Pepsi Estimates Syringe Hoax Cost $35 Million in Lost Sales, Added Expenses
NEW YORK (AP) _ Pepsi-Cola Co. estimated on Thursday that a syringe hoax earlier this year cost the soft drink marketer and its bottlers about $35 million in lost sales and increased expenses.
But the company said its overall sales including new products were up 7 percent in July and August, the biggest gains for Pepsi products in the two key summer months in five years.
Analysts said the soft drink industry overall had a good summer as weather was better in many parts of the summer than it was a year ago. Soft drink sales were depressed last summer in part due to cool and wet weather.
Pepsi was rocked last June by reported discoveries of syringes and needles in cans of Diet Pepsi. The first report was in early June in the Northwest and dozens of other such reports soon surfaced across the country.
But authorities were unable to confirm any of the reports, and some people confessed that they made up the stories.
Pepsi said its sales dipped about 6 percent in the two weeks between the first reports and the consensus that the syringe scare had been a hoax.
Spokesman Gary Hemphill said the episode cost the company and its bottlers about $25 million in lost sales, increased marketing costs and higher labor costs during those two weeks. A discount coupon program in July cost another $10 million.
The Somers, N.Y.-based soft drink company said its July and August sales were up 7 percent from a year ago compared with a 2.7 percent decline a year earlier and represented its biggest gain for the period since it started keeping such records in 1989.
The company didn’t offer any comparison with industrywide sales growth, and several analysts were unable to provide an industry estimate.
Part of the increase also due to new products such the clear cola Crystal Pepsi, Lipton ready-to-drink teas and Ocean Spray single-serve juices that Pepsi wasn’t distributing a year ago. Pepsi was not immediately able to say how much those sales contributed to its overall increase, however.