Crisis Management in the Food and Drinks Industry
To many companies, crisis management issimilar to an evacuation procedure at the office when the fire alarms ring. You hope itnever happens, especially in mid-winter or when it's pouring with rain.
That, however, is where the similarityends. Evacuation procedures are generally well communicated, understood by most staff andsometimes practised. Crisis management is different. Sometimes it's invisible andsecret. Many managers will never experience a major crisis; the crisis management teamwill never go 'live'. So why have one, and what is a crisis anyway?
This is simply answered in two words -'Risk Assessment' - two words generally sufficient to put managers into a deepsleep. How often have I heard: 'I don't know where to start'. I will showyou just how easy it is.
Within the food and drinks industries, acrisis is a threat to the health of consumers, brand, company or individual. This threatcould be chemical, physical, microbiological or environmental. In many cases, especiallyon standard working days, a team of managers can handle a crisis, almost as part of theireveryday routine. The real problems begin on the eve of public holidays, when you are onyour own, your colleagues have all left town and you begin to get a few calls fromconsumers, the media, worried parents, enforcement agencies, the police, retailers orpathologists.
You may say, "It will never happen tome / us / this company". You may be right. I am not suggesting that every company ison the brink of disaster, but just advocating that you check your own vulnerability. Thisis simply done through risk assessment - in other words, what can go wrong, and how big orsmall the consequences may be if it does. In a more technical way, the first priority isto identify any hazards that exist within the entire business unit and to estimate thelikelihood that such hazards will be realised and their potential consequences (the risksinvolved).
Remember, risks can be chemical, physical,microbiological or environmental food safety issues; from fire and flood to plane crashes.Prepare a long list; include the obvious and the outrageous. You may have a list of 100hazards; now score them realistically - severity x likelihood. The risk rating below showsa range or risk rating of between 1 and 80.
An Introduction to Risk Assessment
Risk Rating Matrix
The next stage is to sort your list, lowestnumbers first. These are very unlikely events, and, even if they do happen, the severityor impact on you or your business will be minimal. As the numbers get higher, so you paythem more attention. You write plans, and you manage the risk. You manage it out of theequation, you stop doing it, you monitor it, and you reduce the risk. Let me suggest thatany score above a six requires your attention.
Many months later, you slowly become awareof an issue that could severely affect your brand. Let's assume that your product isdistributed across 30 states, has a 20-day shelf-life, and it's the day beforeThanksgiving; CNN has just gone live with a grieving mother, a child has died and yourproduct could be involved. Information is scarce and conflicting. You can paint your ownworst-case scenario.
How many of you use peanuts, hazelnuts ornut oil in any shape or form? Start paying attention now if you do. You will have noticedthe number of recalls related to nuts. Normally, because of the fear of nut allergies, therecalls are initiated because nuts are not declared on the label, or the right product hasgone into wrong packaging - just plain carelessness really. But you are all petrified ofkilling a consumer through your negligence. You are all preparing your defence in court.Quite right too, but it is far better to reduce the possibility of carelessness in thefirst place. If you use nuts, your manufacturing and packaging areas are at risk; you arenegligent in your duty of care if you put nut products in cartons with labels declaringthat the product is 'free from' nut products. In 'a worst-casescenario', you may also face criminal charges.
If you recall, can you trace your entireproduct? How quickly can you contact all your sales outlets? Let's suppose it's6 o'clock in the evening; can you call your colleagues and get them or their deputiesback to the office? Have you got a list of key phone numbers of sales outlets in your car?How quickly can you send recall notices to the media? Have you been trained to handle somepretty tough media interviews?
Can you cope? How much energy and staminahave you got?
Of course, you may be in an industry sectorwhere the likelihood of events of such severity is non-existent. You may just have to dealwith a factory fire, grieving relatives, children and the media. You just build anotherfactory and start again. You may just discharge some effluent into a local river and killa few million fish - not a big issue, unless you're a fisherman.
Many issues begin with a complaint - notnecessarily a crisis, because only money, court cases, media interest and brand reputationare at stake. The risk assessment I've described earlier can be used very effectivelywhen handling customer complaints. Let me give you an example. Some companies receivehundreds of letters a week from disgruntled consumers. Most are genuine problems, and fitinto a certain pattern. If your team handles them professionally and sympathetically, nolasting damage is done to your brand name or company. On my risk rating let's assumeyou routinely receive complaints about organic matter, albeit unpleasant, a very low-riskhazard. A standard letter and voucher will suffice. What your team of junior,administrative staff must be able to do is recognise the 'big one', thecomplaint that will make national headlines, court cases and a slump in sales. If no-onehas complained of a mouse in your product for 60 years, and you have made hundreds ofmillions of the product during this period, then do not treat it as a standard complaint.Junior staff must be trained to pass serious complaints upwards. You have to prioritiseyour actions: get the sample, pacify the consumer, show and demonstrate concern, handlethe media, or keep it quiet from them.
During a major incident or crisis, you willhave to make decisions, often without sufficient information, or with information thatconflicts. Your personal reputation as a leader, manager and communicator is in the publiceye. Demonstrate an ability to make decisions, demonstrate that you are the expert, thatyou know what you are doing, and that it is the right thing to do under the circumstances.
The Coca-Cola incident in June this yearhighlights the difficulties of 'managing ambiguity'. There was a ban across muchof Europe following the illness of more than 100 people. Tests had failed to find fault inproducts made in France. Coca-Cola admitted to 'quality problems' afterinjecting sub-standard carbon dioxide into some bottled drinks at its Antwerp factory. Canfrom Dunkirk in France 'picked up' traces of fungicide used to treat woodenpallets on which they were transported to Belgium.
Doug Ivester, Coca-Cola's worldwidechairman, personally apologised to Belgian consumers in full-page adverts in 15 newspapers(6/23/99) - a day after the company published reassuring adverts that fell short ofan apology in four other European countries. (ref. Ft.com - World News / Europe).Exhaustive tests from the authorities and Coca-Cola had proved inconclusive -with variousquotations being published: 'Symptoms reported by French and Belgian consumers werepsychosomatic', 'Any contamination of Coca Colas drinks or packaging was toosmall to cause illness', and 'The pattern of this epidemic is consistent with aclinical entity, which has been described as a 'mass sociogenic illness'.
The important lessons are that, if yourexplanations are based on toxicology, no-one believes you anyway. You must apologisequickly, you must demonstrate real concern, you must appear in charge and neverunderestimate the scale of the incident or how rapidly a global brand can have a globalproblem.
Plan, prevent and train is my message.
Tony Hines MBE, Commercial Manager
Leatherhead Food Research Association
- just The Preview - Pernod Ricard's Q4 & FY
- Comment - Hybrid Spirits: Innovation or Laziness?
- Comment - Another One Bites Bacardi's Dust
- CCA - Coca-Cola's Canary in the Mine
- Brown-Forman's Q1 Performance by Region, Brand
- Mast-Jägermeister targets UK off-trade boost
- SABMiller exec to become CFO at Beam Suntory
- Brown-Forman unveils Jack Daniel's UK push
- Bacardi announces CFO switch
- Champagne will not regain lost ground until 2018