Strategic Management Case Study;When an icon stumbles: the Ribena issue mismanaged

Strategic Management Case Study (Semester 1, 2015)
Individual Paper – Case Study Analysis.
The Assignment Task
Read the Case Study: “ When an icon stumbles: the Ribena issue mismanaged. ” and answer the following questions.
Question 1
Identify and discuss a set of coherent actions that the organisation may have taken to possibly avoid the legal and reputational situation that resulted from their actions.
Question 2
From an organisational perspective identify and discuss potential problems that may arise in implementing your suggestions.
Question 3
What might be the implications of your suggestions for organisational and management practice? Discuss this from a risk management perspective.
Some additional points to consider
? Your answer must be based in the theory and concepts taught in this subject.
? Discuss this question with reference to at least four theoretical perspectives.
? As a minimum research requirement, the subject text book and required readings must be referenced as part of your research effort to answer this question.
? The word limit for the assignment is 3,000 words per student candidate.
You may also discuss this question with reference to other organisational examples if these will add gravitas to your argument.

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 both
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1356-3289.htm
CCIJ
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Received August 2007
Revised November 2008
Accepted April 2008
Corporate Communications: An
International Journal
Vol. 13 No. 4, 2008
pp. 394-406
q Emerald Group Publishing Limited
1356-3289
DOI 10.1108/13563280810914829
Australia 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
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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).
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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 7 mg of vitamin C per 100 ml 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.
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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 andAustralia 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).
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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
story received disproportionate publicity around the world, undoubtedly amplified by
the involvement of the two photogenic schoolgirls, now aged 17, who gave extensive
interviews before and after the court hearing. As the New Zealand Herald quipped:
“Seldom has a case of commercial chicanery been exposed as delightfully as that of the
sugar drink Ribena” (New Zealand Herald, 2007b).
The impact of this news angle alone can be gauged from just a brief sampling of
international mainstream media headlines – “Ribena Shamed by New Zealand
schoolgirls” (The Australian, 27 March); “Schoolgirls expose firm’s claim of vitamin C
in drink” (Times of India, 27 March); “School project trips up Ribena” (BBC online,
27 March); “Drinks giant faces court after girls’ Ribena test” (The Scotsman, 27 March);
“Schoolgirls rumble vitamin claims” (The Guardian, 27 March); “The schoolgirls who
cost Ribena £80k for its vitamin fib” (Daily Mail online, 27 March); “Ribena maker
squashed after NZ schoolgirl expose” (Reuters, 27 March); “Ribena caught out by
schoolgirls” (CNN online, 27 March); “Sweet victory for NZ schoolgirls” (Daily
Telegraph, 28 March); “Schoolgirls expose drink scandal” (Bangkok Post, 3 April).
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GSK was caught in a “perfect storm” and any hope of containing the story to New
Zealand and Australia was self-evidently doomed.
Using explanations to reduce impact
When responding to a corporate issue, particularly a charge of wrongdoing, any
organization needs to offer a consistent explanation, or suite of explanations. The GSK
response over time reflects little such consistency.
In response to the initial complaint, the company simply defended the “four times”
claim as being correct (Fair Go, 2004). It subsequently admitted that while “factually
correct” on a weight for weight basis, the claim “may have had the potential to mislead
some customers” (GSK, 2007b).
A British newspaper later reported that GSK suggested the girls had “tested the
wrong product” (Vasagar, 2007). But after the NZCC’s own tests showed no detectable
vitamin C in RTD Ribena, the company agreed with NZCC that its long-standing test
was accurate for testing the syrup, but was not suitable for testing the RTD product
because of its much lower concentration of vitamin C (NZCC, 2007). GSK’s public
position was that “the testing method used to determine the level of vitamin C was
unreliable and we were unaware of this at the time” (GSK, 2007a).
Attempting yet another approach, the company also argued that:
[. . .] testing methods revealed that vitamin C levels in a number of our ready to drink
products deteriorated over time and did not meet the vitamin C levels stated on the nutritional
information on the pack (GSK, 2007a).
However, this position was somewhat undermined when an unnamed GSK
spokesperson in London claimed: “The problem arose when Ribena in Australia and
New Zealand was left on shop shelves for too long, causing the vitamin C to degrade”.
She then boldly asserted that there was “no such problem with Ribena sold in Britain”
(Squires, 2007). While it is accepted science that some vitamin deterioration does occur,
the intervention from Corporate Headquarters was awkward and unhelpful.
