When an icon stumbles: the Ribena issue mismanaged Tony Jaques RMIT University, Melbourne, Australia Abstract Purpose – When two 14-year-old New Zealand schoolgirls challenged the advertising claims of Ribena blackcurrant drink – owned by global giant GlaxoSmithKline – they triggered a sequence of events which led to prosecution, public opprobrium and international damage to an iconic brand. The purpose of this paper is to explore the case and identify lessons for future management practice. Design/methodology/approach – Some of the fundamental principles of issue management, post-crisis discourse and corporate apologia are to recognize the problem early, to promptly institute a strategic response plan and corrective action and, if necessary, to apologise genuinely and without delay. The paper assesses the case against the theoretical basis of each of these principles and comparable cases. A senior executive of the company concerned was interviewed about some management aspects. Findings – Despite early indications of a problem which had potential impact around the world, a major global corporation responded inadequately to a local situation and, as a result, suffered prolonged embarrassment at the hands of two teenagers and unnecessarily severe damage to its brand and international reputation. Originality/value – By in-depth analysis of a recent case, the paper underlines valuable lessons in terms of prompt management intervention, consistent strategy and effective apologia. It also illustrates the danger of poor management of a brand extension and the risk of contagion facing multinational organizations where adverse outcomes in one small regional market can rapidly damage a global reputation. Keywords Brand image, Corporate image, Corporate strategy, Complaints, Advertising Paper type Case study Introduction: Ribena blackcurrant drink was launched in Britain in the 1930s and won lasting fame during the Second World War as a source of vitamin C for British children denied fresh fruit such as oranges. It subsequently became established as an iconic “healthy food” served by mothers in 22 other countries around the world[1] especially locations such as Australia and New Zealand with strong post-war British migration. Today Ribena generates sales world wide of £169 million ($US 332 million) for manufacturer GlaxoSmithKline (GSK, 2006). In 2004, two New Zealand teenagers testing the vitamin C content of various fruit drinks for a high-school chemistry project found that the pre-diluted ready-to-drink (RTD) variety of Ribena did not contain four times the vitamin C of oranges, as implied in advertising. After the students failed to secure a satisfactory response from GSK, their complaint went to a popular television consumer programme and eventually to the Auckland District Court. In March 2007, the company pleaded guilty to 15 representative charges and was fined $NZ 227,500 (£81,750 or $US 163,400) for the misleading television commercials and incorrect labeling. The second largest global pharmaceutical company was forced to take out apology advertising in bothAustralia and New Zealand and their humiliation at the hands of two 14 year old schoolgirls was widely reported around the world. Among the fundamental principles of issue and crisis management are to recognize the problem early, to promptly institute a strategic response plan and corrective action and, if necessary, to apologize genuinely and without delay. This case study reviews the manufacturer’s lack of success against each of these principles and its failure to effectively exercise the dissociative defences posited within the concept of corporate apologia. It examines how the giant corporation which owns Ribena mismanaged a seemingly simple local problem and suffered unnecessarily severe consequential damage to its brand and international reputation. A theoretical framework for the case The first fundamental principle to be considered is issue scanning which, as a vital element for early warning, should involve not just scanning the field for possible future risks, but learning from relevant past events. The literature provides many high profile cases of severe brand damage caused by product failures, often where early warnings were ignored or misinterpreted and sometimes leading on to crisis. Examples of such reputational damage would include Perrier’s benzene contamination crisis (Miller and Gleizes, 1990; Barton, 1991), Firestone’s ATX tyre recall (Blaney et al., 2002) and Dow Corning’s silicon breast implant issue (LaPlant, 1993). There have sadly also been many examples of “self inflicted” damage to an iconic brand, such as the disastrous introduction of “New Coke” (Pendergrast, 1993); protest over withdrawal of Nabisco’s famous Crown Pilot cracker (Esrock et al., 2002); and the genetically modified food debacle of the late 1990s, where Monsanto “wrecked an entire industry, as well as its own brand” (Larkin, 2003, p. viii). In each of these cases, not only were early warning signs or market evaluation ignored, but there was a failure to translate issue identification into effective issue management, where lack of clear objectives within a proper planned approach can lead to confusion, mixed messages, wasted effort and ultimate failure (Jaques, 2005). A common failure to link issue early warnings to development of a strategic response – and directly pertinent to the Ribena case – is where seemingly low level consumer complaints are not properly addressed, leading to major corporate problems. Instructive examples include the 1994 Intel Pentium chip fiasco, where technical concerns raised by a persistent academic were underestimated, resulting in a global product recall (Hearit, 1999); or the 2001 case involving Starbucks, where mishandling of an issue about September 11 rescue workers in New York being charged for bottled water led to severe corporate embarrassment and a persistent “urban legend” (Seid and Ainsley, 2001). Moreover, the specific area of food labeling and advertising is a rich territory for management case studies, none more relevant to the Ribena incident than the Perrier benzene contamination crisis of 1990 (Miller and Gleizes, 1990; Barton, 