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Cola Stains -- Anatomy of a Recall: How Coke's Controls Fizzled Out in Europe --- Lapses Let Contaminants Into Products; PR Flubs Only Made Things Worse --- `Deviation in Taste and Color'
By Wall Street Journal staff reporters Nikhil Deogun in Atlanta and James R. Hagerty, Steve Stecklow and Laura Johannes in Brussels

06/29/1999
The Wall Street Journal
A1
(Copyright (c) 1999, Dow Jones & Company, Inc.)

How could it happen?

That's been the question facing Anton Amon, chief scientist of Coca-Cola Co. and the man responsible for protecting the integrity of the world's best-known brand. Starting three weeks ago, hundreds of consumers of Coke products in Europe began turning up sick, prompting governments to pull Coke from shelves and European newspapers to speculate that Coke cans were contaminated with rat poison.

Now Mr. Amon acknowledges that Coke, a company famed for its attention to quality control, brand protection and public relations, blundered badly. The result was one of the most serious crises in Coca-Cola's 113-year history.

In an interview, the Austrian-born Mr. Amon says that a major culprit was lapses at Coke's bottling plants in Antwerp, Belgium and Dunkirk, France. The plants are run by Coca-Cola Enterprises Inc., or CCE, a giant bottler 40%-owned by Coca-Cola. The Coke plant in Antwerp failed to follow crucial quality-control procedures. "That's where the accident happened," Mr. Amon says, adding that these lapses allowed contaminated carbon dioxide, the gas that puts the fizz in soft drinks, to slip into Coke's products and make people feel sick.

At almost the same time that things were breaking down in Antwerp, trouble was brewing at a Coke plant in Dunkirk. Mr. Amon believes a fungicide that had been sprayed on wooden pallets rubbed off on the bottom of some cans, creating a "medicinal" smell. While Mr. Amon says those bad odors could have made some sensitive people feel ill, scientists in Belgium and France have been unable to confirm this theory and some remain skeptical.

Carbon dioxide comes from a variety of sources and can be a byproduct of numerous processes, such as alcohol fermentation, the milling of corn and the making of fertilizer. In this case, the CO2 at the Antwerp plant was contaminated with trace amounts of carbonyl sulfide and hydrogen sulfide, according to Mr. Amon. Neither should have been present. Both can be highly toxic in large doses. Hydrogen sulfide gives off a rotten-egg smell even if it's present in small amounts. The hydrogen sulfide is hard to detect because it evaporates once the bottle is open.

Mr. Amon says the bottling plant didn't detect the contaminants. Contrary to Coke procedure, the plant wasn't receiving certificates of analysis from the supplier of the gas, Aga Gas AB of Sweden. This certificate vouches for the purity of the CO2. Mr. Amon also acknowledges that contaminants could have entered the CO2 after it was delivered to the plant.

Beyond that, Mr. Amon says, workers at the Antwerp plant failed to perform a routine test, required by Coke, after the CO2 had been pumped into the holding tank at the plant, to confirm that the batch of carbon dioxide smelled and tasted fine.

A CCE spokesman yesterday confirmed that the company didn't test the CO2 batch at the Antwerp plant, and failed to request a certificate of analysis from Aga, supplier of the gas. Officials at Aga say it retained samples of the gas it shipped to CCE, and subsequent tests have shown no impurities. Coke officials say it's possible the gas could have been contaminated after it left Aga. Aga also says CCE has never asked the company to provide a certificate of analysis for each shipment.

The fiasco, which resulted in 14 million cases of Coke products being recalled in five European countries, seems to be subsiding now. No deaths have been reported. Health authorities in Belgium, France, the Netherlands and Luxembourg have lifted sales restrictions on Coke products. Coke said yesterday that production at the Antwerp plant will resume by the end of the week. It said it has installed additional quality-assurance personnel in Antwerp and other plants. It isn't clear how much the mess will cost Coca-Cola, but CCE has said it will take about $60 million in second-quarter charges because of the problems. Analysts expect CCE's second-quarter operating profit to be shaved by about $35 million.

Beyond the breakdown in quality control, public-relations failures and other miscalculations worsened Coke's problems. Coke may have missed an early warning in mid-May when the owner of a pub in Herentals, near Antwerp, complained that four people at his bar had become sick after drinking bad-smelling Coca-Cola from glass bottles. Coke says it investigated his complaints, but found no problems at the plant.

