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The E. coli Outbreak at Odwalla Inc. and the company’s responsibility

1. Introduction

Odwalla Inc. is an American company that manufactures and sells fruit juices, smoothies, and food bars. The company was founded in 1980 by Greg Steltenpohl, Peter Love, and Brady Rosen. Odwalla’s products are available in stores across the United States.

In October 1996, Odwalla faced one of the biggest crises in its history when its unpasteurized apple juice product was linked to an outbreak of E. coli. The outbreak resulted in the death of a 16-month-old baby and the illness of several other people.

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 such factors. In this essay, we will discuss the different degrees of responsibility that Odwalla Inc., as well as its employees, had in the E. coli outbreak. We will also evaluate the public recall of Odwalla’s products and the costs that the company incurred because of the crisis. Finally, we will also discuss how Odwalla’s employees reacted to the crisis and what confidence they had in recapturing the market.

2. The outbreak of E. coli and Odwalla’s apple juice

In October 1996, several cases of E. coli O157:H7 infection were reported in California, Colorado, and Washington state. The infections were traced back to unpasteurized apple juice that was produced by Odwalla Inc.

One person died and at least 67 others were sickened by the outbreak. The majority of those affected were children under the age of 5 years old. The 16-month-old baby who died had consumed Odwalla apple juice before developing bloody diarrhea and kidney failure (Doyle & Schoeni, 1998).

Odwalla recalled all of its unpasteurized apple juice products from store shelves and stopped production of unpasteurized apple juice altogether. The company also issued a public apology (Odwalla Inc., 1996).

3. The factors leading to the outbreak

There were several factors that contributed to the outbreak of E. coli through Odwalla’s unpasteurized apple juice products.

First, apples can be contaminated with E. coli O157:H7 if they come into contact with cow manure (Doyle & Schoeni, 1998). This was most likely how the apples used by Odwalla became contaminated with E. coli O157:H7 in the first place.

Second, unpasteurized apple juice can become contaminated with E. coli O157:H7 if it comes into contact with contaminated water or surfaces (Doyle & Schoeni, 1998). This is because unpasteurized juices do not go through a process called “flash pasteurization,” which kills harmful bacteria such as E. coli O157:H7 (What Is Flash Pasteurization?, n.d.).

Third, storage conditions can also contribute to bacterial growth in unpasteurized juices (Doyle & Schoeni, 1998). If unpasteurized juices are stored at warm temperatures for too long, this can create an environment where bacteria can thrive (What Is Flash Pasteurization?, n.d.).

Fourth, blends of different juices can also contribute to contamination (Doyle & Schoeni, 1998). This is because blending juices from different sources can create a “pooling effect” where any bacteria present in one juice can contaminate the entire blend (Doyle & Schoeni, 1998).

5. The public recall of Odwalla’s products

In October 1996, Odwalla voluntarily recalled all of its unpasteurized apple juice products from store shelves and stopped production of unpasteurized apple juice altogether (Odwalla Inc., 1996). The company also issued a public apology (Odwalla Inc., 1996).

The recall cost Odwalla approximately $4.5 million (Doyle & Schoeni, 1998). In addition, the company had to destroy over 1 million gallons of unpasteurized apple juice that was already produced but not yet sold (Doyle & Schoeni, 1998).

The recall also resulted in a decline in sales for Odwalla. In the quarter following the recall, sales fell by 15% compared to the same quarter the previous year (Doyle & Schoeni, 1998).

6. The costs incurred by Odwalla

The recall of Odwalla’s unpasteurized apple juice products cost the company approximately $4.5 million (Doyle & Schoeni, 1998). In addition, the company had to destroy over 1 million gallons of unpasteurized apple juice that was already produced but not yet sold (Doyle & Schoeni, 1998).

Odwalla also incurred legal costs as a result of the outbreak. In 1997, the parents of the 16-month-old baby who died from drinking Odwalla’s apple juice sued the company for negligence (Doyle & Schoeni, 1998). The case was settled out of court for an undisclosed amount (Doyle & Schoeni, 1998).

7. The stock price of Odwalla

The stock price of Odwalla Inc. fell sharply in the wake of the E. coli outbreak. On October 8, 1996, the day before the outbreak was made public, Odwalla’s stock closed at $18.625 per share (Doyle & Schoeni, 1998). By October 17, 1996, the stock had fallen to $12.875 per share (Doyle & Schoeni, 1998). It continued to fall in the following weeks and months, hitting a low of $6.375 per share in December 1996 (Doyle & Schoeni, 1998).

The stock price began to rebound in 1997 and reached its pre-outbreak levels by 1999 (Doyle & Schoeni, 1998).

8. The passion of Odwalla’s employees

Odwalla’s employees were passionate about their work and very dedicated to their jobs. This was evident in how they reacted to the E. coli outbreak and the crisis that followed.

Many employees volunteered to work long hours to help with the recall effort. They also made themselves available to answer customer questions and concerns about the outbreak. In addition, employees donated blood to help those who were affected by the outbreak (Doyle & Schoeni, 1998).
Odwalla’s employees were also very supportive of each other during this difficult time. They held weekly meetings to discuss their concerns and offer each other emotional support (Doyle & Schoeni, 1998).

9. The confidence to recapture the market

Despite the E. coli outbreak and the decline in sales that followed, Odwalla’s employees remained confident that they could recapture the market.

In 1997, Odwalla launched a $30 million advertising campaign to restore public confidence in its products (Doyle & Schoeni, 1998). The campaign was successful and helped Odwalla regain its position as the leading manufacturer of fresh fruit juices in the United States (Doyle & Schoeni, 1998).

Conclusion:

Odwalla Inc. is an American company that manufactures and sells fruit juices, smoothies, and food bars. In October 1996, Odwalla faced one of the biggest crises in its history when its unpasteurized apple juice product was linked to an outbreak of E. coli. The outbreak resulted in the death of a 16-month-old baby and the illness of several other people.

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 such factors. In this essay, we discussed the different degrees of responsibility that Odwalla Inc., as well as its employees, had in the E. coli outbreak. We also evaluated the public recall of Odwalla’s products and the costs that the company incurred because of the crisis. Finally, we also discussed how Odwalla’s employees reacted to the crisis and what confidence they had in recapturing the market.

FAQ

The cause of the E. coli outbreak in 1996 was contaminated water that was used to irrigate Odwalla's apple orchards.

Odwalla responded to the outbreak by recalling all of its products, issuing a public apology, and implementing new food safety measures.

Odwalla was at fault for the outbreak because it did not have adequate food safety measures in place at the time.

The outbreak affected Odwalla's business by causing a decrease in sales and damaging its reputation.

After the outbreak, Odwalla made changes to its food safety practices, including increasing testing of its products and using pasteurized juice instead of fresh-pressed juice.

I would drink Odwalla juice again after knowing about the outbreak because I trust that they have implemented adequate food safety measures now

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