Coke: Ethical Issues

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Case Details:

Case Code : BECG014
Case Length : 12 Pages
Period : 1999 - 2001
Pub. Date : 2002
Teaching Note : Available
Organization : Coke, Belgian Health Ministry
Industry : Food and Beverage
Countries : Belgium

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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...

The entire episode left more than 200 Belgians and French, mostly school children, ill after drinking the Coke produced at Antwerp and Dunkirk.

The company had to assure its British customers that the products made in its UK factories were safe. By June 15, 1999, Coke 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 Coke's products from one country were banned from sale.

As part of a damage control exercise, Coke sent a team of scientists to Europe. During its visit to Europe after a week of these incidents, Coke's chairman and CEO Michael Douglas Ivester said, "We deeply regret any problems encountered by our European consumers in the past few days."

Coke Belgium even announced that it would reimburse the medical costs for people who had become ill after consuming its products. The recall had a significant negative impact on Coke's financial performance with its second-quarter net income coming down by 21% to $942 million. Moreover, the entire operation cost Coke $103m (66m) while its European bottling venture showed a 5% fall in revenues.

Analysts felt that the Belgium recall was one of the worst public relations problems in Coke's history. One analyst3 alleged that the company had information about people who had become ill weeks prior to the above incidents...

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