Odwalla

Evan, Thomas J

Late in the evening of October 30, 1996, health officials in the State of Washington alerted the management of fresh-juice maker Odwalla, Inc. of Half Moon Bay, that there was an epidemiological link between a number of cases of E. coli 0157:H7 and Odwalla fresh apple juice (October 31, 1996, News Release).

Within a matter of hours nearly 200 Odwalla Inc. delivery trucks were enroute to retrieving the juicemaker’s apple juice products from retailer’s shelves in seven states (California, Colorado, Texas, New Mexico, Oregon, Nevada and Washington) and Canada. The voluntary recall was made effective immediately after the company learned of a possible link between cases of E. coli infections among people who had consumed the products. The recall of Odwalla products was not demanded by any regulatory authority and was completely voluntary (Nov. 2, 1996, News Release).

Odwalla was founded in 1980 by three musicians with the dream of a healthy world. Long-time friends Greg Steltenpohl, Gerry Percy and Bonnie Bassett started squeezing fresh orange juice in Santa Cruz, California. Their only business plan at the time was a vision: make great juice, do good things for the community and build a business with heart, nurturing relationships with humans and the environment. Odwalla’s “People to Planet” philosophy is reflected in:

Restorative Agriculture

Odwalla supports farming practices that go beyond eliminating the use of chemical fertilizers and pesticides to actually rebuilding the soil. Odwalla does this by working closely with small family farms, developing sustainable citrus-growing techniques, and buying organic and biodynamically grown ingredients for its products.

The Femme Vitale Scholarship

Named after its popular nutritional drink for women, this annual scholarship program awards funding to women in financial need who are actively pursuing degrees in health and/or nutrition.

One of Odwalla’s earth slogans is “Soil to Soul” which means that at “Odwalla, caring for our communities – both internal and external – is an ongoing business practice.” This type of philosophy of caring for the environment and people has won many awards and honors for Odwalla, among them:

1998 Brandy Award for Brand Culture, Build Brand Value Conference

1997 “20 Better Places To Work,” Mother Jones

1997 Clean Air Award, American Lung Association

1995 Outstanding Corporate Environmentalism, Business Ethics Magazine

1994 “Companies Who Care” Award, City Woman Magazine

(Nov. 6,1998, Website)

This Odwalla case study will show how the philosophy for supporting others helped Odwalla take control of a crisis and, in the face of adversity, come out on top as the new leader in the fresh juice business.

Case

On October 30, Odwalla management was notified by the State of Washington Environmental Health Services of an epidemiological link between several cases of E. Coli 0157:H7 and Odwalla’s apple juice product. Based on this preliminary information, the company enacted a voluntary recall of all its apple and apple-based juices. As an additional precautionary measure, the company recalled its carrot and vegetable juices, because they are processed on the same line as the apple juice.

On November 4, the Food and Drug Administration (FDA) tests confirmed one of Odwalla’s apple juice samples tested positive for E. coli 0157:H7 bacteria. It was positively identified in a 16-ounce container of apple juice retrieved from the Tukwila, WA distribution center.

On November 8, Odwalla was very saddened to learn from the Center for Disease Control of the death of a young child in Denver, Colorado. The company was notified by health officials that this child has been associated with the recent E. coli 0157:H7 cases which have been linked to Odwalla apple juice. On November 13, FDA completed testing of the 16-month-old child’s blood serum. The test confirmed the presence of serum antibodies to E. coli 0157:H7. Other tests conducted by the State of Washington revealed a match, via molecular fingerprint testing, between four confirmed cases in Colorado and 10 cases of E. coli 0157:H7 in Washington (Nov. 6, 1998, Website). On November 15, a field inspector report from the FDA was filed about the Dinuba processing facility. As the report only mentioned positive findings, the absence of any discussion of E. coli 0157:H7 confirmed that E. coli 0157:H7 had not been found at the facility (Nov. 18, 1996, News Release).

Analysis

On October 31, Odwalla hired Edelman Public Relations’ San Francisco office to handle all aspects of the company’s crisis communications. Edelman worked non-stop on the project from November 1 to December 17, when Odwalla made a presentation to the FDA on the need for mandatory pasteurization. Matthew Harrington, executive vice president and general manager, and Lori Smudsky, vice president, of Edelman Public Relations, San Francisco, headed a six-person team to handle the crisis. Sydney Fisher, Odwalla’s public relations person, also worked on the crisis. Edelman was hired by Odwalla because of its experience in handling crises. The communication crisis team was Sydney Fisher, Robin Joy, director of marketing, for Odwalla, Matt Harrington and Lori Smudsky (Nov. 1996, Edelman). The first few objectives that the team wanted to achieve were media training the staff at Odwalla, establishing open lines of communication, deciding how to handle the flood of calls and telling the media the truth. First the crisis team made sure that all information was made available to all company spokespeople and that Odwalla executives were available for every media request. The summary of media information was obtained each morning by 6:30 a.m. and distributed to the executive committee of Odwalla. The crisis team also crafted and created key messages to be sent to the media, along with any new information. Odwalla held media updates every day at 10 a.m. and 3 p.m. at its Half Moon Bay headquarters (Nov. 1996, Edelman).

