Coke mired in legal wrangles over Glaceau Vitamin Water and Dr Pepper

July 26, 2010

Dr Pepper isn’t the only Coca-Cola brand to cause offence to consumers. Glaceau Vitamin Water is now facing a federal class action in the United States, which could end up costing the corporation millions of dollars and considerable damage to its reputation.

Glaceau is notorious for its “irreverent” (for which read “silly”) and cynical posturing. But that’s not what has landed Coke in deep water, or not overtly. Some folk evidently believe Glaceau has been peddling phony health benefits when, in reality, it is nothing more than sugar water with a few vitamins thrown in. In other words, far from preventing “age-related eye disease” (as the brand has claimed), its only durable side-effect is to make you fatter, if you consume enough of it.

The stakes are higher than they seem. Success for the plaintiffs would make Coke appear little better than a huckster apothecary hawking snake oil. But it will be years before we know the result – in all probability.

While on legal matters, I hear things have turned nasty at Coke over the Dr Pepper digital foul-up. Lean Mean Fighting Machine, the agency responsible, has resorted to lawyers after Coke decided to terminate its newly-won Diet Coke account without (as LMFM sees it) adequate financial compensation.

UPDATE 27/7/10. Legal fisticuffs have now ceased on the Dr Pepper/Diet Coke accounts, with LMFM and Coca-Cola agreeing to go their separate ways.

Rumbol and Sleight departures flag up threat to UK-centric marketers

April 28, 2010

Are the imminent departures of high-profile marketers Phil Rumbol and Cathryn Sleight, from Cadbury and Coca-Cola GB respectively, by any chance related? In one important respect they most certainly are: both are casualties of globalisation. The corporate circumstances may be different, but the underlying cause has been the same.

Cadbury had its destiny decided for it by the deus ex machina of corporate takeover. A successful global company with a premier-league set of brands and high-octane growth prospects in emerging markets, it nevertheless had significant vulnerabilities – particularly in Europe – which Kraft was able to exploit with the seductive promise of greater efficiencies and economies of scale should the two companies “merge”.

Coca-Cola has reacted to similar cost inefficiencies in its mature European operations by embarking on an internally generated “rationalisation” programme which will reduce its ten existing European business units to four. Coke is in no way a potential takeover target, but may well be reacting to investor pressure.

In the words of Dominique Reiniche, president of Coca-Cola Europe: “The changes we are making will simplify the way we operate in all areas of the business. This will drive efficiency by enabling us to be faster to market and to increase the scale of our activities across Europe.” He does not mention shareholders, but we can be pretty certain they will be gratified by the extra margins generated. Perhaps coincidentally (given his hostility to the Cadbury bid), Warren Buffett – near enough the world’s wealthiest man – is a significant investor in both Kraft and Coke.

One side-effect of both company restructures has been to subordinate national marketing units to a new pan-European marketing management team. As will be seen, that has implications for ambitious UK marketers – not all of them positive.

In the Kraft/Cadbury case, things could have turned out well for Rumbol had he chosen to toe the new corporate line. Far from being made redundant (unlike many senior colleagues), he was slated for promotion to a new pan-European marketing role. The only problem was (so we are told), Rumbol’s new job would be based in Zurich and he did not wish to relocate his family there. So, he hasn’t… What may also have troubled him was that the new role was in some ways more narrowly defined than his present one. Its remit was chocolate (now under the auspices of former Cadbury executive Tamara Minick-Scokalo), to the exclusion of the gum and boiled sweets sectors.

As for the role of Coca-Cola GB marketing director – Sleight’s fiefdom since 2006 – it has been axed. The function will now be folded into a broader role operating out of NWEN, the new pan-European unit consisting of Iberia, Germany, North West Europe and “Nordics” headed by Sanjay Guha. Guha will assume the title marketing and Olympics director, NWEN; currently he is Coca-Cola GB president. Sleight is expected to leave the company.

