Dole Reveals the Cost of Recalls: The Effects of Operational Crises

I have been arguing that it is important to distinguish between operational and reputational crises.  Crises often contains elements of both but one tends to dominate and that domination has implications for crisis communication.  Operational crises are marked by a disruption or potential disruption to operations, a driving factors in creating crisis management.  Operational crises also tend to create a risk for stakeholder health and safety.  Product harm crises are operational.  When a product poses a hazard to stakeholders, the organization engages in a recall (corrective action).  Organizations do purchase recall insurance but it rarely covers the full cost of the recall.  Crisis communication can be essential to creating awareness and compliance with a recall (instructing information) as well as helping to address reputational concerns that emerge from the crisis.

 

Dole has about 25% of the bagged salad market in the U.S. The Dole bagged salad recall is an excellent example to illustrate the costs of product harm crisis, one that is also a food safety crisis.  In 2015, some bagged salad tested positive for Salmonella.  The recall cost Dole $10.8 million.  In 2016, there was a deadly Listeria outbreak.  According to the CDC, 19 people were hospitalized and one died from the outbreak that was linked to the Dole bagged salad facility in Springfield, Ohio.

 

Here is the recall announcement:

 

Dole Fresh Vegetables, Inc., is temporarily suspending operations at its Springfield, Ohio production facility, and is voluntarily withdrawing from the market all Dole-branded and private label packaged salads processed at that location (see the product list at http://www.cdc.gov/listeria/outbreaks/) Products subject to the voluntary withdrawal are identified with a product code beginning with the letter “A” in the upper right-hand corner of the package (see example below), and are sold in the following states and Canadian provinces noted below. This suspension and withdrawal is being performed voluntarily by Dole out of an abundance of caution, in collaboration with the Food and Drug Administration and Centers for Disease Control. See more about this withdrawal at www.cdc.gov/listeria/outbreaks/

No additional Dole facilities are affected. Other Dole products, including fresh fruit, fresh vegetables and packaged salads from Dole’s other processing facilities (with product codes beginning with the letters “B” or “N”), are not part of this voluntary withdrawal.

Retailers and consumers who have any remaining product with an “A” code should not consume it, and are urged to discard it. Retailer and consumer questions about the voluntary withdrawal should be directed to the Dole Food Company Consumer Response Center at 800-356-3111) (hours are 8:00am-8:00pm Eastern Time, Monday through Friday). Media inquiries should be directed to Bil Goldfield at 818-874-4647.

Retailers which carry Dole products produced in its Springfield, OH plant (with the product code beginning with the letter “A” in the upper right-hand corner of the package) should check their store shelves and warehouse inventories to confirm that no withdrawn product is available for purchase by consumers. Dole Fresh Vegetables’ customer service representatives have been contacting retailers, and are in the process of confirming that the withdrawn product has been removed from the supply chain.

Dole Fresh Vegetables is coordinating closely with regulatory officials.

List of states included in the voluntary withdrawal:

  • Alabama
  • Connecticut
  • Florida
  • Georgia
  • Illinois
  • Indiana
  • Kentucky
  • Louisiana
  • Michigan
  • Massachusetts
  • Maryland
  • Minnesota
  • Missouri
  • Mississippi
  • North Carolina
  • New Jersey
  • New York
  • Ohio
  • Pennsylvania
  • South Carolina
  • Tennessee
  • Virginia
  • Wisconsin

List of provinces included in the voluntary withdrawal:

  • Ontario
  • New Brunswick
  • Quebec

 

 

Here is Dole’s statement:

 

Dole Food Company, Inc. One Dole Drive Westlake Village, California 91362-7300 Attention: Consumer Center Phone: 800-356-3111

(January 27, 2016) – Dole Fresh Vegetables, Inc., has temporarily suspended operations at our Springfield, Ohio production facility, and we are voluntarily recalling all Dole-branded and private label packaged salads processed at that location.

We apologize for any concern or inconvenience this temporary suspension has caused our retail customers and consumers. While other Dole products are not affected by the recall, we want to keep you updated with the latest information about the products that have been taken off the market.

Our voluntary product recall is a result of a suspected link of the products to a listeria outbreak, but the exact source is still unknown. We are working closely with regulatory agencies as our Springfield plant undergoes additional investigation and testing.

