January 10th, 2018
Overview of Odwalla Growth and the 1996 Crisis
Before Odwalla Inc (henceforth herein Odwalla) fell into disrepute in 1996, its growth had largely been built on the firms’ perception as the epitome of corporate responsibility. Entine (1999), for instance noted that the firm “was touted as much for its ethical consciousness as for its growth prospects” (p.1). Due to such an ethical depiction, the firms’ brand enjoyed wide coverage from sympathetic media (Entine, 1999), making its supply of unpasteurized squeezed juices famous with a large section of the population. The entity distributed its products in areas such as California, Colorado, Washington, Oregon, and the British Columbian city of Vancouver (Martinelli & Briggs, 1998). Its ethical perception among the people was improved by its executives’ outspoken philosophy of a “commitment to a more just society” (Entine, 1999, p.1). This, in addition to attracting media coverage, was also a factor that helped it to draw investors who regarded social responsibility highly in their investment decisions (Entine, 1999). With this favorable reputation, the company had rapidly expanded to achieve a “30 percent annual growth rate” making it one of the reputable firms in the 1990s (Entine, 1999, p1).
In the fall of 1996, the fortunes of Odwalla however began to change. With the information on possible contamination of the firms apple juices by “E. coil 0157:H7” – a disease causing bacteria – a crisis began to unfold (Martinelli & Briggs, 1998, p. 450). Though the distribution of the company’s products was restricted to a few states in the U.S. and a city in a Canadian province; the news of the contamination were widely disseminated nationally by numerous mass media outlets and internationally via the Internet whose use was gaining popularity (Martinelli & Briggs, 1998). Further, the crisis was compounded by a sequence of events that followed the contamination news.
The first event that dealt a brow to the company was the confirmation by federal health officials that a sealed bottle of apple juice in a Tukwila warehouse contained a disease causing strain of the E. coli bacteria (Martinelli & Briggs, 1998, p. 450). Secondly, a 2- year old child had been hospitalized following E.coli inflicted kidney damage (Martinelli & Briggs, 1998). The death of a girl from Colorado later with her parents informing the media of possible litigation against the company worsened the scenario (Martinelli & Briggs, 1998). The result of these events was that the company received a number of legal suits some from parents of children who had subsequently been discharged from hospital (Martinelli & Briggs, 1998). Subsequent investigations and events pressurized the company to consider some heat treatment disinfection procedures for its juices which it had earlier resisted on the grounds that such would alter the flavor hence the marketability of its products (Martinelli & Briggs, 1998). Ultimately the company resulted to “flash pasteurization” of its products that lead to resumption of supplies discontinued in the wake of the E. coli crisis (Martinelli & Briggs, 1998). Go to part 3 here.