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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"A company takes ordinary mains water, puts it into fancy blue bottles, slaps on an exotic name and sells it for thousands of times more than it cost out of the tap. It sounds like an idea dreamt up in a boardroom that was too outrageous to implement, or a far-fetched plot of a television comedy. But the idea is, with a few modifications, behind Coca-Cola's latest drink, bottled water called Dasani."¹

- Matthew Beard, Columnist, The Independent in March 2004.

"This is very surprising for a company as careful and deliberate as Coca-Cola, and a blow to the trust they're aiming to build with consumers as well as their strategy to diversify into drinks that can't be linked to obesity, such as water."²

- Allyson Stewart-Allen, International Marketing Strategy Consultant & Founder of International Marketing Partners Limited³ in March 2004.

The Recall

On March 19, 2004, the US-based Coca-Cola Company (Coca-Cola), the largest carbonated beverages company in the world, voluntarily recalled its entire range of bottled water - Dasani --from the UK within five weeks of its launch.

The recall was made after the levels of bromate, a derivative of bromine⁴, a potentially harmful chemical, was found to exceed local legal standards (Refer to Exhibit I for more information on the harmful effects of bromine).

Speaking on this subject, the Food Standards Agency (FSA), the UK's food quality regulator, said long-term exposure to high levels of bromate could increase the risk of cancer.

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The recall was preceded by an inspection conducted by the FSA, prompted by the discovery of the UK press that Dasani's water came from local municipal taps, albeit processed before being bottled, rather than from natural springs.

Selling processed water was not new in the bottled water industry; but the UK press held that as per the labeling guidelines, Dasani water which was sourced from the local municipal water taps, was not qualified to be described "as pure as bottled water gets." After the Belgian soft drinks crisis⁵ that Coca-Cola faced in mid-1999, the Dasani bottled water crisis in the UK was considered to be the biggest embarrassment for the company. Marketing analysts opined that the recall of about 500,000 bottles of Dasani, though described by Coca-Cola as a voluntary precautionary measure, could prove to be a severe blow to the company's efforts to make inroads into the bottled water market of Europe, particularly the UK.

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1] Matthew Beard, "The real thing? Coke's water comes straight from the tap with a cool mark-up of 3,000 per cent," The Independent, March 02, 2004.

2] "Coke Recalls Controversial Water," www.news.bbc.co.uk, March 19, 2004.

3] Founded in 1991, the US-based International Marketing Partners offers market analysis, market planning, market research and cross-cultural insights into business.

4] Bromine is the only liquid non-metallic element. It is a member of the halogen group. It is a heavy, volatile and mobile reddish-brown liquid and has a strong unpleasant odor. When spilled on the skin it produces painful sores. It is a serious health hazard; safety precautions should be taken when handling it.

5] On June 13, 1999, Coca-Cola recalled over 15 million cans of the soft drink after the Belgian Health Ministry announced a ban on Coca-Cola's drinks, which were suspected of making over 100 school children ill in the preceding six days. Children at six schools in Belgium had complained of headache, nausea, vomiting, and shivering after drinking Coca-Cola's beverages, leading to their hospitalization. Most of them reported an 'unusual odour'and an 'off-taste'in the drink. By June 15, 1999, Coca-Cola had recalled about 30 million cans and bottles, the largest ever product recall in its 113-year history. To read more about this crisis, please refer to the case study, "Coca-Cola's Belgian Crisis: The Public Relations Fiasco," ECCH Reference No. 504-121-1.