Case Study of Pepsi Syringe Crisis in 1993

Introduction

PepsiCo is an American multinational food, snack and beverage company which is located at Purchase, New York, USA (The Editors of Encyclopaedia Britannica, 2019). In 1993, the company faced a crisis which is called the Pepsi Syringe crisis (Paul Holmes, 1993). It was started as a threatening local incident which turned into a multimillion-dollar disaster for the PepsiCo after some time (Newsweek Staff, 1993). A couple reported that they found a syringe in Diet Pepsi can and returned the can to the shop owner who contacted the Tacoma-Pierce County Health Department (Dr. Allan Bonnar, 2010). After that, many other people reported finding syringes and other things in the Pepsi can such as needle, pins etc. (Paul Holmes, 1993). These stories went viral in the media and became a headline in the newspapers and the TV channels. But Pepsi handled this situation very well with the help of its crisis management team (Paul Holmes, 1993). The Company did a great job to save its reputation and it stayed strong and calm during a time of crisis and took good steps to prove that these allegations were false.

Background and Content

Pepsi is a carbonated soft drink manufactured by PepsiCo. It was created in 1893 by Caleb Bradham who introduced it as Brad's Drink, it was renamed as Pepsi-Cola on August 28, 1898, and then as Pepsi in 1961 (The History of the Birthplace of Pepsi Cola, 2012). The core values of PepsiCo are honesty, fairness and integrity (PepsiCo Mission and Values). In 1993, the company faced a big crisis related to one of its products named Diet Pepsi. This case was started in Tacoma, Washington. An elderly couple complained on June 9, 1993, that they have found a needle inside the can of Diet Pepsi (Paul Holmes, 1993). They returned the can to shop owner and called their lawyer who directly made a call to the press and local health officials (Paul Holmes, 1993). The next day, the second case was reported by a woman in Federal Way, Washington which is just ten miles away from Tacoma (Paul Holmes, 1993). The third complaint came from New Orleans, Louisiana on June 13, 1993. Thereafter, this kind of news was received for all around the USA (Madison Hanna, 2012). One woman in Portland said that she found two syringes in a single glass (Paul Holmes, 1993). In New York, a man claimed he accidentally swallowed two pins that were in a Pepsi bottle. A woman from Beach City said she found a sewing needle in one can (Paul Holmes, 1993). In Jack¬sonville, a man reported a loose screw in his soda. More than 50 reports of Diet Pepsi tampering had been reported across 23 states (Paul Holmes, 1993). There were no reports of deaths or serious injuries and no indication that any kind of poison had been found in the cans of soda. So, the FDA (Food & Drug Administration) announced that syringes were not contaminated and issued a statement that con¬sumers in the Pacific Northwest should pour canned drinks into a glass before drinking for safety reasons (Paul Holmes, 1993). The FDA did not give any kind of product recall order to Pepsi. Pepsi was puzzled and made executives from its local bottler, Alpac Corporation, available to the media (Paul Holmes, 1993).

Challenges

During this crisis, the biggest challenge for PepsiCo was to prove that all these rumours about the Diet Pepsi can were false and maintain its reputation in the market and public. It was difficult to handle, but it was important for Pepsi to present all the facts to the public to maintain its good name. PepsiCo knew that this problem did not come from the company’s side and its beverages were safe to drink (Dr. Allan Bonnar, 2010). Another Challenging part of the crisis was to fight back with the wrong media coverage against the company because the media was causing more panic than the syringes (Madison Hanna, 2012). This issue became very popular in the media and it was very tough for anyone to ignore it and not make an opinion about it (Valerie Zhuluri, 2016). So, it had become a challenge for Pepsi how to get the wrong media coverage in its favour.

