had in their homes. Marylise Lebranchu, Secretary of State at the Finance Ministry, said that the government had acted because it was not satisfied with Coca-Cola’s explanations.

A week after the reported illnesses and following the Health Ministry’s withdrawal of the products, Coca-Cola Enterprises Belgium issued an official statement at a news conference. The director-general, Philippe Lenfant, stated that a bottling plant in Antwerp had used the incorrect carbon dioxide to carbonate soft drink bottles. Furthermore, the head of sales for Coca-Cola even visited those in the hospital to check on their welfare. However, the following day, other cases appeared, referring to schoolchildren and cans produced in Dunkirk. In addition, the manufacturers of the gas from the Antwerp plant denied Coca Cola’s claims and stated that the gas was perfectly normal and that they could prove it. Later, France, Luxembourg, and the Netherlands also banned or restricted the sale of Coca-Cola products. It was estimated that a total of 15 million bottles and cans of products were recalled. This cost the Coca-Cola Co. more than $200 million in expenses and its bottler in Belgium, Coca-Cola Enterprises, estimated its losses at $103 million.

Only after the Belgian and French governments recalled the products did Coca Cola finally mobilize, and Doug Ivester, Chairman, and CEO came to Europe and apologized: “We let down the people of Belgium, and we’re sorry for that, but now we’re committed to doing what it takes to earn their complete trust once more.” Coca Cola then issued another report, which they sent to the Ministry of Health, where “chlorine products” that “used to clean automatic drink dispensers” were considered one of the possible causes of the illnesses. Coca-Cola was harshly criticized right away by the press, not only for their carelessness but also for the way they handled the crisis. “Coca-Cola apparently forgot the central rule of crisis management – to act fast, tell the whole truth, and look as if you have nothing to hide.” Coombs argues that crisis managers must always address first the physical and psychological concerns of the victims and then focus on the organization’s reputation. The fact that Coca-Cola first responded by denying that there was any problem and by trying to pass on the blame to the victims proves the existence of a dysfunctional organizational culture.

“Coca-Cola’s public relations mistake is to have seemed keener to protect its own back than to still the understandable fears of consumers.” Therefore, it appeared as an organization that cannot deal with public perception when it is put in the spot and under close media scrutiny. Coca-Cola’s biggest mistake was that the crisis was managed from Atlanta instead of being contained in Belgium at the local office, so it failed to address the relationship between stakeholders and its own reputation, which are key elements in dealing with a crisis. “Crisis team members must bring certain area-specific knowledge and skills that will facilitate the execution of the crisis plan.” The immediate decision to recall all products made by the Belgian Health Ministry was also determined by the fact that Belgium had just suffered from a food scandal involving contaminated meat during election time, a situation that the Atlanta team was not fully aware of. Even though the company kept insisting that there were “no health or safety issues” and that the drinks “might make you feel ill but are not harmful,” it was not enough for the Belgian Ministry, but especially for the Belgian consumers, who had gone from one health scare to another.

However, this experience taught Coca-Cola a lesson related to managing crises, so that when the Dasani catastrophe happened in 2004, the organization was much better prepared. After becoming the number two bottled water brand in the USA, Coca Cola decided to introduce Dasani to Europe, planning to sell it across the UK, France, and Germany. The fact that Coca-Cola did not seem very open regarding the source of the water raised suspicions. Dasani received the first blow when “The Grocer,” the food industry’s highly influential trade magazine, ran a piece on the “actual” origin of Dasani, revealing that the bottled water was the same as plain tap water, and the whole press went ballistic. The media criticized Coca-Cola for misleading the public by describing tap water as “pure” and cheating them by selling it at a highly inflated price. “The Guardian” was writing, “The Dasani crisis is a case of a giant that is so desperate for growth that it appears things are being overlooked.

Coke is the chief seller, and they can sell pretty much anything – even tap water in the right market – but sometimes, they get so caught up in the selling that they lose touch with reality. Moreover, “The Independent” was criticizing, “A company takes ordinary briny water, puts it into fancy blue bottles, slaps on an alien name and sells it for thousands of times more than it costs out of the tap. It sounds like an idea dreamt up in a council chamber that was too hideous to implement, or a far-fetched plot of a television comedy. But the idea is, with a few alterations, behind Coca-Cola’s latest drink, bottled water called Dasani.”

In reaction to these accusations, Coca-Cola first insisted on the fact that Dasani was pure and was better than tap water due to its sophisticated purification procedures based on NASA capsule technology, and that the drink is “as pure as bottled water gets.” Judith Snyder, brand PR director for Dasani, confirmed that “municipal” water supplies were used but said the source was “irrelevant” because it “doesn’t affect the end result.”

Right after this brand credibility damage, Dasani suffered a fatal blow when it was found out that the water supply had been contaminated with bromate, a chemical that can cause cancer. Coca Cola ran a product test and informed the FSA. The level of bromate exceeded the UK standards, but they were lower than European standards. Even though the FSA confirmed there was no immediate health or safety hazard, after just five weeks on shelves in the stores in the UK, all Dasani water bottles were recalled as a precautionary measure. The Coca-Cola crisis team issued the announcement to the press, showing that the company takes full responsibility for the incident. They handled over 100 media interviews, taking control of the situation and avoiding media speculation. “Good corporate communication has to be received by the intended audience; understood in the way it was intended; perceived to be positive; interactive, giving the audience an opportunity to respond.”

Jonathan Chandler, the Manager of Communication for Europe and the Middle East at that time, said, “We volunteered to recall the product and were able to make it clear that we understood the problem, its significance, and that we knew how to fix it.” The way the crisis management team handled the situation represents a good example of crisis communication, as Coca-Cola acted quickly and succeeded in protecting the global image of the organization as well as the image of Dasani in its other markets outside Europe. The company was able to work quickly with the local regulator, move immediately, and address all relevant stakeholders while equipping other Coca-Cola markets with the information and tools to manage the issue in their countries, which they did not do in the Belgium case. Michael Regester says that at the time of the Dasani situation, the company was in the process of introducing a new, more stringent stakeholder review process, which would have addressed the issues before they escalated.

This new approach, however, has been widely used across Coca-Cola since then. In conclusion, regarding both cases, we can observe how the Coca-Cola Company knows how to learn from its own mistakes and apply the lessons learned to remain a successful multinational organization. In terms of crisis communication, “telling a story is a culturally typical response to crisis; it may be a response by the person associated with the event – an apparent or possible crisis – who is expected to explain to others why the narrative has changed from routine to crisis, who or what is responsible for that change, and what will be done to resolve the story – maintain or re-establish control of the organization’s operations.” And this is precisely what Coca-Cola did regarding Dasani, as the effective communication of the messages and the quick reaction to the events saved the company from a reputational catastrophe, while the majority of media coverage on Coca-Cola following the Belgium crisis referred to a company “struggling to rebuild its reputation” because they delayed keeping their audiences informed.

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19. Ibid.
20. Ibid., p. 5.
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