Coca-Cola Comes Clean

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By Rick Aristotle Munarriz (TMF Edible)
June 18, 2003

So much for Coca-Cola (NYSE: KO) being "the real thing."

The pop star is coming clean with some brow-raising concerns of a Frozen Coke test market promotion three years ago that seems to read out of a Dilbert strip.

The allegation by former manager-gone-whistleblower Matthew Whitley seemed far-fetched at first. Why would some members of the company's fountain division hire an outside consultant to spend $10,000 to buy up Burger King value meals with Frozen Coke add-ons in a Richmond, Va., test market?

That there is now a Frozen Coke machine at your local Burger King is why. It's been big business for Coca-Cola as the frozen novelty has given the world's largest soft-drink company two revenue streams within the country's second-largest burger chain.

While the company's audit committee was quick to dismiss many of Whitley's claims of hiring bias and some -- but not all -- accusations of accounting irregularities, it is admitting to influencing the results in Richmond.

While Coca-Cola is countering with the fact that some test markets dated back to 1998, and that the order for expanding the Frozen Coke service chainwide was in place before the Richmond tests were doctored, take that with a grain of sodium benzoate. Why would the company have the need to go Whopper-crazy in Richmond, and why would it admit to disciplining the responsible employees in 2001 if it didn't matter?

Coca-Cola did it. The company was ashamed about it, but chose to bury the incident internally rather than go public with the details when it happened. That can't help the next time it has to butt heads with Pepsi (NYSE: PEP) to claim pouring rights at a quick-service restaurant.

Brands have to earn their golden polish every day. That's hard to do when integrity goes flat.

Is the Frozen Coke fiasco meaningless, or will it have serious ramifications for the king of pop? Does this open the door for Frozen Pepsi? What's with all the new colors and flavors of soda being rolled out lately? All this and more -- in the Coca-Cola discussion board. Only on Fool.com.

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