Odwalla Inc and the E. Coli Outbreak

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The report on the E. coli outbreak due to the consumption of the Apple juice produced by Odwalla Inc. contaminated by the virulent strain of the bacterium O157:H7 brings to light the various factors which contributed to the unfortunate incident. It is not that Odwalla did not have any degree of responsibility into the massacre; but considering the other factors as well as the corporate culture nurtured by the Odwalla Inc. founder, Mr. Greg Steltenpohl along with the honest environment in which he had ran his business, it is clear that it is not al all fair to blame the company solely for what happened.

Degrees of responsibility to Odwalla

Odwalla Inc. produced unpasteurized fresh fruit and vegetable juices. They believed that the slow heat killing of pathogens in the juice based beverages not only altered the taste of the product but destroyed most of its nutrients and vitamins in the process though increasing its shelf life. They were absolutely right in their thinking. As they aimed at providing good healthy beverages to the customers, they could not afford the nutritional loss during pasteurization. There is indeed a threat of E. coli contamination in unpasteurized fruit juices, but Odwalla took a lot of necessary precautions in the processing method in their plant in Dinuba. They never accepted ground apples which might have come to the contact of E. coli contaminated soil. Above all apple juice is acidic in nature having a pH of 4.3. E. coli is not supposed to survive in such an acidic condition (Grant, 89).

In spite of all these extreme precautions E. coli contamination occurred, primarily because of the batch of apples supplied to them. Those apples probably were ground apples accidentally coming in contact with the fecal contamination of cow, sheep or deer. So it is largely because of the suppliers who should be held responsible for that calamity rather than Odwalla Inc. The virulent E. coli strain, O157:H7 also played a large role in that outbreak by mutating itself to an acid tolerant variety and surviving in the low pH of the apple juice (O’Rourke, 112).

It was no doubt unfortunate and grievous for what happened to people who just wanted to have healthy juice based beverages, but Odwalla Inc. had very little contribution in that. They had pure intentions and took all the burden of a public recall to avoid further damage to any one else’s health. Therefore the degree of responsibility which comes on their shoulders for causing such a disaster is very less (Reiss and Kunz, 680-684).

Arguments for and against a public recall

Odwalla Inc. was really concerned regarding the incident of E. coli outbreak which made several people ill and took the life of a 16 month old toddler and was supposed to result from consumption of a batch of fresh apple juice and juice related products marketed by them. Though there was no bacteriological proof at the beginning they did not want the infection to spread further in case there was really something found in the product. So they went for a public recall. The public statement through which the recall was ordered read, “Odwalla Inc., the California – based fresh beverage company, issued today a national product recall of fresh apple juice and all products containing fresh apple juice as an ingredient … our first concern is for the health and safety of those affected. We are working in full cooperation with the FDA and the Seattle/King County Department of Public Health” (FSnet, 1).

As a recall is not a simple task to do and a lot of factors related to it some of which could cause a set back to the company, arguments were placed for and against the recall. Those arguments contained factors like cost, corporate image and public relations, corporate values etc. among many others.

Criteria in arguments that could have gone against the recall

Varied range of products to be recalled: The recall was to involve 13 products which accounted for 70 percent of Odwalla’s sale. It was really difficult to reach out to all the outlets and remove all the suspected products (Walker and Fleming, 223).

Cost of recall: The cost of a probable recall could be overwhelming. The company would have to bear the cost of retrieving and destroying all the products, legal and professional fees and increased market price. That was indeed a reason of concern and the cash position came down to $9 million after the recall compared to the cash position of $12 million at the beginning of the outbreak (Reiss and Kunz, 680-684).

Decrease in the stock price: Something like a public recall was sure to bring the stock price of Odwalla down greatly and that also happened indeed. Odwalla’s stock price came down by 34 percent in one day after recall, from 18 ³/₈ to 12 ¹/₈ on the NASDAQ exchange (Grant, 114).

Possibility of difficulties reintroducing the product in the market: it was obviously going to be very tough reintroducing the apple juice or the juice related product once after it had become identified as a cause of E. coli infection.

Criteria in arguments that went for the recall

In spite of all the above arguments, Steltenpohl decided to order a public recall. None of those factors could stop him from walking on the path of his unique values. The factors which made him take the decision and execute it successfully are as follows:

Corporate values and image: the founder Steltenpohl was concerned on the true sense and didn’t want to compromise the image of his company by avoiding the responsibility of the outbreak by blaming it to someone else. He stated, “…we have a corporate culture based on values. Our mission is nourishment. We really never considered not recalling the product. Looking back, I suppose that recall was the biggest decision we made. At the time, it seemed the only possible choice” (Lawrence, 463-474).

Own fleet of vehicle to accomplish the job: Odwalla Inc. had its own fleet of delivery trucks in seven states and British Columbia which reached all the accounts directly and removed all the tainted products very fast.

Passionate employees: Each and every employee rose to the situation and came forward keeping aside any other task and ignoring whether there was an off day or not. This passion made it possible to accomplish such a tough job.

Confidence to recapture market: Odwalla Inc., though in trouble then, was confident about recapturing the market after finding out a solution and a way to produce safe apple juice related products (O’Rourke, 87).

