US FDA Probe Report Citing Five Deaths Possible Linked to Monster Energy Drink Consumption
New York Times and other newspapers published by 22 October 2012 some of the conclusions contained in a report by the US Federal Food and Drug Administration (FDA).
We collect the excerpts of the opening statements of the article published by New York Times:
Five people may have died over the past three years after drinking Monster Energy, a popular energy drink that is high in caffeine, according to incident reports recently released by the Food and Drug Administration.
The reports, like similar filings with the F.D.A. in cases involving drugs or medical devices, do not prove a link between Monster Energy and the deaths or other health problems. The records were recently obtained under the Freedom of Information Act by the mother of a 14-year-old Maryland girl who died in December from a heart arrhythmia after drinking large cans of Monster Energy on two consecutive days.
A spokeswoman for the company said last week that its products were safe and not the cause of the teenager’s death.
That spokeswoman, Judy Lin Sfetcu, added that Monster was “unaware of any fatality anywhere that has been caused by its drinks.”
Monster Beverage’s stock ended down Monday more than 14 percent, sliding sharply after The New York Times reported about the F.D.A. filings.
New York Times, 22 October 2012
The impact of Monster Beverage Reputation Crisis in Twitter
Public announcement that Monster Beverage is being investigated by federal health consumption authorities for human casualties and that a lawsuit is open for one of these deaths is, under all standards, a major corporate reputation crisis. It may create lasting negative effects for the brand Monster Energy Drink.
The primary goal of this post is not to provide metrics for measuring the short term social medial impact of this scandal for Monster Beverage, but to provide some insights on how an individual corporate crisis do also affect competitors in the same sector of activity. This will be especially the case for top-of-mind brands.
Nevertheless, we need to show some data concerning the direct impact suffered by Monster Beverage before we present our metrics concerning the contagion effect to other brands in the energy drinks sector, and to the top-of-mind brand, Red Bull drinks.
We have run our analysis by checking the conversation in the social media, using Twitter content analysis
First figure shows the evolution of the presence of Monster Energy drink in Twitter conversation during the week of the crisis. Results refer to tweets in English, corresponding mainly to US market, where the crisis emerged. Value 100 corresponds to pre-crisis (17 to 21 October 2012) Twitter average daily activity. Our analysis shows a sharp increase of Twitter conversation around this brand the day media publishes the information about FDA probe against Monster. Traffic almost triples by 22 October and reaches a peak of 373 the day after. The crisis shown in the media clearly reached social media conversation.
In the next figure we show the share of all tweets about Monster Energy that explicitly talk and comment about FDA probe. In a high proportion of cases, the tweet also contains a link to a news article about the scandal.
Direct comments about the scandal represent almost one third of all tweets about this brand.
The crisis is hitting severely Monster Brand in the social media. We proceed now to a Twitter sentiment analysis based in content analysis to measure the short term impact of the reputation crisis in Monster brand perception in Twitter. This analysis is performed by our own metrics developed at Media, Reputation and Intangibles, MRI Universidad de Navarra
First figure shows the evolution of the Twitter Index of Brand Favorable Perception applied to Monster Energy. This index corresponds to the share of tweets explicitly backing or praising the brand. Monster values moved in the range 50-70% before the crisis. The index drops to 30% value in the first day of the crisis, and bottoms towards very low levels of 20%.
We add in the next figure the information concerning the share of explicit negative comments about the brand, using the same index. The share of negative comments in Twitter about Monster Energy was always below the 10% mark before the crisis. It almost reaches the 50% value during the crisis. This is of course devastating for Monster Beverage interests.
The contagion effect of crisis to top-of-mind brands
Red Bull drinks are not indicted not directly investigated in this case affecting a direct competitor.
A common reaction by some spectators when an individual reputation crisis emerges is that this would become a marvelous indirect add for competitors in the sector. This was also reflected in some of the tweets commenting Monster crisis.
See a couple of examples to tweets viewing Red Bull as a winner of this crisis suffered by Monsyer Energy
This in fact quite the opposite, as people in branding and reputation crisis know and affected corporations fear: you will pay a reputation price my mistakes commited by your direct competitors, if the underlying issue reflects a sectorial problem.
Health concerns related with the abuse of energy drinks is clearly a controversy affecting all brands in the energy drinks sector. Even if now a particular case is affecting a single company, the overall reputation of the sector is directly affected.
The point that we want to stress in this blog entry is that the company that has the most to lose and to fear concerning competitors’ reputation crisis is paradoxically the most powerful brand in the sector, the top-of-mind brand. The logic is clear: as the top-of-mind brand is the preferred brand in the sector, it is always the reference brand in social media conversation. People talk about top brands, and not about marginal ones. Now, if an issue emerges in a given industry, the conversation will turn around the directly affected brand, and many times the top-of-mind brand will be used as term of comparison. For the good if the issue is a positive one, for the worse if the industry faces a reputation crisis.
