Coca-Cola's Belgian Crisis - The Public Relations Fiasco

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Case Details:

Case Code : MKTG097
Case Length : 12 Pages
Period : 1999
Pub Date : 2004
Teaching Note :Not Available
Organization : Coca Cola
Industry : Beverages - Carbonated Soft Drinks
Countries : Belgium, Europe

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Recall Contd...

By June 15, 1999, Coca-Cola had recalled about 30 million cans and bottles, the largest ever product recall in its 113-year history. For the first time, the entire inventory of Coca-Cola's products from one country was banned from sale.

Background Note

Dr. John Pemberton (Pemberton), an Atlanta-based pharmacist, developed the original formula of Coca-Cola in 1886.

It was based on a combination of oils, extracts from coca leaves (cola nut) and various additives. The ingredients were refined to create a refreshing carbonated soda.

Pemberton's bookkeeper, Frank Robinson (Robinson), suggested that the product be named 'Coca-Cola'. He also developed a way of lettering Coca-Cola in a distinctively flowing script.

On May 8, 1886, Coca-Cola went on sale for the first time in the Joe Jacobs Drug Store. The first Coca-Cola advertisement appeared in The Atlanta Journal on May 29, the same year. Pemberton, with modest help from several investors, spent $73.96 on advertising, but was able to sell only 50 gallons of syrup at $1 per gallon.

The product slowly gained acceptance after the makers gave out a large number of free samples. In 1888, after Pemberton's death, Asa Candler, Pemberton's friend and a wholesaler druggist, purchased a controlling stake in the company.

Coca-Cola sales soared even without much advertising and as many as 61,000 servings (8 ounces each) were sold during 1889.

Sensing the potential of the business, Candler decided to wind up his drug business and be associated with Coca-Cola full time. As business expanded, Candler also increased the advertising outlay. By 1891, Candler had complete control of Coca-Cola for $2,300.

In 1892, Candler formed 'The Coca-Cola Company' and a year later registered 'Coca-Cola' as a trademark. Only Candler and Pemberton's associate, Robinson, knew the beverage formula. It was passed on only by word of mouth and came to be known as the 'most closely guarded secret in American industry.' Despite occasional rumours, company sources insisted that cocaine was not an ingredient in Coca-Cola's formula...

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