Hires crisis PR shop: Coke wrangles with local Brazilian brand

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[Sao Paulo, Brazil] A local soft-drink marketer believes Coca-Cola Co. tried to damage his brand, Dolly, and is out to prove it to consumers and the Brazilian government. To do so, the brand's owner, Laerte Codonho, is using everything from secretly filmed videotape of a former Coke bottler to billboards accusing Coke of containing coca leaves.

After largely ignoring Mr. Codonho for the last year, Coke swung into action this summer. The U.S. soft-drink giant has started legal action, brought back a former company spokesman, and hired a Sao Paulo public relations shop, CDN, to handle damage control.

Mr. Codonho's ammunition includes a videotaped conversation between himself and Luiz Eduardo Capistrano, a former director of Spal Brasil, a local Coke bottler that was later sold to Mexican soft-drink group Femsa. In the videotape, which has been shown to police, aired on TV, and played at an antitrust hearing in June, Mr. Capistrano allegedly admitted that his department was directed to do whatever it took to drive Dolly out of business.

According to Mr. Codonho, that included distributing fake e-mails alleging that drinking Dolly, a soft-drink flavored with the Amazon fruit guarana, could cause cancer and kidney malfunction.

fighting back

Mr. Capistrano later disputed the videotaped conversation, saying he had drunk too much whiskey at the time.

Coke denies the allegations of unfair competition and abuse of economic power that Mr. Codonho has made to different government departments that regulate business.

"We are the victims of a defamatory campaign," said Marco Simoes, a Coke spokesman who recently returned to the company as director-corporate marketing and communications. "We lacked the capacity to respond for awhile, and of course they took [advantage of] the opportunity."

He said that Coke doesn't know who sent the damaging e-mails, and that Coke's own guarana brand, called Kuat, was subject to similar e-mail attacks.

Coke took legal action when Mr. Codonho and his company, Ragi Refrigerantes, put up billboards, created in-house, attacking Coke in late June. One billboard said "Does Coke contain coca leaves? Is it illegal? Is Coke above the law?" Coke was granted an injunction and the billboards were taken down.

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