Coke scandal may boost rival firms

PARIS, JUNE 23: The health scare over Coca-Cola Co. soft drinks in Western Europe creates an opening for rivals but raises the prospect o...

PARIS, JUNE 23: The health scare over Coca-Cola Co. soft drinks in Western Europe creates an opening for rivals but raises the prospect of a slowdown in soft-drink sales.

Even amid signs that Coke was making progress in allaying the safety concerns of government officials in Belgium and France, where more than 200 people reported getting sick after drinking Coke, an unrelated quality-control lapse was found in Portugal. Coke recalled about 40,000 cans of Coke after small bits of charcoal from a filtration system were found to have left a residue in some cans produced at a plant in Alges.

Coke said the charcoal poses no health risk. Portuguese officials inspected the plant, and a Coca-Cola spokesman said, quot;They checked everything over and gave us the go-ahead to continue production.quot;

Portuguese officials couldn8217;t be reached for comment.

The French consumer affairs ministry said tests it ordered on canned Coca-Cola drinks have revealed no contamination, and it suggested the suspension of sales of canneddrinks from the Dunkirk plant could end shortly.

Nevertheless, French authorities have decided to seek the opinion of the French Food Safety Agency before making a final decision. And Belgium8217;s health minister didn8217;t remove his country8217;s prohibition, now more than a week old, on bottles and cans of Coke, Fanta and Sprite.

The cost of the crisis to Coke8217;s global sales is hard to measure, and Coke isn8217;t expected to release any information until next week. A Coke spokesman said that quot;other than the obvious countries of Belgium and France, it8217;s too early to see any volume effect.quot;

Nevertheless, reports from retailers and bottlers in various parts of the world suggest a modest slowdown in some unlikely places as a result of the spiraling negative publicity.

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In China, Coke8217;s sixth-biggest foreign market, some retailers report a slowing of sales 8212; and a rise in demand for Pepsi, the No. 2 brand in China. quot;On June 20th, for example, sales of Pepsi doubled that of Coke, while usually, the two brands are aboutequal in sales,quot; said Zhu Guorong, a merchandising executive at Lianhua Supermarkets, one of Shanghai8217;s largest supermarket chains.

Lu Hang, a merchandising executive at Shanghai Lotus Supercenter, one of the city8217;s new megastores, said that quot;despite our efforts to boost sales of Coke 8230; we are receiving more orders for Pepsi than in the past years.quot; Coke bottlers in China, however, said they have yet to see an impact on their sales.

In Korea, a Coke official said the European scare has resulted in a quot;slight dropquot; in sales since the weekend, but declined to elaborate.

In Germany, the most important market in Europe for Coke, a spokeswoman at Tengelmann Group, Germany8217;s largest supermarket operator, said there has been a quot;slight declinequot; in sales of Coca-Cola since the scandal first broke and a modest increase in sales of other cola brands.

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To be sure, these slowdowns may be isolated incidents. Major supermarket chains in Britain, for instance, say there has been no effect on Coke sales. And inJapan, Coke8217;s most profitable overseas market, there doesn8217;t appear to be any visible effect on sales. The Coke spokesman noted that sales volume in Ireland rose 30 last week; analysts said the increase is at least due in part to the hot weather in the region.