Loose Lips Can Sink Sales : Rumormongers Damage Company Images
It didn’t seem like a big deal at first. A casino employee in Sparks, Nev., asked a local beer distributor about it, just before the Memorial Day weekend. But things got more ominous when a grocery store chain in Northern California wanted Corona Extra removed from its shelves.
And that was just the beginning. False accounts that the fashionable brew contained urine spread crazily. A version in Colorado Springs, Colo., had it that workers in Corona’s brewery in Mexico City were relieving themselves in a vat. Rumormongers in Tucson showed big imaginations: They placed the contamination level at 73%. Other accounts had it at 2% or 20% or 22%.
By the end of July, questions about Corona beer had spread among beer vendors throughout much of the United States--and even beyond. A potential importer from Israel called Chicago-based Barton Beers to ask if it was true. “It’s ludicrous,” said Michael J. Mazzoni, vice president of Barton, which is Corona’s major U.S. importer. “That’s really the frustrating part.”
Bizarre Phenomenon
Corona’s dilemma is the latest example of a bizarre phenomenon that arises seemingly out of nowhere to threaten the name of well-established companies and products. Nightmare-like rumors--that fast-food companies use red earthworms in hamburgers, that corporations are in league with Satan, that retail stores sell coats with poisonous snakes in them--have circulated often in recent years.
The tales mutate as they spread, forcing beleaguered businesses to fight ever-changing targets. The worms-in-burgers story, for example, first latched onto Wendy’s and other fast-food restaurants in the Chattanooga, Tenn., area several years ago. It then followed the highway to Atlanta, probably with the help of truckers, where it became associated with McDonald’s restaurants. The spurious tale that a Brazilian worker fell into a vat of Coca-Cola was ultimately transformed into a story of two workers plunging into a vat--in Japan.
“The rumors are quasi-mystical,” said Fredrick Koenig, author of the 1985 book “Rumor in the Marketplace” and a professor of social psychology at Tulane University in New Orleans. “You don’t know where they come from. You don’t know where they go. They have a life of their own.”
Corona’s is a classic case of what Koenig calls the contamination rumor, a story that claims that a product is tainted or has a dangerous defect. Fried chicken companies, for example, have faced hearsay that their batter caused sterility and that their stores served fried rats.
Motivation Behind Rumors
However preposterous the tales, they seem to thrive for the most basic of reasons: It makes people feel good to tell them. “Here you are--a little guy--and your job is threatened, and you hear something about a big company being sleazy, and it makes you feel better,” Koenig said, adding that people who feel ignored by others may find a special temptation to spread rumors. “If you have a sensational story, for a brief moment people will pay attention to you.”
In contrast to the Corona-type contamination rumor, there is the conspiracy tale, spread by people in response to their views and fears of the world. Concerns about the Unification Church and its member “Moonies,” for instance, have fueled rumors that the church controlled Entenmann’s Bakery and various other companies, Koenig said.
The strength and breadth of such sentiments should not be underestimated. Does the notion of a giant company being hooked up with Satan sound a tad exotic? In 1985, Procter & Gamble chose to phase out its moon-and-stars corporate symbol after thousands of people questioned whether it betrayed a link to devil worship.
Sales Hurt
Although the financial cost of a rumor is hard to pinpoint, it typically hurts sales in areas where it is rampant, takes up the time of company officials and can require new advertising to protect a product’s image. Understandably, bewildered Corona executives, like earlier victims, tried at first to keep things low-key and hoped that the problem would fade.
Part of their approach was to warn certain competing distributors in writing to talk to any employees guilty of rumormongering. When one employee apparently persisted, Barton sued for $3 million. In a settlement in early July, Luce & Son of Reno--which handles Heineken and Miller beers--attested in writing to Corona’s purity. In addition, Barton officials quietly reassured distributors and retailers, who feared enormous lawsuits from customers if the story had any truth to it.
But the story did not go away. Mazzoni and his general counsel, Fred Mardell, returned from a business trip to China at the time of the legal settlement and found that the tale had been migrating throughout Nevada and into California, Washington and other states. At this point, they formed a crisis-management group composed of top executives, as well as representatives from advertising and public relations firms.
