Comment - Spirits - SPI Group Quells the Stolichnaya Crisis
As SPI Group looks to weather a boycott of Stolichnaya in the US, Chris Mercer considers what steps a drinks company should take if - or when - a crisis hits.
The recent reports of bars ditching Stolichnaya vodka are hardly ideal for the brand, particularly as it nears a change of distribution in the key US market, but owner SPI Group is winning plaudits for its handling of the crisis.
Columnist Dan Savage's call for the lesbian, gay, bisexual and transgender community (LGBT) to "dump Stoli" in protest at gay rights restrictions in Russia continue to reverberate across bars in US cities and beyond.
This boycott is somewhat misplaced, however well-intended it may be as a riposte to the Russian government's dismal stance.
Not only is the Stolichnaya on US shelves distilled in Latvia - albeit using Russian ingredients - but almost anybody would probably have a better chance than SPI Group CEO Val Mendeleev of gaining President Putin's ear on the issue of gay rights; such is the ongoing tension between federal bodies and SPI over Stolichnaya ownership, already explained by my colleague, Andy Morton.
Still, SPI Group finds itself in a corner. It's a particularly sticky situation given that the Luxembourg-based, private company intends to switch to its own distribution arm in the US come the end of the year.
So far, though, the drinks sector-at-large could do worse than observe SPI Group as a case study for crisis management in the social media age.
“They're doing a lot of the right things,” Simon Taylor, a senior partner at specialist crisis management consultant The Redcote Consultancy in the UK, tells just-drinks.
He highlights three key things that companies should do when their brand's reputation is under threat in this way. First up is "respond reasonably quickly, which I think [SPI] has done”, says Taylor. “On their website and Facebook page, they've put a clear statement out there from the CEO [Mendeleev].”
Second of all, Taylor says it's important to engage with users on Twitter and Facebook. "The mistake is to let messages that aren't true perpetuate in social media,” he says. “It's also important that the tone of voice reflects the brand, so that it doesn't come across as a corporate statement that has been drafted by a group of lawyers.”
Thirdly, it's helpful to garner support from third parties who are respected by the protesters. This is the Holy Grail of crisis PR. In this case, Taylor says LGBT community leaders could lend real weight to SPI's argument. “It's much more powerful to get third parties to speak on your behalf.”
This is already happening, to some extent. Several media outlets and Tweeters have set about countering the boycott campaign. LGBT campaigners in Latvia, meanwhile, have publicly asked their friends in North America to back off.
On this evidence, while Stolichnaya is taking the brunt of initial protests after having spent several years courting the LGBT community, perhaps some other brands that have been hitherto silent on the matter should be more concerned. Russian Standard, for example, has taken some flak on Twitter over the same issue, but has yet to officially respond.
Taylor says the internet, and social media channels in particular, have accelerated everything. "Companies have got to respond in real-time," he adds, warning that "rumours will fill any vacuum".
Nevertheless, history shows mixed success for consumer-led boycotts. Some have achieved broad-based support and impressive longevity, such as a near-25 year boycott of The Sun newspaper in the UK city of Liverpool following accusations made by the paper in the wake of the Hillsborough football disaster in 1989.
Success is difficult to measure, however: I've previously asked Nestle about the detrimental effects of long-term consumer boycotting and the firm pointed to its bulging top-line.
In vodka specifically, calls by anti-immigration groups to boycott Absolut in the US in 2008 do not appear to have impinged on the brand's health, with volumes of 11.4m cases in Pernod Ricard's fiscal year to the end of June 2012.
For those deemed guilty by association, recent thinking on a supposed US consumer boycott of French wine* at the time of the country's opposition to the second Iraq war in 2003 is that it failed to significantly alter a pre-existing sales trend.
And yet, there are some reasons why the latest Russian vodka case could be viewed more seriously. The LGBT community is reasonably tight-knit and the self-styled boycott leader and writer, Mr Savage, is widely syndicated.
The action is also relatively convenient for drinkers, because bars are taking a lead ahead of individual consumers, and alternative vodkas are widely available.
Yet, long-term boycotts are deemed rare. “Consumers have pretty short memories on the whole," says Taylor. Plus, in this case, SPI can claim mistaken identity.
One analyst who did not wish to be named says he expects the boycott of Stolichnaya to be “short-lived”. “At the end of the day,” he tells just-drinks, “consumers know that Stoli has no influence over Russian politicians”.
Last year, a survey of 5,362 adults over 21 years of age in the US found that 9% said they drank Stolichnaya, making it the seventh most popular brand within the sample group, according to Mintel/Experian Simmons.
There is a separate debate that could be had about whether SPI Group was previously clear enough about Stolichnaya's origins. That it has openly supported LGBT communities, however, is not in doubt.
More broadly, this case should provoke a bit of navel-gazing elsewhere in the drinks industry. Brands can't take anything for granted, need to be aware of consumers' ethical concerns, and must be ready to respond at the first sign of trouble, wherever it arises.
*See: Ashenfelter, O., Ciccarella, S., Shatz., H.J. (2007) 'French Wine and the U.S. Boycott of 2003: Does Politics Really Affect Commerce?' in Journal of Wine Economics, 2(1); pp55-74.
With recent claims that China has become the world's biggest consumer of red wine, Chris Losh considers what wine producers can learn from the current travails facing international spirits companies i...
Over the last 10 years of rapid acquisitions, Pernod Ricard has built a strong portfolio of premium brands on a global scale. Most of its brands enjoy a leading position in international markets. The ...
Nestle SA (NESN) - Financial and Strategic SWOT Analysis Review provides you an in-depth strategic SWOT analysis of the company’s businesses and operations. The profile has been compiled by GlobalData...
The flavoured vodka category has been a growth engine of the spirits sector for some time, but new research from just-drinks suggests that the sub-category no longer represents the easy route to growt...
Canadean's "Nestle (Lanka) Ltd. - Company Capsule" contains in depth information and data about the company and its operations. The profile contains a company overview, key facts, major products and s...
MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organi...
- Interview - Bacardi global marketing boss, whisky
- Has Coca-Cola Jumped From Frying Pan to Fire?
- Constellation grapples with glass as reality bites
- Comment - Hybrid Spirits: Innovation or Laziness?
- Focus - Heineken's H1 Performance by Region
- Diageo doubles intake for spirits start-ups scheme
- Second senior exec to depart Bacardi
- Diageo appoints head for Asia marketing unit
- Bacardi sees North America president step down
- Portman finds against Diageo "mix it up" tagline