| BUSINESSWEEK ONLINE : AUGUST 16, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN BUSINESS
Have a Coke and a Smile--Please (int'l edition) After the debacle in Europe, it's pushing hard to rebound Talk about a summer of extremes. For two weeks in June, Coke was a pariah across much of Europe, as consumers recoiled from cans with contaminated carbon dioxide and four countries ordered it off supermarket shelves. Now, Coke wants to be everywhere again. Beginning in Belgium, where its troubles started, Coca-Cola Co. is going all out to win back lost customer loyalty. It's also trying new marketing and management strategies to get in closer touch with Coke drinkers worldwide. ''This event has humbled us,'' admits Chief Marketing Officer Charles S. Frenette. ''But it has proved a tremendous testing ground.'' It's sure to be an expensive campaign. Coke spent more than $100 million on its European recall. It won't even discuss what it's spending to get Coke back in circulation. It is giving half-liter bottles away at stands outside 2,000 Belgian supermarkets. Across the country, it's staging dances for teenagers and summer fairs for mothers with young kids. Elsewhere, Coke is trucking in sand to create ''beach parties.'' It plans similar freebie campaigns in France and Germany, where sales also took a hit. By summer's end, Coke says, it will hand out nearly 8 million bottles. The debacle that began when Belgian teenagers got sick from tainted Coke cans has cost the $19 billion giant dearly. Second-quarter net income was down 21%, to $942 million, chiefly because of the European calamity. Coke has to scramble to regain its primacy--and stop the damage from spreading. Pepsi is ramping up European production. Virgin Cola, Coke's No. 1 competitor in Belgium, has more than doubled its market share since June, to 6%. Says Philip De Prest, marketing director at Chaudefontaine, which imports the British drink: ''This crisis has given us a chance to reach the Belgian consumer.'' It has also given Coke a chance to rethink basic management practices. To handle the crisis, Coke set up a war room in Brussels, where marketing managers, public-relations consultants, distribution experts, and others meet every morning at 9. One byproduct is streamlined decision-making. ''It used to take two months to get an ad approved by Atlanta and all the different departments,'' says Wim Van Der Borght, senior brand manager for Belgium and Luxembourg. ''With the war room, we're all together and need only 24 hours.'' Execs say the Brussels war room meetings will continue once the crisis passes--and that they may try something like them in other offices. That won't simply speed up decisions; it will also help bring them closer to the ground. Losing touch with customers is an old problem at Coke--as the disastrous launch of New Coke in 1985 demonstrated. Coke was decentralizing even before the Europe crisis. But this summer has heightened the company's concern. That is why Coke is playing down TV and print campaigns around Europe in favor of face-to-face encounters. It has hired 6,000 Belgians for its relaunch--first for a door-to-door giveaway of 4.4 million redeemable coupons and then to set up its supermarket stands. ''When we asked consumers what they wanted from Coke,'' says Corrine Paquot, Coke's top Belgian researcher, ''they said, 'A human face.''' COLA WOOS. Will Coke's smile campaign work? At Belgian supermarkets and Coke-sponsored events, consumers seem to be responding well. But there's a long way to go. Although Coke hopes its giveaways will overcome doubts about quality, polls show that mothers with small children still worry. Coke's coupon giveaway upset many retailers because it initially failed to ship enough product--suggesting that there's still room for improvement on the management side, too. Competitors think Coke has promised more than it can deliver. ''Coke is being very American--too aggressive,'' sniffs Chaudefontaine's De Prest. Coke executives acknowledge problems. It will take six months to restock Belgian retailers, they say. And Coke is neglecting its Sprite and Fanta brands. For both Coke and its sister products, this means sales won't reach precrisis levels until at least yearend. Nonetheless, Coke is confident that it will emerge a leaner, more effective marketing machine with a better feel for consumers. Many Wall Street analysts think so, too. Indeed, analysts and Coke execs in Brussels say the company could well double European sales within the next decade. Maybe. Let's see if it can buy the Continent a Coke first. By William Echikson in Brussels _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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