Coke India Fiasco
By
Aviral, Anurag and Bishwash
Coca-Cola
• Created in 1886 by John Pemberton in Atlanta Georgia.
He sold it as a potion for mental physical disorders.
• Asa D Candler added carbonated water in coke.
• Registered as a trade mark in 1887.
• In 1895, Coca-Cola was being sold in every state of
United states.
Coca-Cola
• First international bottling plants opened in Canada, Cuba and
Panama in 1906.
• Reached 370 franchisees by 1910 in US.
• In 2003, 70% sales of coke was generated outside US. It has
been no. 1 brand with value of $70.45 billion.
• Worked on the former CEO Robert Woodruff’s goal :
To make Coke available wherever and whenever consumers
wanted it, “ in arms reach of desire”
“It is a real thing” “Things go better with coke”
“Coke is it” “Cant beat the feeling”
Coke in India
• East India company brought Coke to India.
• Till 1977 it was leading soft drink in India, the company left
when it was forced to reveal its formula.
• After 16 years it returned to India in 1993. Coke also acquired
local bands like Limca, Citra, Mazaa, Gold spot and Thumbs-Up.
• International family of brand includes Sprite, Fanta, Diet Coke. It
also launched Kinley water brand in 2001.
• Invested more than US$ 1 billion from 1993 to 2003.
Indian beverage market
• Coke and Pepsi dominated the market with more 95% of
market share.
• Pepsi entered the market in 1988 before Coke.
• Pepsi gave hard time to Coca-Cola, as it was targeting
youth and had first mover’s advantage.
• When coke entered in 1993 and approached the market
selling an American way of life which failed to resonate.
Marketing Strategies
• Used “Think local Act local” mantra because not a single global
strategy would be relevant everywhere.
• Two localization strategy for Indian market:
A: “Life ho to aisi” : Segment -metropolitan areas, message social
bonding.
B: “Thanda matlab Coca-cola”: Segment- rural market, small towns,
message coke is affordable.
Coke won advertiser of the year in 2003
Corporate Social Responsibility
• Has made efforts towards good citizenship by improving
quality of life in which they operate addressing environment,
waste management, water and climatic change.
• Other activities like:
• In Africa combat spread of HIV through partnership with
government
• In India, company employed 7000 citizens, supported rain
water harvesting projects, to promote education and health
and more.
Pesticide residue and Coca-Cola
• Center for Science and Environment (CSE) issued a press release
on 12 major cold drinks to be containing deadly pesticides
surpassing global standard by 30-36 times.
• Amongst them Coke was also one of them.
• Government banned coke and Pepsi products.
• Coke and Pepsi denial of the validity of CSE at the early stages.
• The issue spread in the media and students very fast affecting
majority of customers and decreasing sales by 30-40% n two
weeks.
Previous Coke Crisis
• Ingram, et al. v. The Coca-Cola Company-
1999
– The racial discrimination law-suit which was
settled for $192.5 million
– $100 billion decrease in Coca-Cola’s stock price
between 1998-2000
Previous Coke Crisis
• Belgium- 1999
– afflicted to over 250 coke drinkers
– seventeen million cases of Coke from five European
countries were recalled and destroyed
– Belgian and French authorities banned the sale of
Coca-Cola products for ten days
– Similar actions by other European nations against Coke
– Reported for the CO2 impurity and the fungicide
Rebuilding the trust
• An aggressive PR campaign included vouchers
and coupons for free product delivered to
each of Belgium’s 4.4 million homes,
sponsored dances, beach parties, and summer
fairs for teenagers, and significant television
advertising reinforcing “Today, more than
ever, we thank you for your loyalty.”
Kinley Bottled Water
• “Pure Water or Pure Peril?”
• Coca-Cola remained largely silent and the buzz
went away
Corporate Communications at Coca-Cola
• Critical function at the Coca-Cola corporation
• Matrix team organization
NGO Activism
• Movement against business
– Greenpeace’s attack on Shell Oil
– Global Exchange’s attack on Nike for sweatshop
labor conditions
• Center for Science and Environment (CSE)
against Coke in India
Indian Regulatory Environment
• The Food Processing Order (1955) required
that the main ingredient used in soft drinks be
“potable water”
• EU food laws need to be imported into India
to satisfy safety standards
Thanks to CSE
• Aamir and Shahrukh came together - a rare
show of solidarity at a joint press conference
• Coca-Cola and Pepsi launched independent
campaigns
• Consumers still listened to CSE – sales
dropped
Mr.Gupta vs. Mr.Gupta
• Coke was working within the country’s legal guidelines
• Had not been reported much about product quality
outside of India
• Short attention span of Indians on any issues
• An opportunity to display higher standards of social
responsibility
The situation
• There had been plenty of cases where
multinationals discriminated the standards in
developing countries in comparison to
developed nations
• An effective solution was urgently required to
resolve and continue the Coke momentum
What we heard
• CSE touted:
– “12 major cold drink brands sold in and around
Delhi contain a deadly cocktail of pesticide
residues”
– How can apparently quality-conscious
multinationals market products unfit for human
consumption?