(New Zealand Herald, 2007c) And it was never resolved how GSK in the UK could
be so definitive about the accuracy of their product analysis (Vasagar, 2007; Squires,
2007) while the company in New Zealand was admitting that its analysis was
unreliable and they were “in the process of changing our test method” (GSK, 2007a).
The failure of these varying explanations is reflected in the fact that New Zealand
supermarkets reported Ribena sales immediately fell by 8-12 per cent. (Gregory, 2007)
Four months after the court case GSK said sales in Australia were recovering steadily,
but conceded sales in New Zealand were taking longer to come back (GSK, 2007e).
Offering guarded apologies
The essential but sometimes challenging relationship between legal counsel and public
affairs counsel during issue and crisis management has been explored in detail
(Fitzpatrick and Rubon, 1995; Lukaszewski, 1995; Reber, Cropp and Cameron 2001;
Deveney and Ozcan, 2005).
While specific advice from respective counsel rarely becomes fully public, available
material in the Ribena case indicates the GSK legal strategy was to minimize the
impact of any admissions and to argue a lack of intent.
After the initial stumble in 2004, most GSK statements betray heavy legal
involvement. This hard line became particularly evident when GSK and the NZCC had to
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return to the Auckland District Court a week later for the judge to resolve their failure to
agree on the wording of court-ordered advertisements (New Zealand Herald, 2007d).
There is a distinct difference between saying “I’m sorry we misled you” and “I’m
sorry if you may have been misled”, and this classic ploy is apparent throughout GSK’s
response.
The company pleaded guilty to a charge of misleading advertising, yet constantly
used equivocal phrases such as “claims may have misled consumers” (ACCC, 2007);
“may have had the potential to mislead some customers” (GSK, 2007b); “we sincerely
regret any confusion to customers who feel they may have been misled” (Eames,
2007b); “This may have also misled you to believe . . . ” (GSK, 2007a); “We may have
given you the impression . . . ” (GSK, 2007c [4]).
The company also consistently argued lack of intent as mitigation, which is
discussed below in (3) act/essence dissociation.
Another notable strategic element related to the use of television for apology
advertising. While the company accepted the direction for corrective advertising in
print, their lawyers successfully argued in court that television advertising was not
necessary.
“The judge stopped short of ordering a television campaign because it had been a
year since the misleading advertisements had run” (New Zealand Herald, 2007e).
However, GSK management later decided to voluntarily place corrective
advertising on television, not only in New Zealand where the issue had gained a
very high profile, but also in Australia, where the case had received much less
publicity. Explaining the decision to proceed on television, a senior GSK executive said:
“The main purpose was to show the mothers who trusted the brand over the years we
are sorry we confused people and we wanted to fix it” (GSK, 2007e).
Apologia used for image restoration
Keith Hearit, one of the authorities on the use of corporate apologia by organizations
accused of wrongdoing, has identified three forms of dissociative defence. (Hearit,
1995b) At different stages of the Ribena case, GSK attempted all three, and each is
analysed within the theoretical framework:
Opinion/knowledge dissociation
Challenges the validity of the charges by redefining them as groundless – offering not
just a denial but a counter-interpretation of the facts.
In a prime example of redefining the charge, GSK’s response to the original
allegation on New Zealand television was that the “four times” claim “is correct and
relates to blackcurrant and oranges in their natural state” (Fair Go, 2004).
In court, GSK pleaded guilty in relation to the vitamin C statement on the RTD,
which Judge Phil Gittos described as “not just incorrect but wholly false”
(Eames, 2007b). They also admitted that the “four times” television advertising was
misleading, but continue to maintain their counter-interpretation that “on a weight for
weight basis the claim is actually factually correct” (GSK, 2007b).
However, this counter-interpretation itself opened GSK to further criticism. The NZ
Commerce Commission argued that the claim “while literally true, was likely to mislead
consumers about the relative levels of vitamin C in Ribena and orange drinks” (NZCC,
2007) NZCC Chair Paula Rebstock said after her organization’s successful prosecution:
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“They didn’t say that Ribena did (have the vitamin) but that’s very careful wording isn’t
it? Most consumers would think that means this drink has” (Eames, 2007b).
A less circumspect New Zealand Herald (2007b) editorial described GSK’s carefully
worded marketing claim as “too clever by half” and a few days later a Herald on
Sunday editorial went even further, describing the company position as “cynical deceit,
based in a calculated piece of sophistry” (New Zealand Herald, 2007f).
Individual/group dissociation
A scapegoating strategy in which fault is admitted but an attempt is made to transfer
guilt.
