Hangover cure finds a lifeline in downturn
THE roar of the Celtic Tiger drove most companies through the boom years, but it's the roar of a 1973 Pontiac Firebird that holds the recovery hopes of Lifeline Hangover Defence.
On the road since March, the fully-branded monster of a car is Lifeline's key play for the hearts and minds of the many thousands who've yet to sample the seven-year-old hangover preventer.
"When Boots open a new store we'll park it outside for a few days and hand out samples. When freshers' week is on in universities we'll park it in the car park and do the same," says Lifeline boss Kevin Haig.
"Other times we drive it around and people look at it and go "ahhh". It's a fine-looking car, it's an effective cheap way for us to attract attention."
Originally Haig's hobby car, the Pontiac was earmarked for commercial labour back in January when Haig and fellow Lifeline director Tom Colgan ran the rule over their business prospects for 2009.
Having gotten their trade-marked hangover preventer on to the shelves of every pharmacy in Ireland, plus hundreds of grocery stores, sales at the company peaked at close to €700,000 in 2006.
A disastrous foray into the UK "crippled" the company in 2007, making 2008 the year for Lifeline to refocus on its Irish business and pay off the debts built up as the UK venture went south. Then, disaster struck.
"Grocery sales fell off a cliff in August," recalls Haig, attributing the fall to people drinking less and opting to take a hangover instead of the "luxury" of a €2.99 Lifeline dose. "Myself and Tom looked at 2009, we saw there was a big storm approaching, and we realised we were going to have to do something pretty drastic."
The most drastic part of their plan saw staff reduced from three packers, a book-keeper and the two directors to just the two directors, who took over manually stuffing Lifeline's boxes themselves.
"That was very difficult," adds Haig, an occupational psychologist by trade who fell into the supplements industry after a HR role for a volatile Norwegian energy trader evolved into developing one of his pet projects, an appetite suppressant.
With Lifeline's costs under control, Haig and Colgan turned their attention to the top line. The Pontiac was enlisted to boost Lifeline's profile and a €2,500 paint job was undertaken. Every other advertising play was analysed with military precision.
The duo then tried to contain a migration from their €13.99, 20-capsule multi-pack to their €2.99, two-capsule pack by adding a €6.99, 10-capsule product for people to trade down to.
The new medium pack was designed to have the same dimensions as a cigarette box, enabling Lifeline to get the capsules into high-end cigarette vending machines across Dublin. A separate partnership with vending machine experts Freshen Up has seen Lifeline added to 9,000 vending machines nationwide.
"Before, we've been really short on distribution at the point of consumption. Pubs have are loathe to stock a product that's dry and small because it gets lost and wet," says Haig. "Vending machines solve that problem for us."
The recession has also seen off-licences, who resisted Lifeline's initial overtures in 2001/2002 come knocking. "Now the brand's established we have off-licences calling us up (asking) 'do you still do that Lifeline stuff?'," says Haig.
"People are drinking cheaper alcohol at home, which tends to give worse hangovers. A few years ago a hangover at work was almost a badge of honour, now people's jobs are much less secure and they need to look sharp."
All in, Haig expects 2009's sales decline to be limited to about 20pc, with the business still turning a profit and returning to growth in 2010.
Farther afield, international markets feature strongly in Lifeline's 2010 plans, though the duo will be taking it softly-softly this time round after losing almost €300,000 on their UK adventure.
Haig blames that failure on €2m worth of bank funding that was promised and then revoked, as well as the difference between the pharmacy model in Ireland, where Lifeline could make representations directly to owners, and the model in the UK, where Lifeline found itself presenting to big chains' "junior purchasing managers who were about 12".
THE company has since returned to the UK, using a local partner for sales and distribution, and has set up similar arrangements in Norway and the US.
"The local companies have enough margin to do their own sales and advertising, and the UK is starting to gain traction now," says Haig.
"We're looking at Germany as a serious potential market -- they're big drinkers -- and there'd be an opportunity in Australia where they've a similar drinking mentality to Ireland."
Lifeline is also fine-tuning a "recovery" product that people can take the morning after and hopes to launch that next year.
With all those expansion plans in the pipeline, Haig could be expected to show some excitement about an upcoming meeting with an individual who has expressed an interest in stumping up some cash.
He doesn't. "Having been burned once I just don't know," says Haig.
"There's an element of us not needing the money, we can develop products on a shoestring, and after the UK I'm not really keen on taking on a lot of money and spending it developing a market myself.
"That said, if someone came along and offered to put x million in to take the product global, we'd certainly look at that."
- Laura Noonan
Irish Independent