Solution

PepsiCo put the public first. It showed to the public that they genuinely care about this crisis (Syringe in Pepsi Can, 2008). They wanted to gain back public trust and took full responsibility for solving this problem. By this, Pepsi had shown to their public that they listen to their customer’s complaints (Syringe in Pepsi Can, 2008). PepsiCo took widespread media coverage as an advantage (Madison Hanna, 2012). The company's crisis team decided to fight the media crisis with media in the form of news releases, press conferences and TV interviews for complete transparency. PepsiCo’s president Craig Weatherup became its spokesman because of his familiarity with the bottling system (Madison Hanna, 2012). First, they released four videos showing a sequence of their canning process. After that, Craig Weatherup explained the mechanics of the production process and the impossibility of any kind of harmful objects like syringes, needles etc. during that process (Valerie Zhuluri, 2016). One day after Craig Weatherup’s first television appearance, crisis team members noticed that news reports were starting to use words such as “copycat” and “hoax” (Madison Hanna, 2012).

Pepsi also worked closely with the FDA because they know that the FDA's credibility is high, and people will believe whatever that FDA recommends them to do (Syringe in Pepsi can, 2008). The FDA’s Commissioner David Kessler believed that all these rumours about Pepsi were false (Paul Holmes, 1993). Craig Weatherup and David Kessler had planned to appear together on ABC's Nightline to explain that these all rumours are wrong (Paul Holmes, 1993). The FDA announced that filing a false report is a federal offence that is punishable by five years in prison and a $250,000 fine (Paul Holmes, 1993). Pepsi also uploaded another video which proved to be helpful for them in this case. A sur¬veillance camera in a supermarket in Aurora, Colorado cap¬tured a woman shop¬per insert¬ing a syringe into a can of Diet Pepsi (Paul Holmes, 1993). The company copied the tape and included it in a video news release package that was sent to television stations around the country.

Communication Tactics

During the time of crisis, a company needs to have strong internal and external communication tactics. The PR team of Pepsi focused on both their internal and external public while dealing with the syringe crisis. First, PepsiCo worked on its internal communication as these internal public helps to convince the external public of the company (Organizational Communication in Diet Pepsi syringe Crisis, 2018). Pepsi faxed to all its local bottlers twice daily to keep them informed of any update and PepsiCo employees continued to respond to calls that made to the company’s toll-free line from consumers, bottlers and distributors (Paul Holmes, 1993). Pepsi then targeted the external public and chose to focus on its media tool like interviews on TV, VNRs (Video News Release), print communication tools such as daily newspapers etc. (Organizational Communication in Diet Pepsi syringe Crisis, 2018).

They also took a firm stand and said no to a product recall. Pepsi invited media to the production plant and made videos of¬¬ the process. These videotapes were sent out along with memos and surveillance footage that showed Pepsi's innocence (Organizational Communication in Diet Pepsi syringe Crisis, 2018). Many other techniques used by the PR team of Pepsi like 24 hours hotlines for consumer’s queries and complaints, assigning a specialist to work with the FDA and the legal department were also involved during the communication process (Organizational Communication in Diet Pepsi syringe Crisis, 2018). The PR department revealed all the information to everyone as it was needed. They also convinced the external public by their investigation on this case that the situation is under control. Finally, they uploaded a surveillance video of Colorado’s store in which Pepsi was freed from all the charges. PepsiCo's crisis communication team worked for 15-20 hours a day to solve this problem (Organizational Communication in Diet Pepsi syringe Crisis, 2018).

Results

Initially, the sales of Diet Pepsi fallen by three percent but recovered within the next month because of the way crisis was handled by Pepsi company, made consumers more sympathetic towards the company and improved the sales (Valerie Zhuruli, 2016) After a lot of effort and investigation, PepsiCo proved that they were innocent. The surveillance video of a woman putting syringe inside the can was not less than a blessing for the company. It turned PepsiCo into the victim. Some people were arrested for making false complaints and different other charges. The Pepsi Company saved its reputation and did not panic during the time of crisis (Dr. Allan Bonner, 2010). After that Pepsi was proven not guilty, the company took advantage of the situation to launch a public relations campaign (Dr. Allan Bonner, 2010). The major purpose of the entire public relations campaign was to make people feel secure about the brand again (Valerie Zhuluri, 2016). Pepsi distributed millions of coupons with the slogan “Thanks America'. They also started to advertise on a full page of the newspapers stating, “Pepsi is pleased to announce…nothing” (Dr. Allan Bonner, 2010).

