COKE HALTS DASANI EUROPEAN DISTRIBUTION

Marketing Fallout From U.K. Contamination Widens

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CHICAGO (AdAge.com) -- Coca-Cola Co. today said it is halting the European rollout of its Dasani water brand following a massive product recall in the U.K. and backlash by consumers there after learning the drink was simply purified tap water.

Isolated incident
Since the voluntary recall in the U.K.

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March 19, Coca-Cola's division for Europe, Eurasia and the Middle East "decided not to re-introduce Dasani into Great Britain at this time," the company said in a statement. Coca-Cola went on to say that though the recall in the U.K. was an "isolated and resolved incident," it decided to postpone introducing the brand in France and German, "as the timing is no longer considered optimal."

Just yesterday, a spokesman said the company's plans were "on track."

In the U.S. Dasani is the No. 2 purified bottled water brand behind PepsiCo's Aquafina.

Carcinogen
Coca-Cola last week said it pulled more than 330,000 bottles of Dasani off the shelves after finding excessively high levels of bromate, a cancer-causing mineral, in samples. The inspection was sparked by consumer questions over quality after they learned the water was merely purified tap water. Bromate is a by-product of the water purification process and in limited levels is considered harmless, but at higher levels over time has been linked to cancer. (In Europe, the limit on bromate is 10 parts per billion but the Dasani samples contained more than twice that level.)

Coke today increased the estimate of the number of bottles withdrawn in the U.K. to "just under half a million."

As part of a 20-country rollout, Coke was planning to launch Dasani April 19 as a non-carbonated mineral water bottled from the Astrid spring in Chaudfontaine, in France. Advertising planned for the launch was themed "Un jour, une Dasani" (One day, one Dasani), and would have included sponsorship during the upcoming Olympic Games in Athens.

Dasani is currently sold in 18 countries, mostly in North and South America and the Caribbean.

The postponed rollout has "no effect whatsoever" on the Dasani brand elsewhere in the world or in global sports sponsorships, a Coca-Cola spokesman said. "Dasani is currently very visible during the NCAA basketball tournament, and that promotion continues on track," he said.

Analyst's concerns
Bill Pecoriello, a beverage analyst for Morgan Stanley, last week said the recall "could damage Coke's ability to relaunch Dasani in the U.K. as Nestle and other players will likely take this opportunity to remind consumers that they are selling spring water" as opposed to Coke's purified tap. He also said the recall could have implications for the U.S. market.

Michael Bellas, chairman-CEO of Beverage Marketing Corp., is skeptical the European problems will affect the U.S. market since "Aquafina and Dasani have such strong brand names," he said. Because Europeans are much more discerning about using bottled waters, forecasting how American consumers might react to the European issue is hard to peg.

"Nobody's got a handle on that," he said. "About 20% of the population here still doesn't want to buy bottled water because they think our tap water is so good."

Don't stir the waters
He also questioned whether other water marketers would try to leverage Coke's problems to their advantage, because doing so could hurt the entire category. "Bringing [questions] up about Dasani might make [consumers] wonder about your own water," he said.

Coca-Cola was quick to pull the water brand, in part, to avoid the same public relations problems it faced in 1999 when consumers in Belgium and France became sick from drinking contaminated Coca-Cola Classic, and the company bungled communications around the incident.

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