Early on, the group considered hiring a private investigator to trace the rumor’s origin. But the magnitude of the importer’s territory--25 Western states--seemed sure to doom such a strategy. “Where do you put the guy (private investigator)?” Mazzoni asked.
On July 9, as it continued to spread, Barton sent 50 major wholesalers an information packet that documented Corona beer’s purity. The cover letter noted that the rumor was being spread unwittingly by consumers, waitresses, bartenders and sales clerks. The following day, Barton mailed 250 wholesalers notice of its out-of-court settlement with Luce & Son, the competing distributor.
The crisis group tried to monitor the rumor’s capricious journey by making conference telephone calls to wholesalers in California and Nevada. “It wasn’t the most scientific research, but we had a sense of what was happening in the marketplace,” Mardell said.
An aspect of the phony tale--that the contamination had been reported on “60 Minutes” or another national news show--was particularly troublesome because it gave the story an aura of credibility. By late July, with the rumor wandering eastward into such cities as Chicago, Minneapolis and Milwaukee, Barton decided to take the unusual action of publicly declaring it false.
The importer did not say anything about urine in its July 28 news release, but pointed out that it never has gotten a single documented report of contamination. A fact sheet maintained that the brewer’s processes ensured purity, noting that the beer is brewed in a “closed system” and exposed to the air only for a few seconds, just before the bottles are capped.
Although Corona sales in Marin County and some other areas have fallen, it appears that Barton’s response is working. Reports of the rumor have dropped to a trickle in recent days, Mardell said. In any case, the importer’s decision to deal publicly with the problem has raised more than a few eyebrows in the marketing world.
The reason is simple: Corona was not really hurting. Despite some sales drops, Mazzoni said demand for the beer is so intense that the brewer has not been able to get enough railroad cars in Mexico to ship it to New York and most other major markets in the East.
“My experience says to live out the life of the rumor rather than confront it head-on, until you really start suffering from a big loss of business over a sustained period of time,” said Albert J. Tortorella, an executive vice president and director of crisis management at the Burson-Marsteller public relations firm.
Publicly confronting such hearsay can infuse a story with new life, marketing specialists warn. Edward Tauber, a market-research consultant in Palm Desert, Calif., pointed out that an honest denial can send contrary signals to the public. “By telling people there’s not a problem, they’re telling people that maybe there is a problem.”
What is more, the new publicity informs many about the rumor for the first time, risking that it will be spread much further. Even those who consider the Corona beer rumor absurd may still have a mental association that detracts from the experience of drinking the beer, at least temporarily. “What people are thinking in their short-term memory is ‘Corona--urine’--and that’s an unappetizing combination,” observed Kenneth J. Wisniewski, a professor of marketing at the University of Chicago.
‘Psychologically True’
Indeed, the deep symbolism of many rumors, sometimes triggering fear and prejudice, makes them hard to conquer. For instance, the false rumor that a consumer was bitten by a snake after putting on a K mart coat imported from the Far East struck a chord of anti-foreign sentiment, Koenig said. And it is perhaps no coincidence that the snakebite tale was especially popular in Detroit, where the automobile industry has been injured by Japanese imports.
Similarly, the Corona beer rumor may reflect anti-Latino prejudice on the part of some people who feel threatened by the large migration from south of the border. The beer itself is a newcomer to the U.S. market, rising meteorically to No. 2 among imports last year after its introduction in San Diego and Austin, Tex., in 1981.
“The real story here is why people are spreading it,” said Tom Pirko, president of Bevmark Inc., a Los Angeles firm that consults in the beverage industry, maintaining that the contamination story is “psychologically true” for many Americans.
That in mind, Pirko advises Corona to dump its “Cross the Border” ad slogan. “If we could point to one absolutely dreadful mistake now being made by Corona, it is the continuation of their ad campaign ‘Cross the Border,’ ” he argued. “The message inherent in the ad is danger.”
But for now, Corona plans to stick with the slogan, tell the truth in the news media and continue to put distributors on notice not to circulate the rumor. Already, it has warned competitors in Orange County, Marin County, Seattle and other areas to cease such whisperings and plans a mailing to more than 1,200 beer wholesalers throughout the West.
In any case, competitors who chose to spread the story have more to worry about than a date in court. “You never know where it’s going to end up,” Koenig said. “It might go back to you.”
