The Crisis of Food Brands

Sustaining Safe, Innovative and Competitive Food Supply

Martin K. Hingley, Adam Lindgreen

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9780566088124
• eBook ISBN:
  9781317036937
• Topic: Business
• Subtopic: Business General
• Index: Business

Food and agribusiness is one of the fastest changing global markets; change that is driven by technology, developments in manufacturing and supply, and a growing consumer engagement. The success of the agri-food industry and many of our household brand names will depend on how much you understand about these changes and the extent to which you can deliver secure and competitive products in the face of growing expectations about food safety and quality, as well as changing attitudes about the environment, human diet and nutrition, and animal welfare. The Crisis of Food Brands offers perspectives on many key aspects of these changes including the role of business, policy-makers, and the media in communicating with and engaging stakeholders about: o relevant and dynamic models of risk and crisis management; o the value of innovative and, sometimes controversial, food systems; o their buying behaviour and attitudes to movements such as organic and fair trade; o how and where we source and buy our food now (and in the future). The quality of the original research that underpins this book and the imagination and practicality with which the authors address its applications for the industry is first rate. Anyone with responsibility for marketing food, communicating about the food industry, or engaging with consumers will find this an important source of ideas and inspiration.

PART I
Food Crisis and Responsibility

CHAPTER 1
The Dasani Controversy: A Case Study of How the Launch of a New Brand Jeopardized the Entire Reputation of Coca-Cola^®

BY CONOR CARROLL^*

Keywords

crises, contamination, crisis management, Dasani^®.

Abstract

This chapter discusses the failed launch of Dasani^® by Coca-Cola^® into the European market. The Dasani case highlights the importance of crisis management and the implications of getting a new product launch fatally wrong, along with the dangers of a contamination scare and the ensuing implications for the parent brand. The following topics are discussed: the need for effective crisis communications during a food scare and the need for effective scenario planning. Also discussed is the role of the media during a crisis, the importance of stakeholder support during a crisis and, finally, the need for cultural awareness and sensitivity in international marketing.

Introduction

Dasani, a ‘pure’ still water brand, was launched in the UK in February 2004, with a huge promotional budget. The Dasani brand is well-established in the US, launched as a purified water product several years prior to tremendous success. The parent brand Coca-Cola had hoped to emulate that success by launching it in the UK and Europe, using the same marketing formula. But things went badly wrong. Coca-Cola could never have envisaged the level of negative publicity that would ensue, turning the launch of Dasani into one of the worst marketing debacles ever witnessed in Europe that damaged the company’s European reputation once again after a recent contamination scare in Belgium.

Dasani initially sold for 95p per 500ml bottle, but the source of contents was ordinary tap water from Thames Water, a water utility company in the southeast of England, which charges only 0.03p for the same amount of water. The Dasani beverage thus was 3000 times more expensive than its key ingredient. A media frenzy ensued when consumers discovered that the expensive bottled water was in fact just processed tap water. The newly launched brand faced a barrage of negative publicity, but the company persevered with the launch. When it seemed that things could not get any worse, they did; the entire range of Dasani products had to be recalled in the UK when a known cancer-causing chemical was found in the water. This event signalled the death knell of the new brand in the UK, the postponement of the pan-European rollout of Dasani and the loss of millions of pounds in investments. The debacle highlights the importance of effective crisis management for reputation management. By tracing the UK launch of the maligned Dasani brand, this case illustrates the valuable lessons to be learned from this epic calamity. The case of Dasani will join the pantheon of other infamous UK marketing gaffes, such as ‘The Hoover^® Free Flight Promotion’, Ratners and the crap comment, and the Post Office^®’s confusing Consignia brand.

Dasani Launch

Dasani had the support of a £7 million promotional campaign for its launch. Coca-Cola initially developed the Dasani brand in the US, in an effort to capture the lucrative bottled water market. In just more than 20 years, this market had undergone a remarkable transformation. Previously, people drank bottled water only if they feared a contaminated tap water supply. Today, people consume huge volumes of bottled water as the drive toward healthier lifestyles continues. The success of bottled water brands largely rests on their claims of absolute purity and association with active and healthy lifestyles. Since its inception, the Dasani brand had achieved tremendous sales growth in its domestic US market, fully utilizing Coca-Cola’s powerful distribution system. Based on this success, Coca-Cola decided to launch the brand in continental Europe, first in Britain, and then in other countries. Coca-Cola executives thought that the brand’s American success would be quickly replicated in Europe. But things went wrong – badly wrong! They never envisaged the level of negative publicity that would ensue, turning the launch of Dasani into one of the worst marketing debacles ever witnessed in Europe.