Pepsi lost a lot of money on the crisis. After the crisis, they gained huge media coverage and they became the headlines of the newspapers that they were victims of the public, they were innocent and thus they use the situation to their advantage (Dr. Allan Bonner, 2010). The public relations industry was impressed by the way Pepsi managed the crisis (Paul Holmes, 1993).

Strengths and Weaknesses

First, I would like to talk about the strengths of PepsiCo during the time of this crisis.

• Pepsi acted very smartly in this case. The biggest strength of the company at that time was its communication within its team. PepsiCo gathered experts from the production and manufacturing, scientific and regulatory affairs, legal and public relations sections (John Schwartz, 1993). They worked extremely hard, even some people slept at the office (John Schwartz, 1993).
• They disclosed all-new daily updates to their office’s distribution centres and bottlers nationwide and ask them to reassure retailers that products were safe (Paul Holmes, 1993). They also knew that consumer want to ask questions from the company about product safety, so they also launched new toll-free number take consumers to call (Paul Holmes, 1993).
• The company decided to go directly to the media. They smartly grabbed the media coverage in their favour that was against them previously (Madison Hanna, 2012). They used different media tools like video news releases, tv interviews etc. They explained their canning process to convince the public that this problem was not from the company side because the canning process of the company is safe (Madison Hanna, 2012). They actively searched for the proof which helped them to prove they are right. They found the video of Colorado’s Supermarket which proved as a miracle because after this video complaints about the Pepsi dropped off. Suddenly, the media picked a side of Pepsi, then they started covering the issue from the viewpoint of Pepsi's innocence (Paul Holmes, 1993).
• The FDA’s commissioner David Kessler also in the favour of PepsiCo. This became a strength for the company (Paul Holmes, 1993). He appeared with the PepsiCo's president Craig Weatherup on a TV interview to inform the people that all these rumours about PepsiCo were wrong. He also announced the penalty for people who are making fake complaints of Pepsi which was also good for the company (Paul Holmes, 1993).

On the flip side, the company also showed some weaknesses as well which I am going to explain in subsequent paragraphs.

• In this case, Pepsi's biggest mistake was that they took steps to solve this problem after the three cases were reported (Paul Holmes, 1993). Initially, they did not understand the seriousness of this issue and they thought it as a regional issue because first two incidents have happened in Washington only and they did not expect this case will spread all over the nation (Paul Holmes, 1993). If they upload the surveillance video of Colorado after the first incident, so maybe that this case could not be worse.
• The other weakness is that the first spokesman from the PepsiCo side was Alpac Bottling Company’s CEO. Alpac company was the local bottler of Pepsi in Washington. People did not know more about this company, so they pointed their finger to Pepsi because they were the owner of the bottling company. The words of the CEO of the PepsiCo at first then others would be more effective and compelling (Organizational Communication in Diet Pepsi syringe Crisis,2018).

Recommendations

My First recommendation for Pepsi, in this case, is that PepsiCo should have responded sooner. If the company had done this, perhaps this case would not have been as worse as it was. If it started looking for evidence only after the first case, so probably there were not more than 50 reports against the company. The other thing is that is it important for every company how its image is in the customers because customers are the ones who make the company and make it fall. So, if there was a single case against PepsiCo, it should have taken that case as a serious issue. It is not good for the brand image of a big company like Pepsi to just leave that negative complaint considering it as a small regional issue until it becomes a national issue. Thirdly, in this type of crisis, it is helpful if the parent company's owner comes and gives an explanation to the public about the current situation rather than the owner of the subsidiary company because most of the people do not know about that subsidiary company. Like, Pepsi made its first spokesman to the media was CEO of its subsidiary Alpac Company, but people wanted an explanation from the Pepsi.

Conclusion

Thus, from the overall analysis, I would like to say that Pepsi did a great job to solve this problem. Although it responded late but its crisis management team made wonderful strategies to maintain the company's prestigious image in the market as well as in the consumers. They provided convincing pieces of evidence in the form of videos and media interviews which helped to prove them innocent. In the beginning, the sales of the Diet Pepsi dropped but improved in the following month.