In recent years, drinks brands have faced significant consumer and media backlash. Some have courted controversy with their choice of brand ambassadors or advertising campaigns that miss the mark. Others have been criticized for their environmental impact, unethical practices in their supply chains and selling products that are potentially harmful. A single misstep can very quickly go viral on social media, eroding consumer trust and causing lasting damage to the brand.
We’ve identified some of the key risks drinks manufacturers need to consider, along with mitigations that can help companies prevent a crisis and manage incidents if they do occur.
There have been numerous reports of drinks companies selling harmful products, including products containing harmful allergens, chemicals and even broken glass. Mislabeling or not declaring ingredients makes a product potentially dangerous, especially to people with allergies or food sensitivities.
A global drinks brand hit the headlines recently when its bottled water was found to contain E. coli and other fecal matter, forcing them to destroy over 2 million bottles and causing considerable damage to their reputation. The presence of E. coli in bottled water is particularly concerning as it is a transmittable disease and a risk to public health.
In an increasingly polarized world, advertising campaigns that are intended to appeal to one demographic can alienate another, resulting in widespread social media condemnation. For example, a major drinks brand faced consumer boycotts and a decline in sales following an advertising campaign based around a transgender personality.
Drinks manufacturers have also faced accusations of making false advertising claims about the sustainability and health benefits of their products, and of advertising to vulnerable groups, such as advertising sugary drinks to children.
Celebrity endorsements can boost a brand’s visibility, add prestige and credibility to a product and increase sales. However, if a celebrity partner is involved in a scandal or says something controversial, the brand’s reputation can suffer by association. Recently, a whisky brand suffered significant reputational damage and financial loss when a mixed martial arts fighter they had partnered with was found guilty of sexual assault.
The speed at which things can go viral on social media makes navigating these partnerships more difficult.
Drinks companies have been linked to allegations of child labor and worker exploitation in their supply chains. Many drinks manufacturers rely on contracted and subcontracted suppliers across the globe, making it difficult to monitor and control working practices and increasing the risk of being unwittingly complicit in employee abuse. Being linked to such practices, whether knowingly or unknowingly, can cause severe reputational damage.
Drinks brands are frequently named as being among the top global plastic polluters. A large percentage of bottles, including those that are recyclable, end up as waste with some ending up in oceans where they break down into microplastics. Additionally, drinks manufacturers face criticism for groundwater extraction in areas where water sources are already depleted. Their energy consumption and long-distance logistics also put them in the spotlight.
Willis, a WTW business, has developed a holistic reputational risk management solution, which includes Polecat risk monitoring which tracks live sentiment, and offers insights into public opinion through analysis of social media, to help prevent negative publicity.
Our Reputational Risk Quantification measures likely damage if an incident does occur. Our crisis communications specialists will help you manage the media during and after an event, with Reputational Crisis insurance to cover you for any loss of gross profit you suffer as a result. The solution also includes Reputational Risk Benchmarking to assess your resilience against reputation risk in the future. To find out more, please get in touch.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