As it happens, I don’t think either casualty will have much difficulty finding another job. Sleight has been credited with the UK launch of Coke Zero, the company’s most successful piece of carbonates new product development in over two decades; and has also superintended the fortunes of Glaceau Vitamin Water (which, for all my reservations about its positioning, has done quite nicely thank you).

As for Rumbol, he had already made a name for himself as the Stella client, at a time when that brand still produced great advertising. What he has since done at Cadbury will, however, have immeasurably increased his credit. He helped to launch the confectionery giant’s first foray into chewing gum (ironically, one of the reasons that margin-hungry Kraft began showing an interest). And he has been the impresario behind some of the most noted advertising in recent times, to wit Fallon’s “Gorilla” and “Eyebrows”. Move over Simon Thompson (who presided over a run of great advertising at Honda, a few years ago).

I’m less sanguine about the prospects of home-loving UK marketers in general, though – especially if working in large corporations. The tide is against you, unless you’re prepared to wield your passport more freely.

PS. Rumbol may have opted out of a new life at Kraft Cadbuy, but Ignasi Ricou, president of Cadbury Europe, is to stay on. He will be president of sales, Kraft Europe, with special responsibility for gum and candy.

Now’s the time for you Coke folk to take a sickie

April 19, 2010

Unabashed by a reprimand from the Advertising Standards Authority last autumn, Coca-Cola’s Glaceau Vitamin Water is again courting controversy, this time with an on-label promotion encouraging employees to take a “sickie”.

Surprise, surprise, it has garnered quite a bit of “edgy” publicity – in the fun-loving tradition of the brand. Most of it courtesy of those stuffy people at the Forum of Private Business – representing self-important SMEs – who have got themselves in a lather over the £12bn that lost working days cost the UK economy annually. Even lawyers have shown an interest – proof positive that this one should run and run.

But don’t worry, all this carefree irresponsibility in the service of “irreverence” doesn’t mean a thing. We have Coke’s word for that. “This is clearly a tongue-in-cheek reference, very much in keeping with the humorous tone that Glaceau Vitamin Water has adopted with consumers right from its launch…We are not seriously suggesting people should call in sick when they are not and, on pack, we state, ‘taking a sickie is very, very naughty.'”

So that’s all right then: complete exoneration from responsibility. I’m sure the ASA will buy that one when someone contacts it with a complaint. And just to check that Coke really does see the joke in the same enlightened way as the rest of us, I have a modest proposal. Why don’t some employees at Coca-Cola GB test the water, so to speak, by reporting in “sick” over the next few days? After all, they’ve got the perfect excuse. All this atomised volcanic ash descending from the upper atmosphere could be playing havoc with our health, especially if we’re a bit asthmatic. And the beauty of it is, no one’s going to know whether we’re telling the truth or not. Just like the ever-elusive ’24 hour bug’ handily recommended on the Glaceau Vitamin Water label! That should give HR a laugh.

Silly idea, eh? Not unlike the brand’s “irreverent” posturing.

ASA ban undermines Danone’s health positioning

October 14, 2009

DanoneAnother week, another food and drink company rebuked by the Advertising Standards Authority for running an advertising campaign that made unsubstantiated claims about the health benefits derived from its products.

The Glaceau Vitamin Water ‘More muscles than brussels’ campaign banned last week was, above all, silly in its health pretensions. Coca-Cola, which owns the brand, fell below its usual high standards in this area, but the outcome is hardly going to do significant damage to the soft drink giant’s image.

Not so for Danone. The ban imposed on its Actimel health drink campaign is altogether more serious. Health and ‘wellness’ are at the very core of the European food manufacturer’s positioning. Indeed, chief executive Franck Riboud underlined this very point a couple of years ago when he sold off the “unhealthy” bits of Danone, such as the LU biscuit business, to Kraft; precisely to concentrate on health-enhancing neutraceutical products such as probiotics Actimel, Activia and Yakult (which Danone now part owns).

