Challenging Your Rival? Pay Your Lawyer First

Powerade may consider itself the more complete sports drink, but Gatorade considered that claim to be a complete lie. The No. 1 sports drink was so riled up by its competitor’s new ad campaign that last week it decided to invite Powerade for a serious workout—in a courtroom.Advertisers should pay heed to this case and others like it. When it comes to claims that brands make in ads, competitors seem to be feeling far more litigious and government agencies far more aggressive.That might be because the past six months have seen a spate of attack ads from brands ranging from Dunkin’ Donuts to Domino’s Pizza. Why now? Well, there is a recession going on out there. Consumers are spending less money and being more careful about where they spend it. That’s left many a brand feeling desperate—and suddenly willing to sock a competitor (even a category leader) in the nose.Beverages are one category hit especially hard by consumers’ spending reticence. Just check out Beverage Digest’s recent report about the carbonated soft drink segment; it bore the headline: “Years of growth wiped out. Category down 3 percent.” The news was just as bad for sports drinks, whose overall volume fell by 3.1 percent, per New York-based consultancy Beverage Marketing. Gatorade suffered a 2.5 percent decline.Hence, we return to Powerade, which is obviously trying to make a bold move out of second place. (And that’s a distant second, too; Gatorade’s dominance translates to roughly 80 percent of category sales.) It did it by tossing calcium and magnesium into the vat—giving it two more electrolytes than Gatorade—and then billing the reformulation as an “advanced electrolyte system.”Powerade’s strategy isn’t particularly unusual. The idea of marketing a value-added ingredient or two is pretty much standard operating procedure. Yogurts like Dannon’s Activia have incorporated probiotics; juices such as Tropicana have added calcium, and so on. But where Powerade appears to have gone wrong was the decision to take on a brand that has had its efficacy proven over the course of decades. It’s one thing to say: We’ve got two more electrolytes than Gatorade. (Which, after all, is true.) It’s quite another to say: Our sports drink is more complete and is an “upgrade” over Gatorade. Which is Powerade’s current claim.Gatorade was not amused, and it hit back with the statement: “More calcium and magnesium are found in tap water” than in Powerade ION4. Oh, and that statement did not appear on the bottle; it showed up with the court filing. Coca-Cola, which owns Powerade, says it has the science to back up its claims. But, then again, Coke always says that. Within the past five months, it’s been forced to settle a case regarding its claims for calorie-burning Enviga soda and it also was called out by the FDA over its vitamin soda, Diet Coke Plus. Meanwhile, Coke’s Vitaminwater ran afoul of the National Collegiate Athletics Assn. for allegedly containing some substances banned by the NCAA.Would it be shocking if Powerade’s claims rang false? Not really. But marketers should bear in mind that it’s not only rival brands that have gotten more aggressive about advertising claims, the FDA has, too. “The FDA will be acting as more of a watchdog than in the laissez-faire [George W.] Bush days, so all beverage companies are going to have to be more careful about some of the claims they make,” said Gerry Khermouch, editor of Beverage Marketing Insights. “In the meantime, if Pepsi thinks it’s detected a flaw in Powerade’s claims, then it can’t yet count on the FDA to get involved. It decided to act on its own.”It’s not alone, though. Company lawyers have been licking an awful lot of stamps for their threatening letters lately. Vitaminwater itself, which Coke acquired in 2007, has a long history of suing rivals that that looked or sounded a little too much like its brand. AriZona, notably, was forced to change its packaging.In a separate skirmish, Pom Wonderful took down Purely Juice last July. The small beverage maker was forced pay $1.5 million in damages after the court ruled its marketing was misleading.The litigious climate has even spread into the fast-food arena where it’s now somewhat of a trend to flame-broil mail from the competition’s legal department. Domino’s president David Brandon set fire to a cease-and-desist letter from Subway. Domino’s claims its sandwiches are preferred 2-to-1 over Subway’s. Captain D’s also ripped up a wrist-smacking letter from Red Lobster regarding its comparative ads. The shame of the matter is Powerade, which is now marketed by the same team behind Vitaminwater, finally has a chance to strike at Gatorade—which actually appears to be vulnerable. Its sales have softened, and it’s had to deal with Vitaminwater’s intrusion onto its turf. In fact, the enhanced- and flavored-water categories are one of the few bright spots in beverages. This, of course, comes at the expense of Gatorade, whose own sister brand SoBe Lifewater has ponied up serious dollars to lure consumers. It’s even hired football players Ray Lewis, Matt Light and Justin Tuck to hawk product.Perhaps that’s why Gatorade’s fighting back so hard. Whatever the reason, challenger brands be warned: If you’re going to pick a fight, have your scientists and lawyers ready for battle.

Brand Marketing

Challenging Your Rival? Pay Your Lawyer First

Kenneth Hein

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Kenneth Hein