Lessons to Learn from a Product Recall

In recent years, food and drink manufacturers as diverse as Cadburys, Premier Foods and ABF have discovered food contamination, forcing them to announce product recalls. These companies have all survived. Why? Possibly because they learnt from Perrier how not to do it.

Lessons to Learn from a Product Recall

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In 1990, Perrier was synonymous with mineral water.

An independent French company over a hundred years old, it was the leading brand in a growing sector with a 15% share of the U.S. market.

Then, on 6th February 1992, American regulators in North Carolina discovered bottles had been contaminated with benzene, albeit in miniscule quantities that would not affect human health. No one suffered as a result of drinking the benzene-contaminated water but Perrier recalled 160 million bottles from 120 countries at a cost of over $250m.

Within 18 months, its market share had declined to 9% in the U.S. and dropped from 49% to less than 30% in the UK. The shareprice fell by 37% and the company was taken over by Nestlé. Some 750 people in the mineral water division were made redundant. By 1995, Perrier sales had fallen to one-half their 1989 peak.

So what did they do wrong and what crisis communication lessons can PROs learn?

Perrier’s first error was its failure to plan and specifically, to plan for the right threats.

Despite the publicity around the Tylenol deaths in 1982, Perrier did not have a crisis plan nor did it have product recall insurance. While Perrier’s US President Ronald Davies took advice from former Johnson & Johnson Chairman James Burke over his handling of the Tylenol crisis,
Burke’s sage advice "Be straight" had unintended consequences.

Perrier’s second error was to provide information which turned out to be incorrect.

It therefore forfeited the right to be heard as honest and authoritative. Attempting to play down the scale of problem also set the media against them.

Perrier recalled 70 million bottles in North America on the 9th February – three days after being alerted to the issue. At the time, Perrier stated that the cause was an isolated incident - blaming a cleaner’s improper use of a cleaning solvent on machinery filling bottles bound for the USA for the contamination.

Shortly afterwards, benzenecontaminated bottles were discovered in Holland and Denmark. And since this global product had only one single source – a spring in Vergezes southern France - Perrier had to announce a worldwide recall and change its explanation.

It turned out that the carbon filters intended to remove benzene from carbon dioxide gas had become clogged and had gone undetected for six months. So rather than being a victim of someone’s mistake, the company was viewed as culpable because of its own poor quality control.

But what really did for Perrier was that in managing the contamination crisis they caused a greater crisis by revealing that there was a deception at the heart of the brand.

Perrier’s advertising stated that Perrier was pure and its strapline stated "It’s Perfect. It’s Perrier". Executives decided to withdraw the product not because of any actual health implication but to maintain its brand positioning. The presence of benzene, even in tiny quantities that posed no threat to consumer health, was incompatible with its purity claim. So far, so good. The recall could even be viewed as an act of corporate honesty.

However, Perrier needed to prove that the spring water itself was not contaminated (which would have been been devastating for the company). So Perrier was forced to reveal that while the spring is naturally carbonated, the water and natural carbon dioxide gas were captured independently. Water was pumped from the spring in one pipe and another pipe brought the carbon dioxide, mixing the two at the manufacturing plant. CO2 naturally contains trace amounts of benzene and the clogged filters were supposed to remove it.

The consumer already believed that the product was not ‘Pure’ because of the benzene. In identifying the actual problem with the filters, Perrier’s statement had the merit of showing the basic water was uncontaminated. But the disadvantage was that it showed that the product was not ‘naturally sparkling’ mineral water. With its product relaunch, Perrier was required to drop the words "Naturally Sparkling" from its label as the water was artificially carbonated.

It took more than five years for the public to trust the brand again.

In that time a once totally dominant market position collapsed as other companies raced to fill the void left by the product recall. Perrier’s experience demonstrates how poorly handled crisis planning and communications can seriously damage a product’s brand and business.

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