Coca Cola Enterprises (CCE), the exclusive bottler for Coke in northern Europe, have said that there has been a 70 per cent drop in second-quarter profits due to the recent recall of Coke products in Europe. The recall of nearly 17 million unit cases of soft drinks, when dozens of Europeans became sick after drinking Coke products, cost the company around US $60 million, said a company spokesperson.
Coke products were pulled out mostly in Belgium, France, the Netherlands and Luxembourg where the first reports of illness from drinking Coke products emerged. The ban has since been lifted in most countries. "The health scare will have a negative impact on sales, cash operating profit and earnings per share in the second quarter. But the extent is difficult to determine," said the spokesperson.
Coca Cola has said that the scare was because some of its shipments pallets had been contaminated by the toxic chemical phenol. "All the pallets which were contaminated have been withdrawn," said Henry Schimberg, the chief executive of CCE. "Out of the 150,000 pallets sent from the Kunkirk plant to Belgium, 800 were contaminated by phenol," he added.
Meanwhile, France has opened an investigation into whether rat poison could have contaminated its cans. Coca Cola, however, rejects this theory. Doug Ivester, chairperson of the company said: "We will work with appropriate agencies and processes to ensure that they have complete confidence in our products." To reassure its customers, he said that each of Belgium's 10 million inhabitants would get a free sample of Coke.
Adds Schimberg: "Our efforts to reintroduce our products back in the markets affected by the European product recall will substantially minimise any impact on our results for the rest of the year."
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