The Media, Greedy Lawyers And A Lesson In Brand Assassination

New Orleans is the nation’s fifth largest litigation hellhole. The epithet isn’t going away anytime soon according to a highly inflammatory, if frivolous, lawsuit filed against LaCroix Sparkling Water. The law firm filing the claim is a two-person New Orleans plaintiff called Beaumont Costales with a unique business model. They believe in image building through populist slogans like a political campaign, communicating legal information to clients through text messages and emojis, and when it comes to doing legal homework, relying on Google. But the real specialty is in catering to journalists in need of a quick clickbait headline.

When the firm filed its claim against La Croix Sparkling Water, it alleged the product contains an ingredient found in insecticides. It turned out to be a legal sleight of hand because an orange fragrance is commonly found in household products. But when Time Magazine received the law firm’s press release, it picked the headline straight up:  Lawsuit Accuses LaCroix Seltzer of Containing Artificial Ingredients Used in Cockroach Insecticide. The result was to add credibility to an allegation that has cost the company dearly.

According to Guggenheim Research analyst Laurent Grandet, “The LaCroix brand has gone from bad, to worse, to disastrous in a relatively short period following negative media attention regarding the “natural” claim of the brand’s flavoring ingredients.”

In March, parent company National Beverage Corp reported that sales had plunged 5.8% for the quarter ending on January 26 from the same period the prior year. In May, sales continued to drop an additional 16%. So what was so distressing about the law firm’s tactics that consumers ran from their favorite bottled water product?

Time Magazine gave the allegations more credibility through social media shares and reposts than the law firm could have imagined. Although Time Magazine is now part of a digital media conglomerate specializing in women’s service articles, many people still believe it has the credibility of the old Time Magazine of Henry Luce.

Under the previous regime, the most basic fact-checking would have revealed, according to Gavin Sacks, an associate professor of food science at Cornell University, “the FDA considers the term ‘natural’ to mean nothing artificial or synthetic has been added to a food that would not normally be expected to be in that food.” National Beverage responded that all ingredients are natural, according to this definition.

Secondly, the two compounds the lawsuit alleges were in the drink are limonene and linalool, according to an interview LiveScience conducted with Sacks. “These are widespread in nature and the foods and beverages that people are consuming already. Linalool can be found in citrus fruit, cinnamon, rosewood and mints and limonene is found in citrus fruits like oranges and limes.”

The purpose of these compounds is to enhance odor, as “when you squeeze an orange or grate a lime, it will release limonene,” Sacks said.

What’s more, Sacks said that linalool isn’t the chemical that makes the insecticide toxic to the insects, it’s just added so that the product can have a pleasant smell.

Plaintiff lawsuits have always been a challenge for business, with a broken jury system that is designed to enhance their success. So what else is new?

In the past, the media stood its ground and measured the potential conflicts of interest by looking at all the facts before it took sides. Click-happy journalists in today’s world have no such principles and they will devote ink to anyone who can write a headline for them. Fact checking isn’t just optional anymore. It is an anachronism.

Like Reebok learned the hard way, LaCroix is understanding proactive brand management is an absolute must in 2019. If your company hasn’t figured it out, you have to be prepared to do more than build a brand, you need to defend it.

Jeff Cunningham: Jeff Cunningham is Chief Executive magazine's editor-at-large and a professor of leadership at Arizona State University/Thunderbird School of Global Management, where he has also endowed the Cunningham Global Fellowship for next-generation leaders. He also is the founder of Thunderbird Opinions poll of business trends. He was previously publisher of Forbes Magazine and CEO of Zip2 (founded by Elon Musk). Watch his YouTube interviews at Iconic Voices and connect on Twitter @CunninghamJeff and LinkedIn.