Coke and Pepsi recently ran into a major crisis when the New Delhi based organization Centre for Science & Environment reported that the brands contained pesticides. The fallout of this allegation was denials and explanations and counter allegations by the companies, and the government finally stepping in to investigate!! A crisis in the marketing of the two giant soft drink brands resulting in immediate loss in sales and image.

Crisis and the controversies at FMCG companies are quite unusual. One has often heard of crisis at companies like Enron, Bombay Stock Exchange, Air India, but not so much for day-t-day consumer brands – and that to such as Coke and Pepsi the darlings of the youth market.

Interestingly, the two rival companies for the first time joined hands level to launch a public relations and publicity campaign to protect their brands and corporate image. And what did they do? Some things right, and some things wrong!

Coke and Pepsi sell lifestyle. And they back it with enormous resources in media advertising. Now with the Centre for Science & Environment (CSE) reporting and claiming that both Coke and Pepsi colas contained pesticides, the two brands hit the headlines in media. But this time not of their doing and liking – that they were harmful for consumers who drink them!

This, however, may not be a “new” revelation on a worldwide scale. Coke and Pepsi colas have been known to clean stains on toilets! It is said that pour a can of Coke into the toilet bowl, and let the “real thing” sit for one hour and then flush the toilet clean. The citric acid in the colas removes stains on the vitreous china! No scrubbing, no sweat – guaranteed. Domas and Harpic need not exist? (Source:
barefoot_lass@earthlink.net).

Coca Cola in Chinese is “kokan kole”, and translated as “happiness in the mouth!” Yet, as quoted in the website Barefoot_Lass, when someone put a broken tooth in a bottle of Pepsi, in 10 days it dissolved completely in the drink. What would the drink be doing to our delicate intestines and stomach?? Coke and Pepsi lovers need to think about this before they go for “Thanda means Coke!” or “Dil Mange More” for Pepsi! These are some of the known, but alarming, reports.

The issue here in India on the fact of Coke and Pepsi brands containing pesticides became a major controversy. The crisis and controversy could not be just wished away. It loomed large, and had serious negative impact on the marketing, sales and image of the to brands. It made the manufacturers, trade, consumers, NGOs and the government sit up and look at the situation. The respective companies in order to protect their brands adopted special postures and strategies. The most unique of these was the unprecedented unity that the two majors displayed in the face of the public charges against them and to protect their interests over the long-term. The actions they took and now well known, have been discussed for their impact by professionals and media journalists. This article is one such viewpoint on the communications and public relations strategies of the two companies.

Silence is golden?
There are times when the philosophy “silence is golden” in a crisis situation works very well. You wait and watch; you let time take care of things. But there are times when you need to shun this and take hard-nosed decisions backed by strong actions to overcome and manage the crisis.

Handling corporate and brand crisis can be a nightmare. Particularly in the FMCG area, which involves consumers on a mass scale and thereby attracts and involves media, NGOs and the government at various levels and locations. The trouble for the cola majors in the case of CSE reporting presence of pesticides in Coke and Pepsi has been just so.

Some years ago Colgate toothpaste had to overcome a similar crisis when it was alleged by ENAR, a research outfit near Baroda, to be manufactured containing di-calcium phosphate (DCP) derived out of animal bones. DCP as one of the ingredients gives the toothpaste body and some dental cleaning/polishing qualities. There was then an uproar that Colgate Dental Cream was a “non-vegetarian” toothpaste. As a result the non-vegetarian consumers of this world, NGOs, and the trade (largely the bania and kirana shops) were up in arms against the brand and the company, and they stopped using and selling the brand. It became a case of survival for the company with over 50% of its sales turnover being accounted for by this single brand! The company, however, adopted a “wait and watch policy” and did not take the war into the ENAR camp. With subtle PR and communications to media, employees, trade and government bodies was able to tide over the crisis successfully, but over a period of time.

Coke and Pepsi in the present case took a distinctly proactive and aggressive stand in their crisis, and their actions and communications have been bold and clear.