The six major options to Odwalla as summarized in the case

To find out a solution to the situation and bring back the good name of the company in the market Odwalla Inc. formed a panel of experts called the Odwalla Nourishment and Food Safety Advisory Council. The panel helped the Odwalla executives to plan the line of future action. They recommended six major options as possible lines of action. These are:

Discontinue all the apple juice products: In this case the company would have to discard all the apple juice related products until the safety was guaranteed.
Improve Manufacturing Processes: in this recommendation the company would have to take more intense steps to manage any possible hazards that might happen during the production of fresh apple juice.
Modify Labeling: This option was recommended to announce the rare but still possible risk of bacterial contamination in the unpasteurized products mainly for infants, elderly or people with struggling immune system.
Use standard Pasteurization: Another option was to kill any possible pathogen through Pasteurization in the conventional manner that is to use the slow prolonged heating of the juice. It also could improve the shelf life, but at the cost of the nutritional benefit which raw juices provide.
Use modified pasteurization: Modified or Flash Pasteurization, that is quick heating of the juice at 160 degrees F, and holding it for a short time in that temperature to kill pathogens could keep more nutrients intact than the standard pasteurization. But it could not extend the shelf life.
Use Alternative (Non – Heat – Based) technologies for removing pathogen: Methods of killing pathogens using something other than heat, like high pressure, light wave, herbal disinfectants etc. were also considered (Reiss and Kunz, 680-684).

After considering all the possibilities and giving priority to customer satisfaction, Odwalla decided to accept the Flash Pasteurization process for its apple juice products. The apple juice products were reintroduced in the market with a modified label stating that the product was flash pasteurized to make the customer aware of the fact.

Factors contributed to the outbreak of E. coli poisoning

The outbreak of E. coli through the unpasteurized apple juice product of Odwalla was not the outcome of a single active factor. There were a cluster of factors which resulted in the incident.

Odwalla might have processed a batch of ground apples unknowingly which might have come in contact with some cow, sheep or deer fecal contaminants.
The apple juice which Odwalla produced was unpasteurized. So though there were no traces of E. coli in the processing plant of Dinuba as ample precautions were taken, minimal chances of contamination was there which might have come from some outside sources.
The virulent strain of the bacteria, E. coli, O157:H7 had undergone some prominent mutation which helped it to thrive at acidic pH as low as 4.0 or below.
A very little amount of bacteria, which might not get detected in the tests, is enough to cause infection (Walker and Fleming, 99-102).

Responsibility of Odwalla

Odwalla Inc. had run its production in a very clean environment, taking care of every minute needs of a fresh juice producing plant. Still, Odwalla played a very little part in the unfortunate outbreak of the virulent strain of E. coli, O157:H7.

Odwalla marketed unpasteurized juice which though high in nutritional benefits, had a chance of bacterial contamination. By accident a batch of ground apples were supplied to and processed by them which were infected by E. coli. If they had marketed pasteurized juice, the chances of contamination could be eliminated (Grant, 225).

Steps that should be taken by Odwalla

Odwalla Inc., would have to try hard to reintroduce the apple juice products. They have already done it by reintroducing the apple juice in a safer way that is by flash pasteurizing it. It was necessary to modify the label announcing the risk factors regarding bacterial contamination for infants, elderly and people with struggling immune system. The company started walking in the right direction.

One more thing should be implemented, that is taking stricter norms in selecting apples so that no ground apples can enter in the batch again (Reiss and Kunz, 680-684).

Corporate social responsibility: Odwalla’s voluntary recall decision

Odwalla’s decision to order a voluntary recall was definitely an act of corporate social responsibility. They didn’t only order the recall, but assisted everybody who was affected by reaching them through telephones as well as offering them to pay the hospital bills. Mr. Steltenpohl flew to Denver to attend the funeral of the only victim succumbing to multiple organ failure, a 16 month old toddler.

Steltenpohl’s statement, “Until we are assured of a completely safe and reliable method of producing apple juice, we will not include it in our juices” (Lawrence, 463-474), it provides the proof of his corporate and social values.

Food Safety Public policy and Role of government authorities

Public policies should be there to ascertain food safety. That is a definite line of instructions should be there with some mandatory safety measure for all kind of processed food to ensure that there is no case of food poisoning like this due to contamination. At the same time it is a must also to see that the quality and nutritional values of the product is not compromised in any way.

FDA was correct in holding the public advisory hearing regarding food safety after the E. coli outbreak. They needed to do this to avoid any unfortunate incidents like this. But, they were not correct as far as imposition of mandatory pasteurization. If that would have been done the quality of taste and the nutritional values would have to be sacrificed. That is an expensive process as well. Instead, alternative ways should be evolved to ensure both quality and safety.

Works Cited

FSnet. “Odwalla Issues Product Recall on Fresh Apple Juice”. archives.foodsafety.ksu.edu. 1996. FSnet. Web.

Grant, Tin. International directory of company histories, Volume 31. London: St. James Press, 2000.

Lawrence, Anne. ‘Odwalla, Inc., and the E.Coli outbreak’. Case research Journal, 19.1, (1999): 463-474.

O’Rourke, James S. Management Communication: A Case-Analysis Approach. LA: Prentice Hall, 2009.

Reiss, Gary and Pamela Kunz. “E. Coli: Infection in Nursing Homes: Review of Literature and Report of Recent Outbreak”. Journal of the American Geriatrics Society, 54.4, (2006): 680-684.

Walker, Terry and Ciji A. Fleming. 2001 health care business market research handbook. NY: Richard K. Miller and Associates, Inc., 2004.

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