FOCUS: CRISIS MANAGEMENT - Eat, drink, be wary of food hysteria/Health scares are an occupational hazard of the food and drink industry and PROs must be ready to deal immediately with any sudden outbreaks of public fear, says Nick Purdom

Kids falling ill after drinking Coca-Cola, dioxins in pork in Belgium, Mars taken to court after a mouse was found in a Topic bar. All these recent cases have put food safety high in the public consciousness.

Kids falling ill after drinking Coca-Cola, dioxins in pork in

Belgium, Mars taken to court after a mouse was found in a Topic bar. All

these recent cases have put food safety high in the public

consciousness.



The outcry following such stories can be so huge that food and drink

companies which fail to deal with a crisis in a way the media and public

perceive to be professional and responsible can face the prospect of

losing customer confidence, market share, or even going out of

business.



This month, the Turnbull Report is expected to be published by a

committee set up by the Institute of Chartered Accountants of England

and Wales, and backed by the London Stock Exchange, which will require

companies to demonstrate that they are effectively assessing and

managing the risks their businesses face. Managers who fail to do so

could find themselves in court.



The report is part of a general move in industry towards greater

accountability, and companies will need to show that they are

safeguarding shareholders’ investment and the company’s assets.



A recent survey by Lloyd’s of London and the Association of Risk

Managers showed that risk managers were most concerned about the lack of

insurance cover for intangible risks such as loss of reputation.This

suggests the PR industry has an important role to play in helping

companies identify and manage risks that could damage their

reputation.



’Our hope is that the Turnbull Report will force companies to

demonstrate more actively that they are prepared for crisis,’ says

Jonathan Hemus, director of Reflex, Countrywide Porter Novelli’s crisis

management service.



So just how well prepared is the food and drink industry to face a

crisis?



According to Chris Woodcock, director of Razor PR, the prognosis is

encouraging.



’Food companies are ahead of the game in thinking about the risks that

face the business when going through their annual planning cycle,’ he

says.



But Coca-Cola’s handling of its recent crisis (see panel) suggests that

even the largest companies might not be as well prepared as they would

like to think. Hemus has no doubt that the key to effective crisis

management is preparation.



’Almost three-quarters of the work we do is in the preparation stage

rather than fire-fighting,’ he says. ’Almost all the food clients buying

into Reflex are assessing risks. We’re going in and methodically pulling

the business apart and identifying risks and how likely they are to hit,

and the effects if they did.’



As recent food scares show, the initial problem is in identifying risks

and recognising them when they occur.



The issues facing food and drink companies are wide-ranging, from

product contamination to marketing. David Brotzen, director of issues

and crisis management, Europe at Hill and Knowlton, says: ’We are

increasingly seeing softer issues such as pricing having the potential

to become a crisis.’



Bob Marsh, managing director at RHM Technology, who acts as crisis

management co-ordinator and chief trainer for RHM Group, which includes

companies such as British Bakeries and Rank Hovis, has identified a long

list of risks which could affect the business. These include extortion,

bomb threats, and the interruption of supply of a product or

service.



It is not possible to prepare for every eventuality. While the reasoning

behind risk management is to ensure the business remains in a state of

preparedness, a crisis can very quickly take its own course and no two

crises are the same. But companies which have the building blocks in

place are one step ahead.



Each company in the RHM Group has a crisis team and manual and undergoes

regular training and updates, with procedures reviewed at least once a

year by the main board.



Gordon Storey, head of external relations for Mars Confectionery, says

the company follows a similar line. ’We have good crisis management

systems which are well tested, and we keep it simple. We don’t have

thick manuals because nobody reads them during a crisis.’



Geoffrey Hyde, director of crisis at Burson-Marsteller, says all his

clients acknowledge the value of simulations and desktop exercises. ’I

can’t think of any client which has not run a simulation in the last two

years,’ he says. ’Crisis management requires a totally different way of

thinking. You need to train people so they are used to working in

strange scenarios.’



At the RHM Group, all senior managers are required to go through crisis

simulation exercises. They have to deal with a simulation involving TV

cameras and radio reporters and work with two major retailers who test

their own procedures at the same time. Marsh says: ’A lot of pressure is

put on so people get an idea of what it would really be like.’



In contrast, Mars is unconvinced about the value of full-scale

simulations.



’To do simulation exercises, particularly involving third parties, is

hugely expensive, and the one time we did it, the company we used was

not capable of matching us intellectually. We didn’t find it very useful

because all they said at the end was that we were very good,’ says

Storey.



He believes that senior managers are well enough equipped to handle

crisis situations. ’My experience is that senior managers do not need a

lot of training to manage a crisis because they can use their skills and

business experience,’ he says. Senior managers at Mars do, however,

receive general media training.



According to Martin Langford, head of new business at B-M, preparing for

a crisis should involve looking at how to rebuild a brand if the worst

should happen. ’The time to rebuild is the same time you’re going

through the deluge of media calls,’ he says.



However, the same people cannot be expected to deal with the crisis and

rebuild the brand, as the skill-set and focus is completely

different.