1991) which not only led to a worldwide recall of an iconic brand product and eventual sale of the company, but forced Perrier to admit misleading advertising and change its label. The present case also draws directly from the field of apologia and image restoration. Building on the seminal work of Ware and Linkugel (1973), Sproule (1988) Benoit (1995) and others, the American academic Keith Hearit (1995a) took scholarship The Ribena issue mismanaged 395 CCIJ 13,4 396 concerning the apologetic efforts of individuals and reconceptualized the apologetic discourse of corporations accused of wrongdoing as a social legitimacy crisis. He emphasized that: [. . .] an apologia is not an apology (although it may contain one), but a defence that seeks to present a compelling, counter description of organizational actions. It functions to situate alleged organizational wrongdoing in a more favorable context than the initial charges suggest (Hearit, 1994, p. 115). Hearit (1995b) identified that organizations accused of wrongdoing use one of three forms of dissociative defence: opinion/knowledge dissociation, individual/group dissociation and act/essence dissociation. The decade since Hearit’s innovative analysis has seen the establishment of an extensive literature on how organizations respond to crises involving allegations of wrongdoing (Benoit, 1995, 1997; Coombs, 1995; Hearit, 2001; Ulmer and Sellnow, 2002) and some key overview analyses of the field (Burns and Bruner, 2000; Rowland and Jerome, 2004: Hearit, 2006; Ulmer et al., 2007). In their detailed review, Rowland and Jerome (2004) concluded there is relatively little agreement among the various research traditions and typologies created and that the most developed systems contain so many strategy options they are of limited value. The two key reasons, they propose, are the enormous variation in circumstances and characteristics among cases which limits the capacity to generalize, and the sometimes conflicting purposes in corporate apologia between two distinct endeavours – image repair and image maintenance. The Ribena incident presents an organization compounding this conflict of purposes by simultaneously attempting image maintenance of the main Ribena syrup brand and image repair for the RTD sub-brand. In the process, GSK used all three of Hearit’s dissociative defences, as well as a number of largely unsuccessful strategic objectives, in their attempt to achieve image restoration. Failure of early warning While the Perrier contamination and labeling crisis involved a high profile iconic brand stumble within the beverage industry, the reputational and financial risks of misleading advertising for a drink product had previously been experienced by Ribena itself. Just a few years before its New Zealand embarrassment, GSK in the UK faced strident criticism over Ribena Toothkind, a reduced sugar formula with added calcium launched in 1998 which it was claimed did not encourage decay in children’s teeth. After a two year investigation the UK Advertising Standards Authority found that the claim was misleading, as the drink was “simply less harmful than other sugary drinks, rather than not harmful at all” (BBC online, 2001). GSK appealed to the High Court, which in early 2001 found against the product claim and upheld the ruling that the tooth decay claim be removed from the packaging. Later it was also removed from advertising and Ribena Toothkind was replaced in 2005 by Ribena Really Light. GSK’s aggressive defense of Ribena Toothkind against a charge of misleading advertising in the UK provides an important and almost contemporaneous context for their response to similar allegations against the iconic Ribena brand in New Zealand (coincidentally the original Glaxo brand was born in New Zealand in 1906 as a milk-based infant food). In 2004, two 14 year old students at Pakuranga College in Auckland – Anna Devathasan and Jenny Suo – tested the vitamin C content of various fruit drinks for a classroom chemistry project. They found that the RTD version of the Ribena did not contain four times the vitamin C of oranges, despite wording used in product advertising. The schoolgirls wrote to GSK New Zealand complaining that the television advertising statement “the blackcurrants in Ribena contain four times the vitamin C of oranges” was “intentionally misleading and quite inappropriate” in that it misled people to believe that Ribena fruit drink itself contained four times the vitamin C, which is untrue. They also reported that they telephoned the company and were dismissed with the response “It’s the blackcurrant which have it” (Eames, 2007a). The company was eventually prosecuted and pleaded guilty to ten representative charges arising from the “four times” advertising claim. They also pleaded guilty to five other charges relating to false labeling of the RTD Ribena, which was advertised as containing 7mg of vitamin C per 100ml when subsequent testing showed it contained no measurable vitamin C at all. Notwithstanding the recent bruising experience in the UK involving controversial advertising claims for Ribena Toothkind, the New Zealand company apparently chose not to respond to the girls’ written approach. So the two teenagers took their case to top-rating New Zealand television consumer programme Fair Go, which broadcast the story nationally in October 2004. GSK did not appear on Fair Go but issued the TV producers a written statement, which was summarized on air: The claim “blackcurrants in Ribena contain four times the vitamin C of oranges” is correct and relates to blackcurrants and oranges in their natural fruit state. This is a claim applicable to all Ribena products not just concentrate. We make no comparison to juices, fruit drinks or any other pre-packaged drink product. The advertising statement has appeared as part of Ribena advertising world wide for more than a decade. All Ribena products boldly highlight the actual and correct vitamin C content as required by law. We sincerely apologise for the way in which Anna and Jenny’s complaint was dealt with (Fair Go, 2004)[2]. Despite the UK experience and this exposure on New Zealand national television providing early indications of an