Take the Bull by the horns or fail

The kind of moonshine Red Bull likes is the one it intends to bottle 13 times a year under the influence of a full moon. It sincerely believes a new caffeine-spliced water product, LunAqua, will have the same cult success in European nightclubs currently enjoyed by its famous energy drink.

But there’s another, less agreeable, kind of moonshine doing the rounds. The one that Red Bull claims the media are gullibly imbibing with potentially disastrous consequences for its corporate reputation. Three Swedes have died; all of them had shortly before consumed Red Bull. Whether that amounts to a material indictment of its wholesomeness cannot be ascertained at the moment. What matters now is how Red Bull deals with the crisis.

Like most brands, aware as they are of the fickleness of consumer popularity, it has initially gone into denial. There are all sorts of reasons for adopting this tack, good and bad. Sometimes denial amounts to little more than a stubborn and blinkered management failing to recognise that, like it or not, the crisis has simply passed out of its control. It’s the sort of attitude which afflicted Coca-Cola during the 1999 European contamination scare and cost chief executive Doug Ivester his job.

At other times it can pay off, provided the brand-owner takes appropriate action while surfing the crisis. An interesting insight into this stratagem was provided by Audi, which experienced damaging publicity over its iconic sportscar, the TT, in the year of its launch. A number of people died after the car, apparently inexplicably, went out of control at high speed. Audi denied there was a design fault, but it did modify the suspension and fit a discreet stabiliser to boost public confidence. Measures which have paid off, as the TT is a top-seller in its sector (and particularly popular with marketing folk).

It’s difficult to imagine Red Bull adopting such tactics. Pre-emptively tinkering with the taurine and caffeine formula would undercut the brand’s USP and look suspiciously like an admission of guilt. In any case, things have moved on now that the Swedish government has committed itself to a “special investigation” into possible Red Bull health hazards. Exoneration is the best outcome, but how long will it take, and what happens to brand equity in the meantime?

Red Bull is under pressure, from the medical profession and elsewhere, to withdraw its product pending the investigation. Its resistance to the suggestion is understandable. Turnover in Sweden may be a tiny part of Red Bull’s 1 billion cans a year sales (a quarter of it in the UK), but a temporary unilateral withdrawal there would probably precipitate calls for similar action in its main markets. The Perrier benzene scare provides ample evidence of the dangers. Perrier, which withdrew from the US market for six months, has never recovered its former preeminence.

Yet crisis does not inevitably spell long-term disaster for a brand. Global brands such as Ford, Mercedes and Coca-Cola have all managed to recover their fortunes. Luck plays a part, but depth of management and brand resilience are key. Red Bull’s strengths in these areas have still to be tested.