Coca Cola Struggles with Image Problem in China

Coca-Cola received the lowest level of consumer satisfaction among 12 major beverage brands in a recent quality survey, according to Beijing Business Today. The low rating appears linked to recent negative news.

Coca-Cola received an overall score of 69.3, below the overall score of 72.4 out of 100 average score given by consumers for soft drinks in general, according to the China Association for Quality’s 2012 annual satisfaction survey. The overall score represented the first increase in four years for the soft drink industry as a whole.

Domestic beverage brands Nongfu Spring, Wong Lo Kat, Wahaha and several others all received above-average scores of 73 or more. Coca-Cola, Huiyan and Robuts all received below-average scores.

Coca-Cola’s consumer satisfaction score, which represents a slide of six places since 2010, appears to have been damaged by quality issues that have surfaced in the news during the past year.

In April a Coca-Cola plant in Shanxi was shut down by regulators after they learned that some batches were made with chlorinated water. To make matters worse, the company initially denied the allegations, then later claimed that the products wasn’t harmful to the health of consumers.

Perhaps even more damaging was the news in March that Coca-Cola and Pepsi products contained 4-Methylimidazole, a known carcinogen. The carcinogen forms when ammonia or ammonia and sulfites are used to manufacture the “caramel coloring” used to create the brown colors of cola beverages, according to the Center for Science in the Public Interest (CSPI), the nonprofit that commissioned the tests. CSPI had petitioned the FDA to ban ammonia-sulfite caramel coloring in February 2011.

CSPI tested Coca-Cola, Pepsi-Cola, Diet Coke, Diet Pepsi, Dr Pepper, Diet Dr Pepper, and Whole Foods 365 Cola from Washington, D.C.-area stores. Pepsi contained 145 to 153 micrograms (mcg) of 4-MI in two 12-ounce cans. Regular Coca-Cola had 142 mcg per 12 ounces in one sample and 146 mcg in another. Diet Coke had 103 mcg per 12 ounces in one sample and 113 mcg in another.

Coca-Cola changed its formulation to omit 4-MI in California but failed to change it for the European or Asian market, opening itself up to charges of using a “double standard” for overseas markets.

Coca-Cola continues to enjoy a large market share in China despite the recent hits to its image. However, its share — along with those of all sugary, carbonated beverages — are likely to erode further as Chinese consumers become more health conscious and replace them with mineral water, fruit juices and teas — the nation’s three most popular beverage categories.