Even after more evidence of problems popped up, the company didn't sense big trouble. Mr. Amon, the company's qualitycontrol czar, wasn't brought into the crisiscontrol team until June 11, three days after children at a middle school in Bornem, Belgium, began throwing up after drinking Cokes. "They don't come to Atlanta if it's nothing serious," Mr. Amon says of his far-flung colleagues. "The local folks do their own thing."

The children in Bornem had noticed that the Cokes they bought in the school cafeteria on June 8 smelled bad. At about 1 p.m., an administrator called in a complaint to the CCE bottling plant in nearby Antwerp, which had delivered 20 cases of soda to the school that morning. By 1:30 p.m., some had begun feeling ill. By the next day, there were 39 sick kids from 10 different classrooms. Many of the children were rushed to the hospital, where blood and other tests were normal.

CCE employees picked up two cases from the school for testing. Some of the drinks, says CCE official Ben Laubrecht, had "an acid type of odor." That night, CCE officials decided to recall drinks that were made on June 2 through June 4.

Mr. Amon says that by the time the Bornem school made its complaint, the supply of gas used on June 4, the production date for Coke sent to that school, was used up. So, figuring out what went wrong with the gas might be impossible. "That gas was long gone," he says, and a subsequent batch of gas received at the plant was "clean like a whistle." Since they couldn't test the original gas supply, they started testing soft drinks. It was only a few days after the Bornem incident that Coca-Cola determined the problem was caused by sulfur compounds that had polluted the gas used June 4.

While technicians at the bottling plant struggled to figure out what had gone wrong, other CCE executives were trying to get a grip on what seemed like a little local problem. On June 9, the day after the Bornem children fell ill, the bottler faxed a letter to the school, apologizing for any inconvenience and offering to pay for all medical expenses. In Flemish, it said the company had launched an investigation and that an analysis "we have in our possession at this moment shows that it is about a deviation in taste and color" that might cause headaches and other symptoms but "does not threaten the health of your child."

In reality, officials at the bottling plant still didn't know for sure what was wrong with the drinks. They were anxiously awaiting analyses from Coca-Cola's more sophisticated labs in Atlanta.

On the same day that the Bornem kids got sick, complaints poured into town officials in Belsele, 10 miles away, about foul-smelling Coke cans from a vending machine there. The sodas were produced in Dunkirk. But no one in Belsele reported getting sick. Then, on June 10, seven students and one teacher in the Belgian city of Bruges said that they had become ill after drinking cans of Coca-Cola, also from Dunkirk. Coca-Cola now had a crisis on its hands.

Meanwhile, Coke was trying to placate Luc Van den Bossche, Belgium's newly installed health minister, who already had been grappling with a scandal over dioxin in Belgian poultry and other foods. On June 11, three days after the Bornem incident, Wim Zijerveld, a senior CCE executive, was meeting with the stern Mr. Van den Bossche in his office, seeking to assure the minister that Belgians weren't at risk from drinking Coke.

In the middle of the meeting, someone called in to the minister's office with news that 15 students at Holy Heart high school in Harelbeke, Belgium, got sick that day after drinking Coke or Fanta Orange, another Coca-Cola product.

"I was of course very embarrassed," Mr. Zijerveld says. Since Fanta Orange was produced in Belgium only at a CCE plant in Ghent, the news put yet another facility under a cloud. (CCE would later say no lapses occurred in Ghent.)

Mr. Van den Bossche, the minister, quickly decided to ban sales of soft drinks from both Antwerp and Ghent, as well as those from the Dunkirk plant, which produced cans for the Belgian market. Mr. Van den Bossche says he made clear to Coke who was in charge: "I told them, `I don't negotiate; I decide.'" Over the next few days, Coke started a recall of products from the three plants, and the French authorities opened their own probe.

Coke missteps continued to compound matters. On June 14, Bertrand deGeeter, director of a parochial school in the town of Lochristi, outside Ghent, telephoned a hot line set up by Coke and asked about the soda in the school's two vending machines. He says Coca-Cola told him that the company believed there was no real problem, but that he should remove all cans stamped on the bottom with codes that included the letters DU, DV and DW.

School officials did. When pupils began their break at 10:10 a.m. that day, school officials told them that the Coke and Fanta in the machines in the courtyard were safe. Within a half hour, pupils from six different classes began streaming into the school office complaining of headaches and stomachaches.

