Background: Pepsi has been a favorite soda of millions of people for over a decade. In 1993, PepsiCo received the Silver Anvil Award for businesses for successfully solving a crisis that had to do with one of its products. To understand the severity of the crisis it was first facing in 1993 it is important to understand a little history of the company. It was first created in 1898 when Pepsin and Cola nuts were combined in a unique recipe. Pepsi is a brand name that is actually owned by the company PepsiCo. Besides Pepsi brands, the company owns Quaker Oats, Gatorade, Frito-Lay, SoBe, Naked, Tropicana, Mountain Dew, and 7up (outside the US).
Today PepsiCo is the world leader in snacks, foods and beverages with revenues of more than $60 billion and over 285,000 employees. PepsiCo has a Mission Statement that reads “Our mission is to be the world’s premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity”. Situation Analysis: In June of 1993, PepsiCo’s mission and visions faced a severe crisis.
This crisis could have put the future of the company and its Diet Pepsi brand in jeopardy. On June, 10 of that year, a syringe was allegedly found in a can of Diet Pepsi. The syringe was found in an unopened can by a man in Tacoma, Washington. Seattle television news reported this issue along with the discovery of a second syringe which prompted the FDA to issue a regional advisory. The advisory urged consumers of Diet Pepsi to empty the contents into a glass before drinking. This news immediately grabbed national media attention and within a few days the report has spread around the country.
PepsiCo believed these findings to be false statements at first glance. Unfortunately, this was just the first of numerous tampering reports. Other objects such as wood screws, bullets, a cracked vial, and a broken sewing needle were allegedly found inside these Diet Pepsi cans around the country. Fifty-two of these cases were reported in twenty-three different states within days. It was at this point that PepsiCo realized they had a serious issue at hand. The public and regulatory scrutiny had begun and with the July 4 holiday sales period looming, PepsiCo was left with many difficult decisions and a lot of people challenging its reputation.
The good news for PepsiCo is that they had no reasonable explanation of how this could have happened. They said there was no way that this many cans could be contaminated in the same manner all over the country in a couple of days, and then be discovered at roughly the same time. With this reasoning, PepsiCo and the FDA made a risky decision not to recall any of the Diet Pepsi products. The FDA also then issued a reminder that false complaints could mean a penalty of up to $250,000 and 5 years in prison. PepsiCo set out to prove that these allegations were false. The media was persistent in looking to the company for answers and reasoning.
PepsiCo would show they had all the right answers. First, the company examined if this was even possible. The answer was simply, no. PepsiCo knew that its can lines run at speeds of upwards of 1,200 cans per minute. The company knew that at this filling speed there was no way anyone could be quick enough to place foreign objects in its Diet Pepsi products. So with complete confidence that these reports were false, it began to design a plan to help save the company’s image, reputation, and sales. The job of PepsiCo’s public relations group was to help established communications to the different publics involved.
The objective was to convince the different publics that they, and the company’s products, were safe, and that syringes could not possibly be places inside the cans, and that a recall would not solve the problem. The team focused on both internal and external publics. The internal publics would be all the PepsiCo employees including the bottling companies. The external publics would be the consumers, the general American population, media, shareholders, retail stores, restaurants, and regulatory officials like the FDA. The communication directed to the internal public reassured that the company’s products were tamper resistant.
The PepsiCo president personally wrote letters to bottlers and general managers and explained the positioning and swore to keep them aware of the breaking developments as the crisis continued. Videotapes of the high speed lines were sent out as well as memos and the surveillance footage inside the plants which reaffirmed Pepsi’s innocence to its employees. Pepsi did not feed the frenzy that was being generated by the media and made sure it didn’t let it internalize. The external public was targeted differently. PepsiCo chose to focus on television ads as its vehicle of communication.
In the initial stage, the Pepsi Seattle bottler granted access into the Washington bottling facility for on-site interviews and news crews. The crews were allowed to film the high-tech, high speed canning lines and the company later issued a press release to assure consumers that the company would find the answers. Pepsi then heavily relied on its television ads to reach the consumer audience as quickly as possible. Pepsi’s long time video producer and media consultant Robert Chang Productions was called upon to create video footage that would get out the company’s message that this tampering was not possible.
These videos were shown on televisions nationally by satellite. The videos basically put the consumer inside the production plants to show them the high speed manufacturing process that included showing how the cans were inverted, shot with water, and even turned upside down before being filled at rapid speeds. They also made it clear that the cans were only open for nine tenths of a second and that it would be impossible for a human to insert a syringe in the can thus making the recent complaints illogical and false. Pepsi’s CEO also made himself available and appeared on every major news network to make it clear he was “99.
99% certain” there was no tampering in Pepsi plants. Six media relations managers handled most of the calls from newspaper, radio, television reporters which amounted to approximately 2,000 calls a day. They also provided 24 consumer specialists along with 40 volunteers to manage the consumer calls. The syringe scare ended barely a week after it had started. PepsiCo did lose $25 million in sales but by mid-summer that year, but had bounced back and ended the season with its highest sales in five years. This showed that consumers clearly had confidence in the company and its products.
The results of surveys posted during and after the crisis revealed that 94% of customers said they believed Pepsi handled the situation responsibly and 75% of people said they felt better about Pepsi products because of the way the company handled itself and responded to the problem. Consumer support was also felt through the company’s 800 number and hundreds of letters that were sent by people expressing their support of the company. Conclusion: PepsiCo effectively used public relations tactics and strategies in order to overcome this near catastrophe.
Many risks, such as not ordering a recall, were taken by the company, but the people at Pepsi stood firm in their beliefs that the tampering was impossible. Not ordering a recall, assuring PepsiCo employees, letting cameras into its plants, showing video of the high speed lines for all to see, and having the CEO available for questioning all lead to PepsiCo receiving an Anvil Award in 1993 for business for successfully addressing this sudden issue with professionalism, creativity, and resourcefulness.
Works Cited * “The Pepsi Challenge: managing a crisis – product tampering case at Pepsi Cola General Bottlers Inc.
Pepsi Cola Bottling Co” http://findarticles. com/p/articles/mi_m3289/is_n3_v163/ai_15312359/ * “The Pepsi Product Tampering Scandal of 1993” http://www. roadsideamerica. com/rant/pepsipanic. html * “History Lesson Part II: Diet Pepsi” http://crisispublicrelations. blogspot. com/2006/03/history-lesson-part-ii-diet-pepsi-in. html * “Pepsi’s Crisis Response:
The Syringe Scare” http://www. prsa. org/searchresults/view/6bw-9412b04/0/pepsi_s_crisis_response_the_syringe_scare? utm_campaign=PRSASearch&utm_source=PRSAWebsite&utm_m.