Coca-Cola's Dasani in the UK - The Public Relations Fiasco

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Case Details:

Case Code : MKTG103
Case Length : 16 Pages
Period : 2004-05
Pub Date : 2005
Teaching Note :Not Available
Organization : Coca Cola
Industry : Bottled Water, Beverages
Countries : UK

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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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Background Note

Coca-Cola is the world's leading manufacturer, marketer, and distributor of liquid, non-alcoholic beverages, concentrates, and syrups. 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. Coca-Cola was first marketed as a "brain and nerve tonic" in drugstores. Pemberton's book keeper, Frank Robinson (Robinson), suggested that the product be named 'Coca-Cola' because the words Coca and Cola named two of the ingredients.

It was also felt that the two "Cs" would look good in advertising. 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.

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 and repositioned Coca-Cola as a refreshment drink. The ingredients of Coca-Cola drink were carbonated water, high fructose corn syrup, caramel colour, phosphoric acid, natural flavors, and caffeine.

Only Candler and Pemberton's associate, Robinson, knew the proportions and exact formula of the concentrate. It was passed on only by word of mouth and came to be known as the 'most closely guarded secret' in the American industry. There were occasional rumors that cocaine was an ingredient in Coca-Cola's formula.

Therefore, since 1913, the company began to use "spent cocoa leaves"⁶ in the syrup. In 1919, Coca-Cola was sold to an investment group headed by Ernest Woodruff for $25 mn - $10 mn in cash and $15 mn in preferred stock. Four years later, his son Robert Winship Woodruff (Woodruff) was elected president of the company...

Excerpts >>

6] Spent cocoa leaves are the left over leaves after the cocaine has been removed.