Up to now, this strategy has paid dividends. The fat margins (the only fat you’ll find in a lean business) that accrue to probiotics has allowed Danone to wage a successful recession. A fading celebrity like Nell McAndrew will have been able to relaunch her career on near-ubiquitous presence in Activia commercials, at at time when much of the rest of the industry was scaling back its ad spend. It’s paid off handsomely for Danone, too. Sales of Activia rose 38% in the year to the end of February, according to Nielsen. Similar large spends have been put behind Actimel, starring Sir Bobby Charlton and Felicity Kendal, with similarly gratifying results.

But this ban on the latest ad puts a spanner in the works. The advertisement shows a bottle of Actimel jumping over a skipping rope while a voiceover makes the claim: “Scientifically proven to help support your kids’ defences.”

As far as the ASA is concerned the claim is far from “scientifically proven”, despite the  wealth of clinical data Danone has adduced in its defence. This is a finding, and a ban, which undermines Danone’s core positioning.

Naturally, Danone can water down the language it uses and hope to blur the health-giving benefits a little. But that course is ultimately suicidal for probiotics products, which justify their handsome price premium over ‘ordinary’ yogurts precisely on the fact that they have “scientifically proven” credentials.

The ASA is by no means Danone’s only worry in this respect. The regulators in Brussels are also gunning for it. Empowered by a new raft of more punitive legislation, the EU-backed European Food Safety Authority is going through all food health claims with a fine tooth comb. Of the 70 it had surveyed at last count, 66 failed to pass muster. Danone, so far as I know, has had to redraft all significant health claims underpinning the promotion of Activia and Actimel and is awaiting their approval. Whether it will get that approval, I have no idea.

It’s conceivable, the way things are going, that any kind of health claim attached to food or drink promotion will in a few years time become as quaint as “Guinness is Good For You.”

Brussels has more muscle than health cheats like Coke

October 7, 2009

VitaminwaterThe Advertising Standards Authority’s comprehensive rejection of Coca-Cola’s Glaceau Vitamin Water advertising campaign highlights an unappetising facet of the soft drinks giant’s communications strategy. The rejected health claims in the ads reveal an underlying attitude which is at best naive about health trends, and at worst downright cynical.

The key problem is the positioning of the Glaceau range as something healthy. It is not. As the ASA pointed out, no 500ml bottle of a soft drink which contains 26% of our recommended daily allowance of sugar could reasonably be considered healthy. Coke sought to get around this inconvenient truth by exploiting the so-called functional food platform. The drinks are vitamin-enhanced, therefore they must be healthy. And what health benefits they apparently confer! Drink this stuff and you can kiss goodbye to the doctor’s surgery, because you’ll remain in rude good health. One ad also suggested that Glaceau is more nutritious than Brussels sprouts (“more muscles than brussels”), though when challenged Coke rather childishly tried to pretend the slogan was an esoteric reference to Belgian action-hero Jean-Claude van Damme.

Here in action is a positioning tactic beloved of the embattled processed food industry. Rather than addressing saturated levels of, say, sugar and salt, the manufacturers seek to bypass the vexed issue of obesity by injecting their products with “scientifically-proven” healthy additives distilled in the food laboratory. A good case in point (which I recently touched upon in a column) is the breakfast cereals sector which has studiously avoided bringing down sugar levels by jumping on the neutraceutical bandwagon.

Then again, Coke’s response was pretty typical when rumbled. It meant no harm it said, the ads were just ‘humorous and irreverent’. Who could be so po-faced as to object to a bit of fun? It’s akin to the yob’s excuse: “Me and the lads was just ‘avin’ a larf” ; and about as convincing.

This is wake-up time for Coke and other purveyors of debatably healthy foods masquerading as something diametrically the opposite. By all means market them as indulgence or convenience products, but don’t play the health card. The game’s up. The Euro health police are on to you, and they won’t let up. Brussels, I’m afraid, really does have more muscles.

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