Coca-Cola India - Immediate Communication Strategy

COCA-COLA INDIA – PESTICIDE CRISIS BRIEF

TO:

ARAN BARRANCA

FROM:

STUDENT A

DATE:

AUGUST 20, 2003

SUBJECT:

COCA-COLA INDIA CRISIS REQUIRES IMMEDIATE COMMUNICATION STRATEGY

Welcome to Coca-Cola India. As a leading soft-drink provider in the Indian Beverage Market, Coca-Cola has a successful growth rate of 25-30% since market re-introduction in 1993. With a combined 95% market share to-date (alongside PepsiCo.), Coca-Cola India is faced with losing all 10 years of progress in India and requires immediate attention from our Corporate Communications team. Provided below is an executive brief on the current pesticide crisis and our team’s recommendation to overcome the current product ban in India and take advantage of an opportunity to position Coca-Cola India as the leading refreshment in the East Asia market.

ALLEGATIONS AGAINST SOFT-DRINKS IN INDIA

Over the past year a local activist group in India, The Center for Science and Environment (CSE), released negative reports stating pesticide residue in packaged drinking water brands and cold drink brands. The most recent report issued on August 5th, listed both Coca-Cola and PepsiCo as major offenders resulting in a nationwide ban of multiple Coca-Cola soft-drinks and a stock decrease of five dollars on the NYSE (See Figure 1).

These allegations are increasingly detrimental as they have made the following effects on the Coca-Cola brand image in the Indian market:

1. Consumer perception that products create serious long-term health issues: reports stated pesticide residue surpasses global standards as set by the European norms and have health issues including cancer, damage to the nervous and reproductive system, birth defects and disruption to the immune system.

2. Consumer supported governmental ban: a survey in Delhi found that the majority of consumers believed the findings and agreed with parliament to move to ban the sale of soft drinks.

3. Government launched investigations: State and Parliament agreed to conduct independent lab testing on all soft drink samples and their negative effects on industrialization and economic growth for the nation.

COCA-COLA SUCCESS IN INDIA

The Coca-Cola brand has had major success in the India market after the implementation of the 2001 Marketing Strategy: “Think local, act local.” The global initiative spurred a brand localization

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strategy that lead to the largest increase in per capita consumption from 2001-2003. With the identification