What we read
• Coke’s net income was $3969 millions in 2002
• Coke was No.1 in Inter brand’s Global Brand
Scoreboard 2003
• Coke claimed to do 441 tests for its product
• In India, 10000 million bottles of soft drinks sold in
2003
Coca-Cola: Principles of Corporate Citizenship
• Coca-Cola’s reputation is built on trust.
• “The Coca-Cola Company exists to benefit and refresh everyone it
touches.”
• Committed to managing business around the world with a
consistent set of values that represent the highest standards of
integrity and excellence.
• These values are shared with bottlers, making the system
stronger
• These core values are essential to Coca-Cola’s long-term business
success and will be reflected in all relationships and actions - in
the marketplace, the workplace, the environment and the
community.
Principles of Corporate Citizenship (contd..)
Marketplace
•Adheres to the highest ethical standards
•We will serve the people who enjoy our brands through innovation, superb
customer service, and respect for the unique customs and cultures in the
communities where we do business.
Workplace
•Treat each other with dignity, fairness and respect.
• Foster an inclusive environment that encourages all employees to develop and
perform to their fullest potential, The Coca-Cola workplace ill be a place where
everyone's ideas and contributions are valued, and where responsibility and
accountability are encouraged and rewarded.
Environment
•Integrate principles of environmental stewardship and sustainable development
into our business decisions and processes.
Principles of Corporate Citizenship (contd..)
Community
• We will contribute our time, expertise and resources to help
develop sustainable
• communities in partnership with local leaders. We will seek
to improve the quality of life
through locally-relevant initiatives wherever we do business.
Responsible corporate citizenship is at the heart of The Coca-
Cola Promise. We believe that what is best for our
employees, for the community and for the environment is
also best for our business.
Myths and Facts about Coca-Cola
• Since August 5, 2003 the quality and safety of Coca-Cola
and PepsiCo products in India
was called into question by a local NGO, the Centre for
Science and Environment (CSE).
• The basis of the allegations are tests conducted on
products of Coca-Cola and PepsiCo by CSE’s internal
unaccredited laboratory, the Pollution Monitoring
Laboratory.
Myth versus facts: Coca- Cola (India)
Myth Facts
•Coca-Cola products in India contain •There is stringent quality monitoring covering both
pesticide residues that are above EU the source water as well as finished product.
norms •Tests for traces of pesticide in groundwater to the
level of parts per billion. Even at these stringent
miniscule levels Coca-cola co., India is well within the
internationally accepted safety norms.
•Coca-Cola products sold in India are •There is no contamination or toxicity in Coca-cola’s
"toxic" and unfit for human beverage brands. High-quality beverages are and
consumption have always been - safe and refreshing.
•Coca-Cola has dual standards in the •The soft drinks manufactured in India conform to the
production of its products, one high same high standards of quality as in the USA and
standard for western countries, Europe. Coca-Cola stringently tests soft drinks in India
another for India at independent, accredited and world-class
laboratories.
Myths Versus facts; Coca-Cola (India)
Myths Facts
In India the soft drinks industry There are no standards for soft drinks in the US, the EU, or
is virtually unregulated. India. The water used by Coca- Cola conforms to both BIS and
EU standards
Coca-Cola has put out results for The results of product tests conducted by TNO Nutrition and
Kinley water only and not for Food Research Laboratory in the Netherlands is conclusive
their soft drinks. and is available on The Science Behind Coca-Cola’s Quality
web page.
International companies like The Coca-Cola business in India is a local business. Beverages
Coca-Cola are “colonizing” India in India are produced locally, thousands of Indian citizens are
employed, product range and marketing reflect Indian tastes
and lifestyles, and we are deeply involved in the life of the
local communities.
Farmers in India are using Coca- Soft drinks do not act in a similar way to pesticides when
Cola and other soft drinks as applied to the ground or crops. The use of soft drinks for this
pesticides by spraying them on purpose would be totally
their crops. ineffective.
