CORPORATE COMMUNICATION

ASSIGNMENT

Topic:- Odwalla Foods Apple Juice E.Coli

Outbreak(1996) Case Study

Submitted To: Dr. Om Prakash

Submitted By: Shyamveer

Roll No. 16/IMB/045

 Introduction

The 1996 Odwalla E. coli outbreak began on October 7, 1996, when American food product
company Odwalla produced a batch of apple juice using blemished fruit contaminated with E.
coli bacterium, which ultimately killed a 16-month-old girl and sickened 66 people. Odwalla
made and marketed unpasteurized fruit juices for the health segment of the juice market.
Odwalla Juice Company was started in 1986 by a group of health-conscious friends living
together in the San Francisco Bay area. Organically grown fruit, the owners produced fresh
juice in the back shed of one of the founder’s homes and sold their juice by delivering it daily
to area restaurants. Perhaps the most essential part of their business model was their claim
that their juice was fresh from the fruit and without the pasteurization process that was used
by other juice producers. In fact, Odwalla was one of the pioneers of a wider movement in
the United States favouring more organic food consumption.
In early October 1996, an outbreak of E. coli   2   struck several West Coast states, including
California and Washington, and reached into western Canada as well.  E. coli is a potentially
deadly bacterium that develops as a result of contamination of food products or processing.
On October 30, 1996, health officials in the state of Washington notified Odwalla that they
were investigating a possible link between the E. coli outbreak and Odwalla apple and carrot
juice-this was the warning stage. After learning of the potential link, Odwalla’s executive
management team had an emergency meeting to discuss their response. Although there was
no demonstrable link at this point, Odwalla’s executive management team decided to
mobilize a voluntary recall of products containing apple or carrot products. This was a major
financial commitment involving the removal of Odwalla products from nearly 4,600 retail
outlets in seven states in just 48 hours. Washington state health officials confirmed a link
between a local E. coli outbreak and Odwalla’s fresh, unpasteurized apple juice.

Problems faced: -
In November, after various researches that were conducted, health officials in Washington
state confirmed & informed the company that they had discovered a link between several
cases of E. coli and Odwalla fresh apple juice.

One child died and more than 60 people in the Western United States and Canada became
sick after drinking the juice.

Sales went down by 90% .

Odwalla's stock price fell 34%.

MANAGEMENT RESPONSES
Internal team were formed to carry out the recall process.
Issued press released.
Took full responsibility of the situation.

OPERATIONAL RESPONSES
Two websites created within a span of two days.
Defended the sanitation process in the media.
Hot lines were created to answer questions.

COMMUNICATIONAL RESPONSES:
Williamson conducted daily conference calls with the employees and internal stakeholders to
update and allow their employees to ask questions regarding the crisis.

They created a website and included information that stakeholders would want to know such
as questions and answers concerning the situation as well as links to government agencies
involved in foodborne illness.

Visitors are also allowed to send them questions through the website. Lastly, the company
also thought of their consumers the put up a hotline for them to voice out their questions or
concerns.

Strategies
In their strategies to restore trust, there were daily press briefings by Odwalla to update the
public, along with full- page newspaper ads and a website explaining the situation.

As a result of the crisis, the company had faced its worst-case scenario death caused by one
of its food products.  Odwalla also lost a third of its market value by the time everything
subsided, and pled guilty to criminal charges relating to the outbreak, which resulted in a $1.5
million fine from the FDA. But Odwalla was still standing. The public largely believed
Odwalla’s explanations because its reputation for social responsibility was iron-clad in its
consumers’ minds. It focused on its stakeholders especially, customer relations in the months
following, attempting to rebuild trust. The company fixed the contamination issue and
improved its quality control and safety system.

CONCLUSION

Finally, the company re-launched its apple juice two months later. In 2001, Coca-Cola bought
Odwalla for $186 million and rebranded itself. After the fallout from the E. coli crisis,
Odwalla invested heavily in quality assurance technology and eventually became an
innovator of a “flash- pasteurization” process that killed all bacteria, but kept the fresh taste
and quality of the juice intact. Just two years after the crisis began, the readers of San
Francisco Magazine voted Odwalla “Best Brand.” Although the company looked poised for a
comeback, it had accrued substantial debt and was forced to begin exploring the possibility of
merger opportunities.