Langford, who recommends using some of the company’s top marketing and

repositioning people, adds: ’If you have a level of trust with

consumers, you should not allow a crisis to get in the way.’



He advises clients to verge towards over-communication rather than

hiding the troubles. ’You need to do research throughout the crisis and

see how consumers are reacting to what you’re doing,’ he says. ’Then you

have a good idea of how consumers are reacting and whether they believe

what you’re saying.’



Burson-Marsteller has worked with five companies on the dioxins issue,

and not one has suffered a fall in market share. ’In the majority of

cases we’re able to restore a brand, or even increase its market share,’

says Langford.



PR has a leading role to play in countering crises and rebuilding public

perception and trust in the brand. For as long as food scares continue

to hit the headlines, PR practitioners will have plenty of work on their

plates.



GM FOODS FORCE SUPERMARKETS TO TAKE DRACONIAN MEASURES



One of the biggest issues in the food industry this year has been GM

foods, which have provided supermarkets with plenty of PR

challenges.



Sainsbury’s set up a GM information line in February and within two

days, 3,000 calls had been received. But the first supermarket to

respond to the tide of public opinion was Iceland, which announced as

early as May 1998 that it would be banning GM ingredients from its

own-brand products.



Marks and Spencer followed suit a year later, at the same time

introducing its own helpline. At the end of June this year, M&S

announced it had eliminated GM ingredients from all its food brands,

with the exception of 21 grocery products. Sainsbury’s made a similar

announcement in July.



In March, a consortium of seven food retailers in Europe was established

to work with industry experts to establish validated sources of GM-free

crops, products and derivatives. In August, M&S announced that it was

working to ensure the feed used to rear livestock was also GM-free.



Tesco has been criticised for its ’weak’ policy, but corporate affairs

manager, Alan McLaughlin, says: ’Our policy is to remove GM ingredients

where we can, but label very clearly where we can’t. People may

criticise our position, but it is honest. There would be a backlash if

we were shown not to have been honest.’



Both M&S and Sainsbury’s are confident their claims about being GM-free

are true. But if there were any problems, both say they would act

swiftly.



M&S food press and PR manager Sue Sadler says: ’If we found a product

with GM ingredients, we would take it off display, destroy it and make

sure it didn’t happen again. We would do a recall, advertise in the

media and invite people to bring back the product for a refund. We have

a very clear crisis management plan in place.’



LOCAL ILLNESS GAVE COCA-COLA A GLOBAL CRISIS TO DEAL WITH



It may be one of the biggest brands in the world, but Coca-Cola’s recent

crisis in Europe showed that even a well-loved brand can quickly lose

public confidence if it is perceived to handle a crisis badly.



After Belgian schoolchildren reported sick after drinking Coke, the

drinks brand was quickly faced with a worldwide, rather than local,

problem.



’Crises go global a lot more quickly now. Perhaps Coke felt this was a

Belgian issue, but it was doing damage to their reputation in Europe and

throughout the world,’ says Jonathan Hemus, director of Countrywide

Porter Novelli’s Reflex service.



The company was unfortunate as consumers in Belgium had become

sensitised to food safety issues after recent scares involving

dioxins.



But Razor public relations director Chris Woodcock believes that

Coca-Cola could have coped with the situation better. ’Their lack of

communication left the media domain wide open for scare-mongering and

speculation and made a deep dent in the trust of consumers who would not

have thought to have questioned the integrity of the brand just hours

earlier,’ he says.



When the company did come up with an explanation for the illnesses in

Belgium and France, it put the sickness down to odd tastes and smells

and claimed there was no threat to public health. Initially it

voluntarily recalled and destroyed 2.5 million bottles and cans. Almost

a week later, the Belgian government reacted to growing public concern

by ordering the company to recall all products which could have been

contaminated.



Belgium health minister Luc van den Bossche said on TV: ’It’s a bit

disturbing that a big firm with worldwide fame did not take far-reaching

measures more spontaneously and more promptly.’



Indeed, Countrywide’s Hemus believes that taking an active rather than

passive stance is essential to any form of crisis management. ’There’s a

real need to take control of the situation, particularly in the food and

drink industry. One of the reasons Coca-Cola didn’t handle the situation

as well as it might was that it wasn’t seen to control events. It was

reacting rather than setting the agenda,’ he says.



Ten days after the first reports of illness Coke chairman Doug Ivester

did go to Belgium to make a public statement about the issue. A week

later, he held a press conference and the next day Coke took out press

ads apologising for letting the people of Belgium down.



By this time, the damage had been done. Sales have suffered, and Wall

Street analysts have estimated second-quarter earnings of 40 cents a

share compared with 47 cents the previous year. The recall cost Coke

USdollars 103 million.



But Ian Muir, Coca-Cola external affairs manager in the UK, defends the

company’s crisis action. ’We withdrew the products that needed to be

withdrawn immediately and other products were later withdrawn on

government instruction,’ he says.



He also stresses that the company has media action teams set up on a

country-by-country basis. ’We treat anything and everything that would

adversely and seriously affect the company and its brands as a risk,’ he

says. ’We have regular meetings and simulations, which were set up well

before the Belgian issue.’



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