Coca-Cola Enterprises (CCE), which makes, bottles and sells the brown fizzy drink in the UK, hit the headlines earlier this year after it dramatically withdrew the bottles of purified water branded ‘Dasani’ just months after it was launched.
The company decided to withdraw Dasani from sale in the UK after it was found to be contaminated with unacceptable levels of a chemical linked to cancer.
Paul Meadows, vice-president, legal director and company secretary at CCE, who chairs the company’s incident management team, which handled the situation, says: “The reason for the withdrawal was because we became aware that the product had a very, very slightly higher level of bromate than is permitted under regulation.
“And though the Food Standards Agency confirmed that it did not present any risk to public health, as a responsible business we took the decision that, in light of the regulation, it was appropriate to withdraw the affected product.”
Meadows concedes that the disastrous launch of Dasani was embarrassing for CCE, but stresses that the brand is still hugely successful in the US.
“It was clearly unfortunate and there’s no denying that it was something we’d rather not have happened. Nobody wants to launch a product like Dasani on a fairly large scale and then fairly soon afterwards have to withdraw it. But that is what happened,” he says, adding: “Once the decision was made that we should withdraw the product, we executed it very well and very efficiently.”
CCE has kept Dasani off the market as the company carries out a full-scale review of water products.
Meadows’ role as chair of CCE’s incident management team is a discrete area of responsibility separate from his day job as the company’s head of legal. The team meets to handle emergencies, such as a major accident at one of the company’s facilities, or issues related to its products. If such a situation were to arise, the team coordinates different functions within CCE and if necessary outside parties, such as the emergency services, the regulators and the media.
“From my perspective, it’s a fascinating extra responsibility to have alongside my legal role,” says Meadows.
CCE is entirely separate from The Coca-Cola Company. The latter, which is headquartered in Atlanta and listed on the New York Stock Exchange (NYSE), owns the trademarks for the beverages sold by CCE.
The Coca-Cola Company has two principal roles. First, it makes and sells the secret concentrate – which is used as the basis of the final drink – to the bottling companies. Second, it is responsible for consumer marketing, including television and billboard advertising. In the UK, The Coca-Cola Company operates through a unit called ‘Coca-Cola Great Britain’.
“If you think of it in terms of a supply chain, The Coca-Cola Company has a role at the very beginning of the chain and at the end. It also has the overarching role as the guardian of the trademarks and the brands it owns,” explains Meadows.
The other players in the supply chain are the bottling companies, which have the official licence to produce The Coca-Cola Company brands. For this purpose, the world is divided into a number of different geographical territories, which are typically country-based. For the UK, the bottling company is CCE.
CCE is the wholly-owned subsidiary of Coca-Cola Enterprises Inc, a very substantial US company with a separate NYSE listing. Coca-Cola Enterprises also operates in Belgium, Canada, France, the Netherlands and Luxembourg. Elsewhere, the drinks are bottled and supplied by other entities, such as the Athens-based Coca-Cola Hellenic Bottling Company.
“The Coca-Cola Company and CCE work very closely with each other, as they have complementary roles to play in the overall business of supplying products to consumers, but they’re separate businesses,” says Meadows.
CCE is significantly larger than The Coca-Cola Company in the UK and employs approximately 5,000 people who are split almost 50-50 between operations and commercial.
Since February 1996, when Meadows joined CCE as the number two lawyer, there have been a number of important changes at the company. Most significantly, the ownership of the company changed exactly one year after his arrival.
Until February 1997 the licence to make and sell The Coca-Cola Company brands in the UK was owned by a joint venture between The Coca-Cola Company and Cadbury Schweppes. In 1997 the parties sold their respective shareholdings to Coca-Cola Enterprises. Following the change in ownership, Meadows was promoted to his current position, because the former legal director, Hester Blanks, decided to return to Cadbury Schweppes to pursue her career there.
Under Meadows’ leadership, the legal function has grown from two lawyers and a paralegal to five lawyers, one paralegal and a trainee.
As a consequence of the department’s growth, last year Meadows split it into two teams. The commercial team is responsible for matters relating to customers and suppliers and there is a separate team to handle litigation and employment law issues.
Meadows says he deliberately runs a lean legal function. “It’s partly a reflection on the culture of the organisation and stems from the fact that we’ve consistently taken the view that we should give our businesspeople the tools and knowledge they need to manage and deal with legal risks,” he says. “We don’t operate a system whereby every single contract that CCE enters into has to be reviewed by the legal department. If we were to take that approach we’d need a legal department many times bigger, and I’m not sure that’s the best way to use expensive legal resource.”
Meadows’ team handles 90 per cent of CCE’s legal work in-house and only outsources large transactions or matters that need specialist input, such as software contracts.
CCE’s closest and longest relationship is with SJ Berwin, which handles competition law. Meanwhile, IP work is outsourced to Willoughby & Partners. CCE also has a relationship with a sole practitioner called Richard Gillam, who dedicates half his time to managing the company’s real estate work.
CCE’s legal department has grown partly because the business has grown, but also because the business and the environment in which it operates have become more complicated.
But Meadows is content with the size and make-up of the team. “I think for the moment we’re the right size for the type of business we are,” he insists.
Head of legal
|Legal capability||Five lawyers, one paralegal and one trainee|
|Head of legal||Vice-president, legal director and company secretary Paul Meadows|
|Reporting to||UK managing director Mark Schortman|
|Main law firms||SJ Berwin and Willoughby & Partners|