CASE STUDY: ODWALLA FOODS

Odwalla Foods is a company that promotes a healthy lifestyle,

and sells a plethora of juices and granola bars. In their website, they
are quoted saying, But a company is way more than just its name. It's
even more than its products. That's why we take extra steps to be
good to our environment and our community, ("Odwalla corporate
website," 2012). However, 16 years ago Odwalla went through a crisis
that could have easily destroyed them.
TIMELINE OF THE ODWALLA E. COLI CRISIS

October 30th,
1996
The E. coli
outbreak is
first linked to
Odwalla
Foods.
Odwalla
immediately
issues a recall.

October 31st,
1996
Odwalla hires
PR firm.
FDA Launches
14 month
investigation

November 1st,
1996
Odwalla
expands recall
to include carr
ot juice, and
offers to pay
medical bills
Odwalla
launches
website

November
2nd, 1996
Recall is
completed

November
4th, 1996
FDA links E.
Coli and
Odwalla

November
5th, 1996
Odwalla
announces
potential
new heat
pasteurizati
on process

(Ward, 2011).
The crisis began in October 1996. On October 30, 1996 health
officials in the state of Washington informed the company that they
had discovered a link between several cases of E. coli and Odwalla

fresh apple juice. The link was confirmed on November 5. As the crisis
played itself out, one child died and more than 60 people in the
Western United States and Canada became sick after drinking the
juice, (Baker, 2011).
While an outbreak of E. coli is serious for any company linked
with the Food and Drug Administration, the fact that a child lost their
life due to circumstances make this crisis much larger. A crisis where
there is not only a recall, but loss of life is likely different than other
types of accidents like natural disasters. Victims and potential victims
of these types of crises might be more heavily invested in searching for
current information and further research into how organizations can
maintain and provide continual updates is worthy of study, (Coombs &
Holladay, 2010). How a company handles the situation after a death is
crucial. Luckily, Odwalla took the right steps to restore their reputation.
Odwalla acted immediately. Although at the point where they
were first notified the link was uncertain, Odwallas CEO Stephen
Williamson ordered a complete recall of all products containing apple
or carrot juice. This recall covered around 4,600 retail outlets in 7
states. Internal task teams were formed and mobilized, and the recall
costing around $6.5 million was completed within 48 hours, (Baker,
2011). The company did the right thing by taking action immediately
after being notified of the link between their product and cases of E.
coli. If they hadnt done this they could have been held responsible not

only for spreading the bacteria but for not caring enough to speak up
and put a stop to it. Much like Johnson & Johnson in the Tylenol crisis,
Odwallas main concern was about their consumers health and took
responsibility by costing their company to recall the infected products
immediately.
Most public relations problems faced by individuals and
organizations result from organizational misbehavior. To defend their
actions, organizations use five typical responses: denial, counterattack,
differentiation, apology, and legal, (Lerbinger, 2012). The approach
Odwalla Foods took was apology. They apologized to the public as well
as the families effected the by the death and the illnesses. Odwalla
publicly promised to pay for all medical expenses of injured consumers
and to reevaluate its manufacturing process immediately, ("Mcgrawhill," 2011). Many PR professionals would argue that if Odwalla wanted
to keep any shred of their reputation intact, offering to pay for medical
expenses and taking immediate action wasnt even an option, it was
something that had to happen. According to the readings, Different
types of message strategies used by organizations in crisis are
repentance, remediation, and rectification, (Coombs & Holladay,
2010). Odwalla used all of these message strategies in this situation.
They apologized, offered to handle costs, and later developed a
technology that assured bacterias would not be present in their
products.

Odwalla received so much praise for the way they handled the
crisis, and many people felt that they were actually victims in the
situation. The public largely believed Odwallas explanations because
its reputation for social responsibility was iron-clad in its consumers
minds. Even the parents of the child whose E. coli-related death had
ignited the crisis were quoted as saying that they didnt blame the
company for her death and that Odwalla had done everything they
could have under the circumstances, ("Mcgraw-hill," 2011). However,
upon closer observation it came to the attention of some that Odwalla
was aware of the possible crisis yet did nothing to prevent it. A report
surfaced that indicated that the U.S. Army had rejected Odwallas
proposal to sell their juice in U.S. Army commissaries after an Army
inspector found uncommonly high levels of bacteria in a sample and
concluded that the risk of contamination was extraordinarily high. The
Army rejection had taken place four months prior to the E. coli
outbreak, ("Mcgraw-hill," 2011).
Odwalla should have taken the previous issues seriously to
prevent the death of a 16-month-old child. To ascertain uncertainty is
difficult, but some attempts to predict the likelihood of certain kinds of
crises can be made by estimating statistical probabilities, giving
attention to those occurring most frequently, (Lerbinger, 2012).
Although it may be viewed as common knowledge that any company
should be on the lookout for potential crisis, this wasnt the case for

Odwalla. Stephen Williamson, CEO of Odwalla was quoted saying, We

had no crisis-management procedure in place, so I followed our vision
statement and our core values of honesty, integrity, and sustainability.
Our number-one concern was for the safety and well-being of people
who drink our juices (Baker, 2011). While Williamson made a good
choice to put the customers health and well being first, it could have
been prevented if the company looked at the warning signs in relation
to the E. coli virus and created a plan in case any of their products
became contaminated and had to issue a massive recall.
In my opinion, while Odwalla didnt take the necessary measures
to avoid the crisis, and even ignored the early warning signs, they did a
good job of handling it when it did occur. Not only did they take the
action of recalling the products within 48 hours like I mentioned earlier,
they also created a website immediately. External communications
were just as vital. Within 24 hours, the company had an explanatory
web site (its first) that received 20,000 hits in 48 hours. The company
spoke to the press, appeared on TV and carried out direct advertising
with the website address, (Baker, 2011). Creating the website in 1996
was brilliant, considering not all companies utilized the Internet at that
point in time. Today, a website with up to date information should
always be used during this type of crisis. In a five-year study of crisis,
it was found that over 80 percent of organizations experiencing a crisis
posted a news release on their websites. An organizations homepage

has also become an important element in communication, (Coombs &

Holladay, 2010). Even in 1996 Odwalla Foods knew this and used it to
their advantage as a way to reach out to concerned customers and
people who wanted to know the details about what was happening at
the time of the unfortunate crises.
By utilizing technology and thinking about the consumers needs
ahead of their own, Odwalla Foods gained back the trust and revenue
they desired. While they had no plan in place before the crises, they
acted quickly and became an example to other companies going
through a similar situation.