Quick PR Response Averts Reputational Crisis and Returns Company to Profitability

Background

Investigations into a deadly strain of E. coli that had infected more than 65 people along the West Coast (resulting in the death of a 16-month-old child) traced the epidemic to unpasteurized apple juice that had been tainted with the bacteria.

The culprit, a small natural foods company by the name of Odwalla, saw its corporate leadership descend into a state of panic, recalling all products containing traces of apple within the first 24 hours of the outbreak. In a bid to stabilize the crisis (and stay in business), Odwalla sought the services of a PR agency whose experts immediately set out to curtail further damage and begin the process of repairing the brand’s stricken image.

Response

To adequately respond to the enormous influx of reporters’ inquiries, agency professionals established a media center which, on the first day alone, responded to more than 200 press-related phone calls. For consumers, a 1-800 number was also created to answer any questions or concerns.

At the recommendation of the PR team, arrangements were made for Odwalla’s Chairman to visit and speak with affected families, resulting in a headline in the Oakland Tribune that read, “Odwalla Chairman Apologizes as Outbreak Spreads.” The positive mention signalled what was the start of recovery for the company’s reputation.

Result

At the height of the crisis, Odwalla saw sales plunge by 90 percent, culminating in a substantial downsizing of its workforce. Despite the seemingly irreversible spiral toward bankruptcy, the company’s fortunes soon began to improve as a result of its PR investment. Initially reporting on the extent of the outbreak (along with naming those responsible), media attention began to focus on the company’s admirable efforts in providing the public with all the necessary facts. Through publicized monetary donations, payment of fines, settling of lawsuits and measures taken to prevent future outbreaks, corporate leaders began to amass wide-scale praise for their honesty and responsible actions.

Just one year after the crisis, Odwalla unveiled a new line of beverages, expanded its interests into the energy bar market and once again became profitable. By 2001, with the E. coli threat long since subsided, Coca-Cola obtained the Odwalla brand for $181 million – a stark contrast to the financial ruin that could have been, had public opinion remained unchanged.

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