The Cocacola Case
Case Study: “Coca-Cola crisis in Belgium”
1. How could the Belgian problem have damaged the Coca-Cola image?
Coca-Cola incurred in a very sensitive crisis intensified by the fact that a “mass hysteria” was still spread in Belgium, after the Chickengate scandal. This explained the overreaction of the Belgian Government. Besides, the fact that children were affected, meant that parents were also being concerned, and hence that the crisis emotionally affected more people than other crisis.
Furthermore, Management was giving neither information nor reasons to both customers and Media for what was happening. This meant that Coca-Cola’s image was being damaged due to a loss of credibility. In this sense, although we may argue that the guilt was mainly from the bottler company (40% owned by Coca-Cola), consumers also questioned the control Coca-Cola had over its suppliers. Moreover, a lack of Crisis Management Plan was being a testimonial of Coca-Cola’s poor governance.
All this meant a critical dissatisfaction from customers, leading to numerous rumours that were harming Coca-Cola’s image. The rumours make it evident that Coca-Cola need to destruct the products, withdraw them of the market and ban them of sail. This entailed a lot of costs, and could have been avoided if Coca-Cola had had a Crisis Management Plan and an immediate response.
Into the bargain, we think that the overall scandal had an impact on sales, and revenues, as well as it could foster that competitors overtake Coca-Cola at any point. Pepsi in this case, wasn’t really a preoccupation for Coca-Cola, since it only represents 3% of the market share in Belgium) but, still, it could take profit from the situation.
Investors were also afraid about the money they had invested in the company. For this reason, stock prices felt down on Wall Street by June 1999. Coca-Cola lost 1% of its worldwide sales and in ten days only, they suffered a -13% of value in Wall Street. Douglas Ivester had to
1. How could the Belgian problem have damaged the Coca-Cola image?
Coca-Cola incurred in a very sensitive crisis intensified by the fact that a “mass hysteria” was still spread in Belgium, after the Chickengate scandal. This explained the overreaction of the Belgian Government. Besides, the fact that children were affected, meant that parents were also being concerned, and hence that the crisis emotionally affected more people than other crisis.
Furthermore, Management was giving neither information nor reasons to both customers and Media for what was happening. This meant that Coca-Cola’s image was being damaged due to a loss of credibility. In this sense, although we may argue that the guilt was mainly from the bottler company (40% owned by Coca-Cola), consumers also questioned the control Coca-Cola had over its suppliers. Moreover, a lack of Crisis Management Plan was being a testimonial of Coca-Cola’s poor governance.
All this meant a critical dissatisfaction from customers, leading to numerous rumours that were harming Coca-Cola’s image. The rumours make it evident that Coca-Cola need to destruct the products, withdraw them of the market and ban them of sail. This entailed a lot of costs, and could have been avoided if Coca-Cola had had a Crisis Management Plan and an immediate response.
Into the bargain, we think that the overall scandal had an impact on sales, and revenues, as well as it could foster that competitors overtake Coca-Cola at any point. Pepsi in this case, wasn’t really a preoccupation for Coca-Cola, since it only represents 3% of the market share in Belgium) but, still, it could take profit from the situation.
Investors were also afraid about the money they had invested in the company. For this reason, stock prices felt down on Wall Street by June 1999. Coca-Cola lost 1% of its worldwide sales and in ten days only, they suffered a -13% of value in Wall Street. Douglas Ivester had to