The coke and diesel men

By Anil Agarwal
Published: Sunday 15 August 1999

Indian companies have a lot to learn from the recent Coke scare in Europe. In two separate incidents, more than 100 Belgians fell ill last month after drinking Coke. This scare came after a series of similar incidents had already taken place in Europe from the 'mad cow disease' to the more recent debate over genetically modified foods and the latest scare over poultry products in Belgium being tainted with cancer-causing dioxin.

In France, Belgium and the Netherlands, most of the Coke products were banned and in Switzerland, Italy and Spain, health ministers put out public warnings against Coke products coming from the two suspect bottling plants, even though the company does not ship its products to these countries from those plants. The stock market also turned bearish on Coca Cola shares.

The company itself was partly to blame. On June 21, in its first advertisement appearing in France, it claimed that the quality of its products was beyond reproach, which many people found to be 'more pompous than apologetic', as the Financial Times put it. Paul Holmes, editor of Reputation Management, pointed out, "People like to see companies admit 'we're human, we can make mistakes and we're doing the best we can. That's a much more consumer-friendly message than 'Our products are perfect and we can do no wrong'."

Fortunately, the company recognised its mistake fast and soon came out with a new strategy to undertake damage control. It admitted that the problem had occurred at one plant because of defective carbon dioxide and at another, a foul-smelling fungicide had leaked on to Coke cans. And Coca Cola's chairperson, Douglas Ivester, himself apologised for any discomfort or inconvenience brought on by its products and that the company will guarantee the quality and safety of its products at every instant that is, at every point of the retail chain. In full-page newspaper advertisements across Belgium, Ivester said, "To all the Belgian people, I want to say that I'm personally very sorry for any discomfort or inconvenience. My colleagues and I will be working very hard to earn your trust again." Coke's products are slowly getting back into the shops.

The entire episode was too small to affect Coke's finances. Belgium, France and the Netherlands make up less than 4 per cent of Coke's global volume but it could have caused irreparable damage to the company's reputation.

This episode has left Coke management a lot more sobre and mature about how it should handle public concerns. As a us consultant told USA Today , "The public fundamentally does not trust big companies, and it tends to believe negative health information. Companies should address two questions from their customers: 'Am I going to be okay?' and 'What are you doing about it?'

This is an important lesson for Indian companies, too. India's economic development is still very low and so are its levels of urbanisation, industrialisation, motorisation and agricultural modernisation. All this will pump enormous amounts of poisons into India's environment, create incredible levels of pollution and seriously affect public health unless serious steps are taken to prevent it. India is already reaching unbearable levels of pollution even though its economy is still one of the poorest in the world.

In such a situation, it would help Indian ceo s to understand that public concern over such issues should be dealt with care and caution. Being dismissive of these concerns does not help the image of the companies, especially big companies. But this lesson is yet to be learnt. If it is pointed out that diesel vehicles pose a serious threat, diesel vehicle manufacturers are quick to ask 'but what about petrol cars?' and 'aren't you being paid by petrol vehicle manufacturers?' Similarly, oil companies claim that they are meeting all fuel quality standards set by the government at their refinery gate. They are not therefore prepared to take responsibility for the huge adulteration that takes place during the transport and retail stage. Oil companies are expected to keep a watch on fuel quality but never find a single case of adulteration even after checks, simply because they don't see the quality supplied to the consumer as their responsibility.

Recently, Down to Earth carried a major story featuring major foreign car manufacturers who had been asked a few simple questions ( Down To Earth , Vol 8, No 4, July 15) : Why are you promoting diesel vehicles in a city like Delhi which already has extremely high levels of particulates in its ambient air which kill nearly 10,000 people every year? Are you not aware of these health effects of particulates, especially as most of this research is being done in your own countries? Even if the Indian government does not stop you from making diesel cars, should you not desist from doing so yourself?

Not one company gave us a straight answer about the particulate problem from diesel cars. In the so-called 'market', the rumour is that Down to Earth is being paid off by Korean car companies because they are more hesitant to produce diesel cars. In other words, public concerns grow only when some vested interest is behind it. These companies simply forget that public health and environmental concerns will slowly catch public attention and it is they who will suffer damage to their reputation in the market. It's best to face the challenge rather than to deny it.

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