Communication with consumers was established with a website and a 1-800-Odwalla number. The 800-number was staffed 20 hours every day. The crisis team also had top executives of Odwalla make personal calls to all 4600 accounts within 18 hours. Fisher, PR Director, was the voice of Odwalla to all media and the head of the media response team. Fisher took incoming calls from the media and sent information kits to the callers. News was issued on the wire as it was available, and depending on the news, a conference call, news conference or satellite conference was scheduled. Fisher and Smudsky would only grant individual interviews to correct misinformation and to highly sensitive markets and opinion leading publications. Fisher also provided a list of recommended interviews for Greg Steltenpohl, chairman of Odwalla, and Stephen Williamson, chief executive officer, of Odwalla by 2 p.m. each day to be given either that afternoon or the next morning (Nov. 1996, Edelman).

Edelman also helped Odwalla form an advisory board. The Nourishment and Food Safety Advisory Council was formed to develop industry leading processes for safe and nutritious juice. The company initiated “flash pasteurization” for their apple juice as an interim process. This new state-of-the– art safety procedure treated the apples for a shorter amount of time with an immediate cooling system afterward (July 23, 1998, Website).

The crisis team was concerned about negative media coverage. Although they were unable to admit media into the plant because of logistics while the FDA representatives were there, they did provide footage for media use. Odwalla voluntarily let the FDA into the plant to inspect it. This showed that Odwalla had nothing to hide and caused no speculation by the media that could have resulted in unfavorable media coverage (Nov. 1996, Edelman).

Assessment and Keys to Success

Odwalla succeeded in obtaining favorable coverage in the media, using the media itself to communicate key ideas and human empathy to its consumers and the families affected by the E. coli virus. Another reason for its success was the extraordinary consumer interest. There were 44,000 hits on the website, with 20,000 of those hits happening in the first 48 hours of the website being on the Internet and over 3,000 calls to the 1-800-Odwalla number (Nov. 6, 1998, Website). Mandy Meidan of Edelman Public Relations said, “Being able to communicate to the public and media via the Internet revolutionized communication crisis” (Nov. 18, 1998, Phone Interview).

In interviewing Meidan of Edelman Public Relations who worked on this case and Jerilyn Pelikan of Odwalla, currently the Voice of Odwalla, both said how devastating the death of the child in Colorado was. “Very heart wrenching and upsetting… Greg personally flew out to Colorado to pay his and the company’s condolences to the family. A scholarship fund was established in her name,” said Pelikan. That child’s family did not sue Odwalla for what happened.

Although a child died and others became ill from E. coli, Odwalla received a favorable response from the public. Public opinion polls showed that 97% of the public felt that Odwalla responded well to the crisis. Thus only 3% felt that response was not appropriate or enough. Another public opinion poll showed that 56% of the respondents were more favorable toward Odwalla as a result of its response to the crisis, 10% were less favorable and 34% had no change. Not only did public opinion polls show a favorable response from the public, but also positive letters from customers confirmed their support for Odwalla during the crisis (Nov. 1996, Wirthlin Worldwide).

Odwalla’s handling of the E. coli crisis was exceptional. By hiring Edelman, the company received help in crisis management from an experienced firm. By being open and empathetic with the public, consumers and media, Odwalla was able to seize the initiative and take control of the crisis before it destroyed the company. By knowing its audiences, Odwalla was able to effectively communicate its key messages by effectively using the media to its advantage during a crisis period.

Odwalla also was successful by co-operating with the FDA and helping to form new state-of-the-art safety procedures. By inviting authoritative bodies and using credible experts, the company crushed media speculation. Dr. Douglas Archer, former Deputy Director at the FDA’s Center for Food Safety and Applied Nutrition, said, “Odwalla’s facility is the best I have seen with regards to systems aimed at assuring product safety” (July 23, 1998, Website). Odwalla is the first in the industry to invest in a hyper-sanitized “clean room” where juices are blended and bottled. Stephen Williamson, Odwalla’s Chief Executive Officer, said “We’re proud to be leading the industry in safety and quality” (July 23, 1998, Website).

In researching this case, I found Odwalla’s “people philosophy” and dedication to the environment were huge factors in their success. This company was founded by friends who truly wanted to produce the best product while helping the community at the same time. I am a consumer of Odwalla products and consider them to be the best in the industry. Odwalla is truly a remarkable company and leader in the fresh juice business.

References

October 31, 1996, News Release, “Odwalla Product Recall”

July 23, 1998, Website, “Odwalla Leads The Industry In Quality Insurance”

November 6, 1998, Website, “Awards & Honors Received by Odwalla”

November 1996, Wirthlin Worldwide, Consumer Survey

November 12, 1998, Jerilyn Pelikan, Voice of Odwalla, Phone Interview

November 18, 1998, Mandy Meidan, Edelman Public Relations, Phone Interview

November 8, 1996, News Release, “Odwalla Expresses Condolences To Denver Family”

November 2, 1996, News Release, “Odwalla Completes Recall”

November 4, 1996, News Release, “Odwalla Confirms FDA Finding of E. Coli”

November 8, 1996, News Release, “Tests Results Confirm Presence of E. coli 0157:H7”

November 18, 1996, News Release, “FDA Report Indicates No E. coli 0157:H7 Found at Dinuba Plant”

November 1996, Edelman Public Relations, Communications Crisis Team Strategy

November 11, 1996, Roberta Heien, Letter to Odwalla

November 6, 1998, Website, “Consumer Interest and Support”

November 6, 1998, Website, “Chronology of Events”

Thomas J. Evan has just received his degree in communications from the University of the Pacific, Stockton, CA. Coincidentally the first winner of the Bernays Cup for Writing in 1991 was from the College of the Pacific.

Copyright Public Relations Quarterly Summer 1999

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