By definition crisis is a situation that has reached a critical phase (Crisis definition). Crisis is characterized by its lack of stability, unpredictability and short decision-making time. According to Fearn-Banks (1996) crisis is “a major occurrence with a potentially negative outcome affecting an organization, company, or industry, as well as its publics, products, or good name”. The negative consequences of a crisis are not limited; crisis can be, but not necessarily, a very serious threat to organization’s functioning and stability. Some scholars argue that an organization can benefit from a crisis situation if such is handled properly (Ulmer, & Sellnow, 2000). Communication scholars have been conducting multiple researches, seeking to formulate some generalized and applicable theories of crisis communication and crisis management. Since crisis is a crucial period in lifetime of an organization that can affect its future, understanding crises and knowing how to manage these difficult situations effectively are essential skills that corporate managers should posses. This paper will explore the crisis of Redux Beverages which was caused by controversy surrounding the launch of the new product.
On September 25, 2006, a new Las Vegas based brewing company – Redux Beverages launched a new energy drink called Cocaine. Since the first days on the market the drink has become very controversial. The public didn’t have a problem with the content of the new beverage, which is very similar to Red Bull or Monster. It was its’ name that people didn’t really feel quite right about. Redux Beverages’ CEO and inventor of Cocaine, Jamey Kirby thought that naming an energy drink after a dangerous narcotic was “a fun name”, the public, however, did not agree (“Cocaine drink claims” 2006). The negative publicity that Redux Beverages received as a result of the launch of new product led to the eruption of a reputational crisis. The public accused Redux Beverages of promoting and glamorizing drug usage among teens and young adults, who are the major target and consumer of energy drinks. Just about a month after the introduction of Cocaine a convenient store giant 7-Eleven decided to pull Cocaine from the shelves (Mooney, 2006). The controversy related to Cocaine energy drink continued throughout the fall and winter. People started questioning not only the name of the drink, but also the marketing strategy used by Redux to promote their product. On April 4, 2007 the Food and Drug Administration issued a warning letter notifying the firm that their product was marketed illegally as an alternative to an illicit drug and a dietary supplement. The letter from FDA claimed that “street drug alternatives, i.e., products that claim to mimic the effects of recreational drugs, are not intended to supplement the diet and, as a result, cannot lawfully be marketed as dietary supplements” (Douaud, 2007). Moreover Redux Beverages was accused of having identified some of the drink’s ingredients incorrectly as dietary supplements that could lower blood cholesterol, protect nerve fibers, or help patients with anxiety, depression and obsessive-compulsive disorders. The FDA threatened that the failure to respond to these violations would result in legal actions (Other, 2008). On May 5, 2007 Redux Beverages announced that the company decided to temporarily cease the distribution of Cocaine. In the same announcement the beverage’s makers notified consumers that the drink will be still available for purchase under a different name – Censored.
Redux Beverages crisis isn’t an example of a severe, dramatic case. Unlike some crises, Cocaine crisis wasn’t unexpected. The makers chose a scandalous name because they knew it would be controversial and as Jamey Kirby said “controversy sells” (Nizza, 2007). The controversy was expected and somewhat desired. Redux Beverages knew that breaking into the energy drink market was a very challenging task and that they had to...
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