The children -- 38 in all, aged 12 through 17 -- were raced to two local hospitals. Local police locked the soda in a room at the school -- except for a small carton they took for sampling purposes -- and plastered the school's two Coke vending machines with purple police tape. Mr. deGeeter later called Coke and said, "There's more of a problem than you think." He says he then learned that the list of recalled codes provided to him that morning was incomplete. Officials now told him that Fanta cans, as well as any Coke cans labeled DX and DP, should also be removed.

"For such a big company, they have very bad communications," Mr. deGeeter says. CCE officials now say that they were trying to reach 15,000 customers that weekend and inadvertently gave the school an incomplete set of codes. By the time CCE officials realized their mistake, it was "too late," says a CCE executive.

On June 15, France banned sales of soft drinks from the Dunkirk plant. Hundreds of people in France were reporting illnesses that they blamed on Coke. French officials complained that Coca-Cola had not provided enough information for them to be certain that there was no health risk.

With the crisis escalating, the company pushed its damage-control machine into high gear. At a chaotic press conference in the Brussels Hilton on the evening of June 15, CCE finally provided an explanation for all the illnesses, blaming bad carbon dioxide and the fungicide problems.

Few were convinced. CCE's explanation was vague, and different officials used different terms to describe the problems. For instance, various CCE and Coca-Cola executives called the chemical on the pallets fungicide, wood preservative, antiseptic, phenol and creosote. Government officials and politicians in both Belgium and France were baffled. "That a company so very expert in advertising and marketing should be so poor in communicating on this matter is astonishing," says Bernard Kouchner, France's health minister.

Asked about the company's communications, Randal Donaldson, Coca-Cola's chief spokesman, says that "with hindsight, you can certainly do things differently and better, and that certainly applies in this case." He won't elaborate.

The sales bans stayed in place. Coca-Cola scrambled to find experts willing to work fast, and turned to Robert Kroes, a silver-haired professor of toxicology at Utrecht University in the Netherlands. He arrived at Coke's Brussels headquarters June 19. There would be no time for any lab work. Instead, Mr. Kroes says, Coke supplied him with data from its own labs and from other independent laboratories on contaminants found on or in containers. Mr. Kroes's conclusion: There was no health risk. In all, he spent about eight hours in a Coke office and wrote his report before leaving. While doing his work, he says, he sipped on a can of Coke Light supplied by his hosts.

Soon, Coke was providing to the media Mr. Kroes's report as proof that the levels of impurities were too small to be a health risk. Other reports from hired consultants echoed this, and some suggested that many of the illnesses were psychosomatic. Coke refused to publicly release the results of the independent lab work, and is still denying access to those reports and technicians. A spokesman says he doesn't want the technicians to be asked a lot of "could it be this" questions.

Some government officials remain skeptical of Coke's claims. Bernard Medina, who heads the French government's lab in Bordeaux, says his lab oversaw the testing of 100 samples, including cans, contents of cans, pallets from Dunkirk and Coke concentrate. They found absolutely no impurities, including the fungicide.

"If there was something, we should have found it," says Mr. Medina. "Still, we wonder."

Mr. Amon, Coke's top scientist, says it's no mystery that others couldn't find the fungicide. He says it probably rubbed off on only 500 to 1,000 cans and that the French lab may not have picked up any of those tainted packages. He also says that the foul odor could dissipate quickly, making it hard to detect.

Belgium and France agreed last week, after personal lobbying by Coke Chairman Douglas Ivester and other Coke officials, to let the company resume normal sales and production. Mr. Amon says he has given strict instructions to never let in a batch of CO2 without a certificate of analysis and that each plant must do its own test on every incoming shipment of gas.

As for the wooden pallets, "I made it very clear to the CCE folks that those suspect pallets must be destroyed." In the future, pallets cannot be treated with a fungicide, he says. He vows that the slipshod testing "will not happen again."

In some quarters, though, suspicion of Coke lingers. In Bornem, Danny De Man, a bank employee, says his 14-year-old daughter, Ann, still "gets very tired and gets headaches" with even light exercise. He blames it on a bad Coke.

Last week, a doctor representing Coke returned a call the De Man family had placed a week earlier, says Mr. De Man. The doctor said that the sulfur compound that contaminated the beverage "could cause irritation and headaches but it was in such small doses that it would cause no lasting damage," according to Mr. De Man.

"I don't believe him at all because he's been paid by Coca-Cola," he says. "We have a saying in Flemish: `Whose bread one eats, whose words one speaks.'"

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Amy Barrett in Paris contributed to this article.