Coca-Cola is deemed one of the leading soda brands worldwide. In the 2005 Annual Report of Coca-Cola, the company served approximately 1.5 billion drinks every day, and this number increased to 1.6 billion in 2010. The company sells beverage servings in more than 200 countries. But as with any successful business victory can sometimes bring a turning point that will change the direction of the company. One particular point for Coca-Cola was on August 5, 2003.
On this date, the Center for Science and Environment (CSE), an activist group in India, issued a news media release stating that Coca-Cola in India had” Twelve major cold drink brands sold in and around Delhi containing a deadly cocktail of pesticide residue that surpasses global standards by 30-36 times” (Kaye,2007). The pesticides found were known to cause diseases such as cancer, birth defects, and other health conditions. The Center for Science and Environment report had done its job of striking fear in the residents of India.
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This accusation of pesticides posed a great concern for the Coca-Cola Company and where they stood in India. These allegations were not only threatening to the customers who consume Coca-Cola often but also to the company’s outstanding reputation. The effects could be distressing to the company’s customer base. The company has also marketed its product to be the number one soda in the market and these pesticide claims began diminishing the validity of that claim and the customer base which would shrink revenue for the company. After the reports came out, Coca-Cola stocks dropped on the New York Stock Exchange. According to (Gentleman, 2006) In India,
The consumers lost their trust in the company after the Center for Science and Environment report declared the pesticides in Coca-Cola were dangerous.
Coca-Cola responded to the accusations by denying the validity of the Center for Science and Environment report (Cedillo Torres et al., 2012). Coca-Cola Indian President and CEO Sanjiv Gupta argued that the report was flawed and questioned the testing methods used. The Center for Science and Environment disputed this claim and followed proper procedure with the environmental protection agency which supported the finding of the Center for Science and Environment.
Scientists have argued that pesticides had seeped into the groundwater that Coca-Cola used. Though most of the products in India are required to meet guidelines on an acceptable level, there was no legal legislation regulating the soft drink industry at the time the Center for Science and Environment report was issued. (Vedwan, 2007). The Indian government responded by adopting the European Union standard for bottled water. A survey conducted in Delhi was conducted after the pesticide announcement about pesticides being used in soft drinks found a majority of consumers believed the findings.
Coca-Cola’s strategy was to argue the scientific pesticide claims which backfired on the company and they began losing the customer base. Coca-Cola’s main priority now is to restore the company’s reputation as a strong business that values a strong business program as well as being socially responsible. Restoring the company’s reputation will allow the investors to be confident as well as show responsibility as a business to its customer base.
The company now must be able to win back former customers who were turned away from the company’s lack of social responsiveness as well as be a champion to the environment. Communication with the employees is a must as well to ensure the company will address this problem. Since the employees will most likely talk to their families, and others, there has to be a consistent message from the organization within the consumer base.
Instead of denying the claim of pesticide usage, Coca-Cola should have solicited the assistance of the Center for Science and Environment. That way the Center for Science and Environment, would have nowhere else to go but to agree to assist Coca-Cola with this environmental problem. By joining forces with the Center for Science and Environment, it creates a transparent discussion with Coca-Cola and the customer base. They would admit to a mistake and are willing to correct this mistake. By collaborating with The Center for Science and Environment they could come up with a public image campaign to help win back the customers while keeping their best interests in mind. The issue with any big consumer business is to get the truth out to the customer base. This should be done as quickly as possible to ensure credibility and truthfulness. Coca-Cola India should have responded immediately, not remained silent until they were losing money.
Coca-Cola India must come up with strategies to bring back the customer's trust. Coke India should be completely transparent regarding this allegation and reveal the complete problem to the public so that they can assure the consumers to believe Coke again. Building a better relationship with the Center for Science and Environment and the government is a must as well as these two parties were involved with the start of this allegation. By maintaining a better relationship with the government, or influential parties, Coca-Cola will have an opportunity to resume its position as
The leading soft drink company and regain creditability from their investors which will lead to improving their economic loss.
To help correct the issue of trust with consumers, Coca-Cola India could have adopted a public relations campaign to provide giveaways to show the public that Coca-Cola is not just another greedy conglomerate but would show the company in a more socially responsible view. This campaign needed to be done quickly so they could follow the campaign with a customer retention program which would have included promotional events, charity work, and giveaways. This public relations plan will take time and should regain customer loyalty to rebuild the brand name.
According to the article by Raman (2007), Coca-Cola plans to help establish improved, cleaner communities in both rural and urban areas of India. By working for a cleaner India, Coca-Cola India can rebuild faith in Coca-Cola as a brand that cares about its customers’ value of life. By initiating the “Coke Cares” program this will help rebrand the company as an environmentally responsible corporation that responds to the needs of its customers. Coca-Cola has also stated ” Our new environmental management system, ecosystem, is being implemented across our business enterprise to address and reduce local impacts on the environment” (Dudovskiy,2015) This change in corporate social responsibility is just one sign that a business can change. As suggested by (Cedillo Torres et al., 2012) It appears that the controversy in India was a learning experience for the company, and it motivated the company to adopt a more proactive CSR policy on a global scale.
Before the incident regarding Coca-Cola India and pesticides, the company was not responsible to their consumers or their employees. Responsible leaders make sure that the products and services meet the needs of their customers and clients that they are safe and not harmful and that real and potential risks are openly and transparently communicated (Maak & Pless,2006). Although Coca-Cola was not responsible, Coca-Cola did become more active in resolving the issue.
There is no way for certain that the ideas and plans suggested for Coca-Cola India to follow are 100% failure-proof. However, these ideas will prove Coca-Cola India to be a socially and environmentally responsible company that places the safety of the public in delivering a safe and delicious soft drink which will eventually lead to the sustainability of Coca-Cola India Co. and its profits. The crisis highlighted the factors and goods like clean drinking water, which cannot be taken lightly and is a serious matter which needs to be made a priority and the quality of the product should continually be examined and updated.
The analysis of the crisis regarding socio-ecological and political changes are all covered here as in the government taking a stand, environmental measures, and public safety (Vedwan, 2007). Coca-Cola India learned many things from this predicament as making public safety their priority and not neglecting the main issues that concern the safety of the consumers and also the environment.
References
- Cedillo Torres, C., Garcia-French, M., Hordijk, R., Nguyen, K., & Olup, L. (2012). Four Case Studies on Corporate Social Responsibility: Do Conflicts Affect a Company’s Corporate Social Responsibility Policy? UtrechtLawReview, 8(3), 51-73–77.
- Dudovskiy, J. (2015, August 25). Coco Cola Corporate Social Responsibility. Retrieved October 7, 2019, from https://www.coca-colacompany.com
- Gentleman, A. G. (2006, Summer 8). Pesticide allegations trip up Coke and Pepsi-Business- International Herald Tribune. Retrieved October 8, 2019, from www.newyorktimes.com
- Hard truths about soft drinks. Retrieved from www.cseindia.org/hard-truths- about-soft-drinks-7581
- Maak, T., & Pless, N. M. (2006). Responsible Leadership in a Stakeholder Society – A Relational Perspective. Journal of Business Ethics, 66(1), 99–115. https://doi.org/10.1007/s10551- 006-9047-z
- Raman, R. (2007). Community- Coco Cola Interface, Political Anthropological Concerns on Corporate Social Responsibility, 51 Soc. Analysis 103-120
- Vedwan, N (2007) Pesticides in Coca-Cola and Pepsi: Consumerism, Brand Image, and Public Interest. in a Globalizing India, Cultural Anthropology 22, no. 4, pp. 659-684.
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