In this, another unique and noticeable aspect has been that Pepsi was more aggressive of the two. Coke had opted for actions that have been somewhat subtle and particular. Pepsi had been taking the lead with MD Rajiv Bakshi being more vocal in the media. He was quoted more than Sanjiv Gupta and also his photographs appeared more often! In the publicity thrust, Rajiv Bakshi seemed to have accepted to take the risk of being the champion and launched an advertising and PR campaign that included legal action against CSE. But the actions for Pepsi seemed to have misfired

Phases of Company Actions
From what is obvious today, there were three phases in which the two companies attempted to manage and counter the negative fallout from CSE’s report and allegations at the marketplace. First were the couple of quick joint press conferences, interviews and publicity in all media, followed by individual “we are clean” ads for their soft drinks in the print media, and then a series product promotion advertising incorporating a message of the colas being safe to drink (especially by Coke).

The first phase, thus as expected, was to kill the crisis at the consumer, trade, and government levels, and arrest the decline in sales from non-consumption. A series of media conferences, media interviews and press releases were organised jointly and individually by Coke and Pepsi. While the action taken was professional in all respects and offered a clear explanation of the companies’ point of view, there seemed to be a credibility gap in two broad respects.

There was no positive and immediate proof offered that the colas did not have the pesticide content as alleged. Partly because of the companies own inability to gather the proof fast enough to meet the crisis that had blown in their face, and partly because the government had taken upon itself to investigate and give a ruling in the matter and hence the companies case becoming “subjudice”.

The two companies also did not make efforts to actually “demonstrate” that the brands were indeed safe. For instance, I personally believe, Rajiv Bakshi and Sanjiv Gupta at the press conference themselves could have openly consumed Pepsi and Coke, and be photographed by the Press doing while stating that their colas were safe to drink!!! They, however, preferred to drink tea instead as organized by the PROs and the hotel where the press conference were held! I would even go to the extent suggesting that Rajiv Bakshi and Sanjiv Gupta could have had their children to be present at the press conferences and make them publicly drink Pepsi and Coke! What better proof and message than this could the two CEOs have offered to the target publics? And they would have made a tremendous impact – a PR and publicity coup of sorts!

Both companies thereafter opted to quickly launch and repeat well crafted ads in the Press explaining their position and that their brands were safe to consume. Sadly for Pepsi their ad using newspaper headlines on Sushma Swaraj’s comments on the issue bombed, and had to be followed with a similar sized apology advertisement! The company seemed to have lost sight of the fact that advertising is a double-edged sword! Coke that way was more restrained in their advertising content and correctly followed their factual ad with attention diverting press write-ups on their strategy for their brands of juices, with Sanjiv Gupta himself acting as the spokesman.

In the next phase, Pepsi’s publicity and advertising efforts after this seem to have come to a halt? Coke seems to have gone ahead with a two-pronged advertising programme. A brand oriented but with subtle message against the allegation, featuring Amir Khan in an ad commercial on the TV. This was supported with a half-page ad in the Press featuring their own R&D chief and his family talking about the company’s quality checks, which met his and his family’s personal requirements and the quality for products they consume. The ad also supports this with findings of tests conducted in Netherlands and the UK by two of the worlds most respected testing labs giving them a clean chit. Here, and I will repeat, Bakshi’s and Gupta’s children having Pepsi and Coke at the Press conference would have made better and greater impact right in the beginning, and without incurring expensive media costs for such an advertisement!

Thus, as regards advertising, the situation has been such that Pepsi has had to apologize and in the process got a further knock in its public image. Coke on the other hand was able to think through their advertising strategy and got on to the right track for gaining trust in its “Thanda”.


Looking back

Despite all this, one is not sure of the conviction and confidence level today among the consumers of the brands. May be a consumer audit and research will give us the true position for further course of action to strengthen and build on the past consumer loyalty for the brands. Alternatively, the companies could, and may do nothing, and go by the fact that public memory is short and soon all this will be forgotten, and the brands will continue prospering as before – as long as the companies truly maintain the product quality in manufacturing and deliver the promised benefits to consumers.

In respect of PR and publicity, besides some of the unusual things that could have been done and as suggested in this article, there were no unique strategies adopted which may be worth talking about or drawing lessons from. There were no demonstrable actions adopted which could serve as a model to practicing marketing and communications professionals. From the practical and academic point of view, the actions to handle the controversy and crisis have been a run of the mill kind and nothing new or innovative as may be expected from international leaders like Coke and Pepsi.

 

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