Tests Find High Levels of Cancer-Causing Mineral

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CHICAGO ( -- Coca-Cola Co. is pulling its entire supply of Dasani bottled water from U.K. retailers after quality tests for tap and bottled waters revealed high levels of a suspected carcinogen.

Although a U.K. regulatory agency said there was "no immediate risk to public health," it called the withdrawal by Coca-Cola a "sensible measure," because of the increased cancer risks from long-term exposure to bromate, the substance found in tests of Dasani.

"Some consumers may choose not to drink any Dasani they purchased prior to its withdrawal, given the levels of bromate it contains," the Food Standards Agency said in a statement.

Dasani is made with purified tap water that is fortified with calcium chloride to meet U.K. legal standards. Bromate is an unwanted byproduct in the water purification process called "ozonation," where ozone gases used to "disinfect" water react with naturally occurring salts called bromide ions. Bromate is a suspected carcinogen that environmental regulators limit to levels considered to be harmless.

Coca-Cola began the recall today and said it would be 80% to 85% complete within 24 hours.

About 330,000 cases are involved in the recall, said Bonnie Herzog, a beverage analyst for Citigroup's Smith Barney.

$2.35 bottle of tap water
The recall comes at a somewhat awkward moment for the beverage giant. Coca-Cola launched Dasani in the U.K. last month, spending $7 million on the effort. Shortly after the launch, the marketer was criticized when consumers discovered that municipal water was the main source for the product, which is labeled "pure, still water." A bottle of Dasani costs upward of $2.35 for a half liter, while the same amount from the tap costs roughly 7 cents.

"We believe this could continue to fuel the backlash by consumers of Dasani in the UK," Ms. Herzog said. "The introduction of Dasani in the U.K. has not been successful, to say the least. Therefore, we are very concerned about this new development given the product's already very poor perception in the market."

Opportunity for rivals
Bill Pecoriello, a beverage analyst for Morgan Stanley agreed. "This 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 vs. the purified 'tap' water Coke is selling."

Coke is scheduled to roll out Dasani in continental Europe this spring, starting with France in April then Germany in May. For the French launch, a major ad campaign has been developed by Interpublic Group of Cos.' Lowe Alice, Paris. Local shop Kolle Rebbe Hamburg is handling the German rollout. Lowe, London, created the U.K. launch.

French version
In France, Dasani will be reformulated as a mineral water. That brand will be bottled as a non-carbonated water from the Astrid spring in Chaudfontaine, Belgium. Advertising supporting the launch will carry the tagline "Un jour, une Dasani," or "One day, one Dasani," and will include sponsorship as the official partner for the upcoming Olympic Games in Athens.

Mr. Pecoriello said the recall "could have implications for the Dasani brand in France, but more important is to make sure there is no fallout on the brand equity in the U.S."

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