impending serious issue, the TV commercial with the “four times” claim remained in use for another 18 months. Meanwhile the two girls took their complaint directly to the government consumer watchdog the New Zealand Commerce Commission (NZCC). Furthermore, at the same time Ribena – promoted as having “no artificial colour, flavour or sweetener” – was under sustained attack for its high sugar content. In January 2004, the UK Food Commission journal had reported that the 70 g of sugar in a 500 ml lunchbox bottle of Ribena would exceed a child’s recommended maximum sugar intake for the whole day by 30 per cent (Food Magazine, 2004). And in January 2007, precisely in the midst of media publicity about the upcoming court case in New Zealand, newspapers in Australia and New Zealand reported a study by the Australian Consumer Association journal listing Ribena as one of the top ten “Foods that make kids fatter faster” (Choice, 2007). The report and widespread media coverage identified the major ingredients of the RTD product as water and sugar (11 teaspoons per drink, exceeding Coca-Cola) with blackcurrant juice, processed from concentrate, coming in at only 5 per cent. The Ribena issue mismanaged 397 CCIJ 13,4 398 Four response strategies Facing the NZCC investigation and threatened prosecution, GSK appears to have pursued four strategies: (1) Quarantine Ribena RTD from Ribena syrup to protect the parent brand. (2) Contain brand damage to Australia and New Zealand. (3) Reduce impact by offering acceptable “explanations”. (4) Apologise conditionally and rely on lack of intent of wrongdoing as mitigation. Analysis of the case against each of these strategic objectives in turn suggests that only the fourth was successfully achieved. Quarantining the sub-brand Unlike some earlier Ribena brand extensions in other countries (which had distinct identifying names such as Ribena Spring, Ribena Sparkz and Sparkling Ribena) the RTD formulation in New Zealand and Australia was simply called Ribena. In retrospect this was a marketing error which created a virtually insurmountable hurdle for the company once the controversy broke and they tried to distinguish the RTD from the syrup. The issue management challenge was certainly not made any easier by the company’s ill-judged written response to television in October 2004 which firmly stated that the “four times” claim is “applicable to all Ribena products, not just the concentrate” (Fair Go, 2004). Although in 2007 Ribena syrup and RTD were both the subject of prosecution for misleading advertising, the company belatedly attempted to distinguish the two products to protect the parent brand. For example, in the wake of the court case the company said: With regard to the (vitamin C) content statement, it is important to highlight that Ribena syrup products were not part of this content information issue. They are a rich source of vitamin C (GSK, 2007b). Similarly the GSK regulatory statement which appeared through the Australian Commerce and Consumer Commission said: “This issue only relates to Ribena RTD products and does not relate to the Ribena syrup products” (ACCC, 2007, emphasis in original). While this position is true insofar as it relates strictly to the nutritional content panel on the RTD packaging, it is not true in relation to the “four times” claim about the syrup, to which the company pleaded guilty. Irrespective of such terminological nicety, analysis of the very extensive news coverage of the case shows the delinquency of the RTD was constantly transferred direct to the parent brand. Some international media reports used ambiguous phrases such as “the syrup based drink contained almost no trace of vitamin C” (for example International Herald Tribune, 27 March 2007) while New Zealand’s largest metropolitan daily, the New Zealand Herald, explicitly (and incorrectly) stated in an editorial: The discovery that the syrup produced by the multinational GSK contains not a trace of vitamin C came from a school science project by two 14 year olds at Pakuranga College (New Zealand Herald, 2007a). This incorrect statement about the syrup was widely repeated and it is clear that, despite the company’s effort, commentators, consumers and the general public made little or no distinction between concentrated Ribena syrup and its pre-diluted RTD variety. Containing brand damage According to GSK, the particular RTD formulation subject to prosecution was marketed only in New Zealand and Australia, and a concerted effort was made to geographically contain the issue. About a year before appearing in court in New Zealand the company approached the Australian Commerce and Consumer Commission in a pre-emptive move to voluntarily “self-report” that its RTD packaging and “four times” advertising may have been misleading. When the ACCC made this approach public (unfortunately for GSK just days before the court case in New Zealand) the company had agreed to a number of undertakings, including placing corrective print advertising in Australia. However, they successfully avoided further prosecution (ACCC, 2007). Meanwhile GSK’s headquarters in Britain, the lead market for Ribena, issued a statement designed to isolate the problem from other locations. “GSK has conducted thorough laboratory testing of vitamin C levels in all other markets. The testing confirmed that Ribena in all other markets, including the UK, contains the stated levels of vitamin C as described on product labels”. The company added that UK “Original Ready to Drink Ribena” provides 115 per cent of the recommended daily allowance (Vasagar, 2007). The company also moved to eliminate the “four times” claim, which had been used in many countries throughout the world. However, despite an international “sweep” of communication sites and advertising, four months later it was still in use on the GSK website in Malaysia, a key location where Ribena is manufactured for many export markets. In fact GSK Malaysia at that time (subsequently corrected) was going so far as to unambiguously state that Ribena itself contained four times the vitamin C of oranges (GSK, 2007d [3] ).
Notwithstanding GSK’s efforts to geographically contain the issue, the New Zealand