Coke Ethical Issues
Our product is quite healthy. Fluid replenishment is a key to health. Coke does a great service because it encourages people to take in more and more liquids.
- Michael Douglas Ivester, Coke’s Chairman and CEO.
Public schools are funded by the public to educate the children as provided by state law. It is totally inappropriate that its facilities and employees are being used by corporations to increase their own profits on public time and with public dollars.
Dr. Brita Butler-Wall, Executive Director, Citizens Campaign for Commercial-Free Schools, US.
On June 13, 1999, Coca-Cola (Coke) recalled over 15 million cans and bottles after the Belgian Health Ministry announced a ban on Coke’s drinks, which were suspected of making more than 100 school children ill in the preceding six days. This recall was in addition to the 2.5 million bottles that had already been recalled in the previous week. The company’s products namely Coke, Diet Coke and Fanta had been bottled in Antwerp, Ghent and Wilrijk, Belgium while some batches of Coke, Diet Coke, Fanta and Sprite were also produced in Dunkirk, France.
Children at six schools in Belgium had complained of headache, nausea, vomiting and shivering which ultimately led to hospitalization after drinking Coke’s beverages. Most of them reported an unusual odor and an off-taste in the drink. In a statement to Reuters, Marc Pattin, a spokesman for the Belgian Health Ministry explained the seriousness of the issue: Another 44 children had become ill with stomach pains, 42 of them at a school in Lochristi, near Ghent, northwest Belgium.
We have had five or six cases of poisoning of young people who had stomach pain after drinking (the suspect beverages)." In the same week, the governments of France, Spain and Luxembourg also banned Coke’s products while Coke’s Dutch arm recalled all products that had come from its Belgium plant.
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 Cokes 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 Cokes history. One analyst alleged that the company had information about people who had become ill weeks prior to the above incidents. Coke had an opportunity to disclose this information but it did not do so.
He blamed Coke for being unethical in not disclosing the information, The instinct is to pull information in, and that is almost always wrong. The right move is to focus on the health of the customer. Even though you don’t think this information is relevant, you should get it out because that allows people who might think it is relevant to go through whatever process they want to go through. Coke might have done a lot more than it did in the opening days of the crisis. Another issue, which worried analysts, was...
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