As a way to transfer guilt the company chose to blame impersonal quality
assurance methodology in its production process. In its formal print and TV apology
advertising the company said:
The testing method used to determine the level of vitamin C was unreliable and we were
unaware of this at the time [. . .] We’re (also) in the process of changing our testing methods and
are working to improve these products to ensure this can never happen again (GSK, 2007a).
Similarly, in its statutory advertising in Australia, the company added that the claimed
amount of vitamin C in RTD products “could not be substantiated by acceptable
testing methods” (ACCC, 2007).
Hearit says that when corporations scapegoat their employees they differentiate
those individuals from the rest of the organization. “This linguistic decoupling draws a
line that clearly delineates one part of the organization from another – individuals from
the group – even though consubstantially they are one. In effect, individual/group
dissociations separate legitimate parts of the organization from those responsible for the
malfeasance in order to salvage legitimacy” (Hearit, 1995b, p. 8).
However, such decoupling must be credible. GSK’s scapegoating defence of
inadequate testing capacity was very much a two-edged sword and exposed the
company to cynicism and legitimate criticism. NZCC Chair Paula Rebstock drew the
obvious conclusion when she said:
As a multinational company specialising in pharmaceuticals and health products, they
should have had robust testing and quality assurance systems in place to ensure its product
was delivering what it promised (NZCC, 2007).
Act/essence dissociation
Where the corporation claims that, while it may have committed the act, it was an
isolated event which does not represent the company’s true nature.
While other forms of apologia were attempted, the dominant mode upon which GSK
relied was act/essence dissociation, pursuing a consistent position of lack of intent.
During the court proceeding, for example, lawyers for the company said the company
had not deliberately misled the public (New Zealand Herald, 2007e) and the company’s
subsequent formal web statement said “There was never any intention to mislead our
customers” (GSK, 2007b).
Similarly, GSK’s later website update and television commercial emphasized both
the absence of intent and Ribena’s longer term reputation:
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We may have also given you the impression that there is four times the vitamin C in Ribena
than in orange juice. This was never our intention and is incorrect [. . .] (however) Ribena
syrup is still a rich source of vitamin C. I can assure you that we are working hard to restore
your confidence in Ribena (GSK, 2007c).
The effectiveness of this third dissociative defence was illustrated by a company
statement after they had been convicted in the Auckland District court. “We are
pleased the judge recognized that this was an inadvertent action. It was never our
intention to mislead consumers in Australia and New Zealand, so we moved quickly to
amend our advertising, labeling and testing procedures when the issue came to light”
(BBC online, 2007). However, this minor success in court must be weighed against the
broader adverse impact for the product.
Conclusion
From information available on the public record GSK management appear to have
learned very little from their prolonged and aggressive defence of controversial British
advertising for Ribena Toothkind (indeed the replacement product is still promoted as
“tooth friendly”).
At a broader level the New Zealand case provides some valuable lessons for future
management practice:
. Ensure systems are in place to adequately respond to early indications of an
impending issue.
. Promptly implement a forward strategy and keep to consistent messages.
. Understand the risk when legal considerations dominate the public response.
. Integrate full issue and threat assessment when planning brand extensions.
. And finally, recognize the importance of genuine and meaningful apologia to
achieve effective image restoration.
Sales of Ribena in New Zealand at the time were just $NZ 8 million – equivalent to
about £2.8 million out of global Ribena sales of £169 million. Only time will reveal the
extent to which this heavily publicized stumble in such a minor market has caused
lasting damage to an iconic global brand.
Notes
1. GSK’s corporate website says Ribena is sold in 22 countries, including Caribbean, UK, Eire,
Denmark, Greece, Saudi Arabia, Qatar, Kuwait, Bahrain, United Arab Emirates, Oman,
Yemen, Sri Lanka, Singapore, Malaysia, Australia, New Zealand, Kenya, Nigeria, Mauritius,
China Hong and Japan. Source: www.ribena.co.uk/FAQ
2. The video can still be seen on Fair Go web archive.
3. Ribena now comes in a variety of flavours, but blackcurrant is without a doubt everyone’s
favourite and contains four times as much vitamin C as oranges. The website was
subsequently corrected.
4. The television commercial used in Australia featured Australian MD John Sayers and used a
very similar script.
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References
ACCC (2007), Ribena Vitamin C Claims “May Have Misled Consumers”, Australian Competition
and Consumer Commission, 21 March 2007, available at: www.accc.gov.au/contents/index.
phtml/itemId/783192 (accessed 19 July 2007).
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