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Coca-Cola, Nestle targeted by poisoning attack threats

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(This story has been changed from the original to make clear in some comments that the alleged food-poisoning has not been proved.)

A threatened food-poisoning attack in Greece against The Coca-Cola Co. and other companies just days before Christmas requires a quick response and thorough investigation, insurance industry analysts said Wednesday.

An environmental anarchists group calling itself Green Nemesis said Monday that it had tainted with chlorine and hydrochloric acid several dozen units of products made by Coca-Cola, Unilever N.V., Nestle S.A., and Greek dairy company Delta Foods S.A. at major supermarket chains in the greater Athens area. 

“The operational aim is to sabotage the above companies, forcing them to fully withdraw their products for two weeks,” Green Nemesis said in a statement posted on an anti-establishment website, news accounts said.

The threat prompted the companies to withdraw their products from store shelves. The same group made similar threats in 2013 against Nestle and Coca-Cola.

Coca-Cola said in a statement Wednesday that “our team in Greece is working closely with the authorities on a product-tampering threat that affects the Athens area only.” 

A spokesperson for the Atlanta-based beverage maker declined to discuss what insurance coverage Coca-Cola has to deal with such incidents and referred questions to the Hellenic Police, which had not responded to an email seeking comment. Unilever and Nestle did not respond to requests for comment.

The threat of food tampering by terrorists is one of the biggest consumer concerns, according to a survey conducted earlier this year by the Arlington, Virginia-based Food Marketing Institute, coming in behind contamination by germs or pesticides; residues from pesticides and herbicides; and product tampering. 

Simon Oddy, a partner at forensic accounting firm RGL Forensics in New York, warned that product recalls and withdrawals can result in large unplanned costs and financial losses. 

“In this case,” Mr. Oddy said in an email, “the costs will likely include investigation costs into the alleged threat, in an effort to confirm if it’s real, and, if so, which batches of product are affected, and where they are.

If the alleged contamination is proven to be true, “a review of the security of the supply chain may be needed to minimize the risk associated with malicious tampering of products. At what point was access to the product sufficient to allow poison to be added to the products?”

Mr. Oddy said other costs could include claims for illness from customers that would need to be investigated.  Public relations and other consultants would also have to be retained as a cost, he said.

In addition, if the alleged contamination is confirmed, “Affected products will need to be destroyed, rather than sold, resulting in financial loss,” Mr. Oddy continued. “And any loss in consumer confidence will likely lead to reduced sales levels of the affected products as well as other associated products. 

As we head into the final week of shopping before the festive season, these lost sales could be substantial.”

Thomas Mangan, vice president of the global crisis management division at Allied World Insurance Co. (U.S.) Inc. in New York, said malicious product tampering insurance “can address the deliberate contamination or the threat of such contamination of products when a company or the public have a reasonable belief that these products might cause bodily injury if consumed.”

“In such an event,” Mr. Mangan said in an email, “access to experienced crisis management consultants is a key feature of this coverage. With a tampering threat, crisis consultants in various fields are available around the clock and around the world to assist in a speedy, coherent and effective response that will lessen the impact on a company's brand and future.”

MPT insurance should be considered as part of the total risk management solution, as an uninsured loss can erode shareholder’s equity, Mr. Mangan said.

Product tampering dominated the news in 1982 when seven people in the Chicago metropolitan area died after taking Tylenol-branded acetaminophen capsules that had been laced with potassium cyanide. Other people died in copycat crimes.

No one was ever charged or convicted in the poisonings, which led to changes in the packaging of over-the-counter substances and to federal anti-tampering laws.