Alex Rodriguez and the Coco Water Wars
Some of my sports-minded friends are upset over what they believe is A-Rod’s ethical lapse concerning his endorsement of Vita Coco over its rival Zico.
|Did A-Rod commit a coco no-no?|
For those of you who are not sports fans or followers of trendy potables, I’ll translate.
Alex Rodriguez aka ‘A-Rod’ plays third base for the New York Yankees and is considered one of the best all around major league ball players. He not only is the youngest player to hit 600 home runs but has had 14 years in which he has batted in 100 runs. He has been paid handsomely for his prowess. In 2007, he signed a 10-year $275 million contract, the richest in baseball history. He is also known in other circles for dating actress Kate Hudson and currently seeing Cameron Diaz.
A-Rod’s endorsements are golden and consumers pay attention so it came as a surprise when he changed his allegiance from one coconut water drink to its main competitor. Quite frankly, I was taken aback to learn that the coconut water market is a $200 million space so a lot is riding on A-Rod’s say-so. Rodriguez is a large investor in coco water maker Zico. Although no one is saying how much, the number is rumored to be substantial. On the advice of his trainer, Rodriguez tried rival coco water maker Vita Coco because of all the electrolytes and potassium, and later pronounced: “This stuff really works.”
The folks at Zico winced, and it didn’t take long for A-Rod to sign with Vita Coco and be part of their latest ad campaign ready to launch next month.
In statement on CNBC read by his business manager Rodriguez explained: “I don't discuss my personal investments. What I will say is that since Zico changed their formula to concentrate, I felt that the taste and functionality was compromised and that’s when I started to only drink Vita Coco. I love the taste and purity of Vita Coco.”
Zico’s CEO Mark Rampolla told CNBC that he was blindsided by A-Rod switching teams. “We’ve been sending Alex our product for months. We've sent product to his house, locker room, spring training and he has requested it when he's traveling. Not only do we have video of Alex drinking our product from concentrate, but we have him recommending it. Our product from concentrate has the same nutritional value and has the same profile and, according to Nielsen, it is the number one coconut water SKU in New York.”
Is A-Rod guilty of a conflict of interest by endorsing one product through his investment and throwing it under the bus with his endorsement of its arch enemy?
Despite his switching allegiances, and confusing fans who hang on his every word, A-Rod is off the ethical hook. First, he changed his mind about which coco water he likes best. He’s allowed. Second, while his investment in one company and endorsement of another may have hurt Zico’s feelings – maybe even hurt their bottom line - it’s not any more of a conflict than owning stock in Apple, Google and Microsoft all at the same time.
Clearly, A-Rod should have told Zico first about his new coco water love interest before going public. After all, he is a major investor and they should have had time to prepare for his undermining their marketing efforts with his negative endorsement.
Apparently, the third baseman is hedging his bets in the coco water world and while it may been a bonehead move to do it the way he did it, it’s not unethical.
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Larry Kahaner has been a business journalist for more than 20 years, a former Business Week Washington correspondent, and the author of many books about business ethics including: Values Prosperity and the Talmud: Business Lessons from the Ancient Rabbis; Competitive Intelligence: How to Gather, Analyze, and Use Information to Move Your Business to the Top; and Say It and Live It; The 50 Corporate Mission Statements that Hit the Mark, (co-author).