Coca-Cola, throughout is history, has had it fair share of crises and controversy. In the mid-1980s, the company suffered its New Coke fiasco, in which the company replaced the original Coke brand with a newer version in an effort to defeat its archrival PepsiCo. The Pepsi^® brand was gradually eroding Coke’s market share with its Pepsi Taste Challenge campaign, and Coca-Cola executives thought a new formulation and rebranding of Coke was required. After extensive product and taste testing, New Coke was launched with huge fanfare. However, a cult following of diehard Coke fans were outraged with the demise of their beloved brand. National boycotts and protests were organized, forcing Coke to rescind its new strategy. Coke Classic reappeared on shelves.

Then in the 1990s in Belgium, a carcinogenic scare erupted, when a number of people became sick from drinking contaminated Coke. The contamination was later traced to a chemical used in the cleaning transportation pallets. However, the company was widely criticized for its slow reaction and handling of the crisis, which severely damaged its reputation in Europe.

Yet Coca-Cola remains one of the world’s most ubiquitous brands, with a massive global presence and double-digit growth throughout the late twentieth century, achieved particularly through expansion to international markets. As this spectacular expansion levelled out, the company was striving to achieve new growth opportunities, and bottled water, the next big thing in the beverage industry, provided an avenue for future growth. The water sector achieved substantial growth rates compared with those for carbonated soft drinks (see Table 1.1), and all the large beverage companies continue to vie for a larger slice of the bottled water market. These companies pour massive investments into promoting their brands, including PepsiCo’s Aquafina^®, launched in 1995 as a non-carbonated, purified drinking water. Coca-Cola offered Dasani in response in 1999; it has grown to be the second most popular drink in the US. Coca-Cola previously distributed other water brands through its distribution networks, including a brand called Naya that enjoyed stellar success in the 1990s, with 30 per cent annual growth. However, after introducing the Dasani brand, Coca-Cola halted Naya’s lucrative distribution agreement, seeking a bigger share of the bottled market in terms of both manufacturing and distribution.

Dasani achieved enormous success for a relatively new brand, ensured largely by Coca-Cola’s huge marketing muscle and extensive distribution network. The brand of purified ‘tap’ water with added minerals sat beside natural spring waters from mountain peaks on shelves, yet it still won over customers. The American public appeared not particularly concerned or were simply apathetic about the origin of brands, as long the bottled water was safe. With this first foray into the bottled water market a barnstorming success, Coca-Cola viewed Europe as the next target. The company had long craved a successful new product launch in new product categories, rather than more similar line extensions, such as Vanilla Coke that achieved only modest growth targets. In the US, Coca-Cola even segmented the bottled water market by price, dividing it into three tiers: Dannon as the low-tier brand, Dasani in the middle and Evian as their high-price distribution., using strategic alliances to boost its portfolio with Danone, the French group.

Table 1.1 Water market at a glance

• In the US, bottled water earns an estimated $8.3 billion in revenue (2003), compared with $1.1 billion in 1984.

• The UK bottled water market is estimated to be worth £1.1 billion, compared with an estimated worth of £360 million in 1998.

• Fastest growing sector of the drink market.

• The volume and value of UK bottled water marketing is expected to double by 2011.

• The sector includes still, sparkling, sport bottles, kids packs, flavoured and even light sparkling.

• 80 per cent of bottled water is sold as still water.

• Water with added flavours and minerals is a huge growth area. Some such waters are classified as health waters, while others aim at the fitness sector (for example, Reebok Fitness Water).

• Volvic is the UK market leader, followed by Evian, Highland Spring and Vittel.

Coca-Cola chose the UK as the launch site, because it appeared ripe for exploitation. British consumers drink far less bottled water than their continental neighbours, at 34 litres per capita, compared with Germany’s 116 litres, France’s 149 litres, Spain’s 126 litres and Italy’s 203 litres per capita. Predictions suggested the market for bottled water would grow rapidly in response to environmental factors, such the drive toward a healthier lifestyle and growing concerns about the safety and quality of local water supplies.

