Coca Cola in Belgium
1) How could the Belgium problem have damaged Coca Cola?
Coca-Cola had been creating a really strong and successful image, and people had great sympathy for the brand. But because of the Belgian scandal, the credibility of the umbrella brand was being doubted.
First of all, customers (mainly from Belgium and France at the beginning) were scared of drinking Coca-Cola products. For example, parents did not want their kids to get contaminated. More so, the brand was not giving a specific reason for these incidents, and by not reacting soon enough the quality of their products was at stake. Because of that, the Belgian government imposed strict hygienic conditions to recover the right to sell their products again. Therefore, the rest of European countries had an "excuse" to distrust the brand, even if the Belgian authorities reacted a bit extremely due to the former chicken crisis.
Suppliers and distributors around Europe were also impacted. Coca-Cola, as a global brand, had had to trust its bottlers to follow the quality values the company held, but this scandal challenged the current control of Coca-Cola over its supplier's plants. But these suppliers also were scared of the consequences of their relationship with Coca-Cola in this crisis.
Coca-Cola also suffered a financial impact because of this crisis. The withdrawal of their products had a negative impact on the second quarter net income of the year 1999, with a decrease of 21%. Not only that, but the cost of the entire operation escalated to $103 million. All around the world investors were afraid of the money invested in the company, and this affected a decrease of the share value on Wall Street.
The competitors saw this crisis as an opportunity, and increased their promotion in order to steal part of Coca-Cola's market share. They took advantage of Coca-Cola's weak image during those days to claim their own high quality.
Despite all of this damage during June and July (partly due to the slow reaction of
Coca-Cola had been creating a really strong and successful image, and people had great sympathy for the brand. But because of the Belgian scandal, the credibility of the umbrella brand was being doubted.
First of all, customers (mainly from Belgium and France at the beginning) were scared of drinking Coca-Cola products. For example, parents did not want their kids to get contaminated. More so, the brand was not giving a specific reason for these incidents, and by not reacting soon enough the quality of their products was at stake. Because of that, the Belgian government imposed strict hygienic conditions to recover the right to sell their products again. Therefore, the rest of European countries had an "excuse" to distrust the brand, even if the Belgian authorities reacted a bit extremely due to the former chicken crisis.
Suppliers and distributors around Europe were also impacted. Coca-Cola, as a global brand, had had to trust its bottlers to follow the quality values the company held, but this scandal challenged the current control of Coca-Cola over its supplier's plants. But these suppliers also were scared of the consequences of their relationship with Coca-Cola in this crisis.
Coca-Cola also suffered a financial impact because of this crisis. The withdrawal of their products had a negative impact on the second quarter net income of the year 1999, with a decrease of 21%. Not only that, but the cost of the entire operation escalated to $103 million. All around the world investors were afraid of the money invested in the company, and this affected a decrease of the share value on Wall Street.
The competitors saw this crisis as an opportunity, and increased their promotion in order to steal part of Coca-Cola's market share. They took advantage of Coca-Cola's weak image during those days to claim their own high quality.
Despite all of this damage during June and July (partly due to the slow reaction of