We have performed some other similar analysis about the contagion effect at MRI Universidad de Navarra, some of them published in this Reputation Metrics blog. For instance, we showed that the immense reputation crisis suffered by FedEX by a obvious misbehavior captured in a Youtube video of a worker launching over the fence a fragile and expensive computer monitor was devastating not only for FedEx interests. We found that in the following days the views of videos showing poor delivery practices by UPS exploded.
UPS is the top-of-mind rival of FedEx in the United States, while others, like DHL no. We did not observe such an increase of views about bad delivery video concerning DHL company.
In another somewhat analogous study, we looked for the brands/persons/institutions that are strongly associated to specific scandals or evils as an epitome case and reference to compare with.
We showed for instance how US President Bill Clinton is systematically used as reference cited case each time than a new political scandal with sex connotations emerge (See ‘The curse political scandals case’). In another study case, we discovered which are the persons and institutions that are chosen in sarcastic tweets in a Twitter trending topic linked to poor performance and quality.
In a sense, top references for past bad behavior are top-of-mind brands. As we pointed out, this phenomenon is one of the legacies of the consequences of past severe reputation crisis.
Measuring the contagion effect suffered by Red Bull exposure to Monster Energy Crisis
We study in this section how this Monster Energy drink crisis has also crelarly affected in a negative way to Red Bull brand value as it is for all other companies counting with energy drink products.
Red Bull is the leading energy drink reference in the US market. Apparently Monster Energy is number one in term of cans sold, but as Red Bull prices are much higher, this allows Red Bull to control 39% US market share. Monster Energy takes a 29% share. Then follows 5 Hours Energy with 13% share. 5 Hour Energy is considered technically in another segment, the ‘Energy Shot Brands’, but we include all of them in the same category. Data collected from EnergyFiend.com
As our purpose is to tackle how Monster crisis is affecting the other energy brands, the metrics strategy we have followed in this case is to check tweets mentioning both Monster and another energy drink brand. This is why results do not include Monster separately, as it is present in all data.
Next figure shows The Social Media Brand Value Index in Twitter, captured by their presence in the social media conversation in normal times. This is tweets between 17 and 21 October, before the FDA probe crisis emerge.
Our results show that Red Bull brand is present in 49.3% of all tweets in English about energy drinks. This is quite in line with its own market share (54% excluding Monster). Second most talked brand is Rockstar, with a social media share of 18.7%. This is again in line with its commercial power.
There is a strong relationship between commercial brand power and social media power, as plots show in the following figure including all energy drinks. This is a familiar result for us, as we have found a systematic direct relationship between our media value measures and commercial power, in all our studies about sport brands (at Economics, Sport and Intangibles research group, ESI Universidad de Navarra).
Our data confirm that Red Bull is also the leading reference in the social media conversation. This is an indirect way to identify Red Bull as top-of-mind brand in the energy drinks industry.
Let’s analyze now how this Monster crisis is also a Red Bull crisis.
We proceed first to present the trend concerning the Twitter Index of Brand Favorable Perception applied to Red Bull. Normal time values showed a share of favorable tweets around 50%, and negative comments always below 10%. Monster crisis started by 22 October has had a direct impact on Red Bull brand health in Twitter, as negative comments exceed positive comments by 24 October (30% Vs 22%)
Social media punishment against Red Bull is visible and relevant. It is however somewhat less severe than the social media capital losses experienced by Monster Energy. In the next figure we show the evolution of the Twitter Index of Positive minus Negative comments. The drop of social media favor suffered by Monster is higher, but the one experienced by Red Bull is notable as well.
Finally, our last figure of this post shows that there is a reinforced contagion effect suffered by top-of-mind brands. The figure shows the share of Twitter conversation of tweets talking about both Monster and another energy drink.
Red Bull increases sharply its Twitter share during the FDA crisis tweets, moving from the 50% value in normal times to 57.2% in crisis times. Something similar happens with 5 Hour Energy, which increases its presence during the crisis time. This is the top brand in the ‘Energy Shot’ segment (for energy drinks containing even higher amount of caffeine).
What I have learned from this crisis
1. Bad news is always bad news. Do not quickly rejoice by mistakes and crisis suffered by your rival and competitors, as they may harm your own reputation through the decrease of the global reputation and social perception of your industry sector.
2. It is wise to collaborate with your archrivals in your industry for dealing with issues that may affect the reputation of all players in the sector.
3. Being the top-of-mind brand does not mean to be almighty in the social media era. It imposes a lot of new responsibilities and cares. I run an exercise with some of my students in other to gather additional anecdotic evidence. I opened the conversation about the ongoing crisis suffered by energy drinks doe to allegations of provoking deaths. I asked in a candid way for the name of affected brand as if I forgotten it. And yes, many of them told me that Red Bull was being investigated by US consumer health authorities.
See an example of a tweet that drives direct reputation loss to Red Bull