Coca-Cola's Indian Pesticide Crisis
Executive Summary
Coca-Cola is the world’s largest soft drink corporation. This case study concerns a report released by The Center for Science and Environment (CSE), an Indian NGO in 2003. The CSE report stated that Coca-Cola was selling products with unacceptable levels of pesticides to the Indian market. The case study also analyses the steps that Coca-Cola took to minimize the damage and protect their company in the report’s aftermath.
On August 5th, 2003 The Center for Science and Environment (CSE), an Indian NGO, released a report that stated, "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues”. The CSE study concluded that Coke and Pepsi products contained pesticides residues, which were 30-36 times higher than global standards. The release of the CSE report prompted the Indian government to ban Coca-Cola products from parliament. Several Indian state governments commissioned independent studies to test Coke products for pesticides. The combination of the CSE report and Indian government actions had immediate and disastrous impact on Coca-Cola’s Indian operations and the entire Coca-Cola Bottling Company. Negative consequences of these government actions included
* The Coca-Cola Bottling Company stock price fell more than 9%, from $55 to $50 per share, in the 6 trading sessions following publication of the CSE report.
* Coca-Cola’s sales in the Indian market fell by 30-40% in the 2 weeks following the report, threatening Coke’s share of the $1 billion Indian soft drink market.
As a result, Coca-Cola India CEO Sanjiv Gupta had to act quickly and decisively to salvage Coke’s place in the Indian soft drink market. Mishandling of this crisis could lead to
* Irreparable damage to Coke’s estimated $70 billion global brand image.
* A failure to capitalize on Coke’s recent marketing efforts that led them to gain market share in the Indian soft drink...