Aquafina, the key Dasani competitor in the US market, had not launched yet in the UK because of contractual obligations with PepsiCo’s European distributor, which gave Coca-Cola an extra impetus to launch there. Dasani would gain an important head start in the quest to establish a sustainable market presence in the purified bottled water market. Other major players already had well-established market positions in the UK, including the European behemoths Danone and Nestlé, both of which owned multiple water brands (see Table 1.2). These traditional water brands faced the prospect of two huge beverage companies, with massive marketing resources, aggressively trying to enter their market. In the US, Coca-Cola and PepsiCo outspend their rivals by up to three times on advertising. Already the Dasani brand was on sale in almost 20 different countries; now Europe was next.

The company had existing brand names for purified bottled water products in some European countries, including the Irish Deep River Rock^® and Portuguese Bonaqua^® brands. Coca-Cola decided to retain the Dasani brand name for the major European drive, a made-up name that tried to evoke the brand’s core values of ‘relaxation, pureness and replenishment’. A series of advertisements featured the catch phrase, ‘Prepare to get wet!’ The company planned to dedicate an initial marketing budget of more than £7 million and position the new brand as ‘urban water for the fast-living generation’. The target market for Dasani was 20 to 35 year olds who would see Dasani as a lifestyle brand. Prior to the general launch, Coca-Cola placed a series of advertisements in retail trade journals, publicizing the imminent arrival of the brand to interested retailers. The company’s dominance in retail shelves greatly increased the likelihood of a successful launch. In some cases, the company simply leveraged its power with retailers by allocating space within Coca-Cola refrigerators to the Dasani brand, supplanting existing water brands, and forcing retailers to stock the Dasani brand as their only water brand. This strategy antagonized some small retailers who wanted to stock local bottled water brands, leading some of these retailers to remove Coca-Cola refrigerators.

Table 1.2 Dasani’s key competitors

Dasani Media Firestorm

The brand was sold in distinctive blue bottles, with a label that described ‘pure, still water’ which simply mimicked the format used so successfully in the US in the UK context. However, prior to the release, trade journalists noted that the water was just purified tap water and published articles about the source of this new Coca-Cola product, namely, Thames Water. A national syndicated news organization published these stories, which spread like wildfire in tabloid, broadsheet and other news sources. A media frenzy developed surrounding Dasani and Coca-Cola, perhaps because of the cultural sensitivity of the topic and the price mark up, which consumers viewed as virtual extortion. Coca-Cola had a major incident on its hands that threatened the very survival of its nascent UK brand.

The media compared Dasani with a classic BBC comedy, Only Fools and Horses, in which the two lead characters, Del Boy and Rodney, sell tap water as ‘Peckham Spring’ for ridiculously high prices. Numerous media showed images from that well-known episode, in which the characters fill bottles with a hose in their council flat, with the comment that the water comes from ‘a natural centuries old source – the Thames!’ The irony was not lost on the media or the public; the Dasani plant was only a few miles from Peckham in London. Commentators argued that Coca-Cola had showed barefaced cheek in selling ridiculously overpriced tap water to the unwitting general public. The Dasani brand was appearing in headlines for all the wrong reasons. Consumers’ confidence in the brand was decimated as a result, and retailers grew nervous about stocking this brand, though most continued to do so in the hope that the initial furore would dissipate.

Coca-Cola’s incident management team swung into action to assess and respond to the barrage of negative publicity. The crisis management team pressed ahead with the launch of the brand, reassuring retailers, releasing press releases and responding to media queries. Company spokespeople tried to reiterate that the product was entirely safe and that the water had undergone a ‘highly sophisticated filtration process’ developed by NASA engineers. Yet journalists and h...

Table of contents

• Cover Page
• Half Title Page
• Dedication
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• About the Editors
• About the Contributors
• Reviews for The Crisis of Food Brands
• Foreword and Acknowledgments
• Part I Food Crisis and Responsibility
• Part II Agri-food Systems, Product Innovation and Assurance
• Part III The Consumer View
• Part IV Fair Engagement?
• Index