Voluntary recall is a specific term used by the Food and Drug Administration (FDA). While our actions under a voluntary recall as compared to the previously reported voluntary withdrawal remain the same, we have updated our communication terminology to reference a “recall.” We have done this with the aim of using terminology that may be more familiar to consumers.

Transparency and safety remain our top concerns and we will provide updates as additional information is available. For more information about listeria, please visit: www.cdc.gov/listeria/outbreaks/.

What you need to know:

  • Listeria monocytogenes is an organism which can cause serious and sometimes fatal infections in young children, frail or elderly people, and others with weakened immune systems. Although healthy individuals may suffer only short-term symptoms such as high fever, severe headache, stiffness, nausea, abdominal pain and diarrhea, listeria infection can cause miscarriages and stillbirths among pregnant women.
  • Dole Fresh Vegetables is coordinating closely with state and federal officials to determine the exact source of the listeria outbreak. Our website will be updated as new information is provided.
  • All production at the processing facility in Springfield, Ohio stopped on January 21, 2016. Recalled brands of packaged salads include Dole, Fresh Selections, Simple Truth, Marketside, The Little Salad Bar, and President’s Choice. Packaged salad products being recalled are identified with a product code beginning with the letter “A” in the upper right-hand corner of the package. Here’s an example of what the package product code would look like:
  • Consumers who have any remaining product with an “A” code should not consume it, and promptly discard it.
  • Since July 5, 2015, 15 people from six states have been reported being infected with listeria. Sadly, one person in the United States has died. Unfortunately, we do not know the exact circumstances, such as age or preexisting conditions. The Centers for Disease Control has not disclosed this information at this time.
  • Canadian health officials have also reported that 7 people were infected with listeria in five provinces and became ill between September 2015 and early January 2016. All individuals were hospitalized, and 1 person has died although it has not been determined if listeria contributed to the cause of death. We understand that the Centers for Disease Control believes 5 of these 7 cases are highly related to the listeria cases in the United States due to genetic testing.
  • All of the retailers who received the products being recalled have been contacted.
  • No additional Dole facilities are known to be affected at this time. Other Dole products, including fresh fruit, fresh vegetables and packaged salads from Dole’s other processing facilities (with product codes beginning with the letters “B” or “N”), are not part of this voluntary recall.
  • Below is a list of U.S. states included in the voluntary recall. Other states may have received recalled products through secondary distribution so this list may not be complete. Consumers should look for the “A” at the beginning of the manufacturing code found on the package.

o    Alabama

o    Connecticut

o    Florida

o    Georgia

o    Illinois

o    Indiana

o    Kentucky

o    Louisiana

o    Michigan

o    Massachusetts

o    Maryland

o    Minnesota

o    Missouri

o    Mississippi

o    North Carolina

o    New Jersey

o    New York

o    Ohio

o    Pennsylvania

o    South Carolina

o    Tennessee

o    Virginia

o    Vermont

o    Wisconsin

The Canadian Food Inspection Agency has issued a food recall warning for products made at this plant and reports that recalled salads have also been shipped to these provinces in Canada:

o    New Brunswick

o    Newfoundland and Labrador

o    Nova Scotia

o    Ontario

o    Prince Edward Island

o    Quebec

The type of salad blends produced at the Springfield, Ohio, plant were packaged in bags and clamshell containers and include:

  • American salads
  • arugula salads
  • Asian salads
  • bacon and bleu cheese salads
  • BBQ Ranch salads
  • Caesar salads
  • chipotle and cheddar salads
  • coleslaw
  • field green salads
  • garden salads
  • iceberg salads
  • Italian blend salads
  • kale salads
  • lettuce salads
  • Mediterranean salads
  • romaine salads
  • sesame ginger salads
  • Southwest salads
  • spinach salads
  • spring mix salads
  • spinach salads
  • sunflower salads
  • vegetable blend salads

If you have any concerns, please reach out to the Dole Food Company Consumer Response Center at 844-483-3865. Temporary extended hours are 8:00am-8:00pm EST, Monday – Friday.

Media inquiries should be directed to William Goldfield at 818-874-4647.

Please continue to enjoy all of our products which remain for sale at your favorite stores. We thank you for your continued trust and confidence in our products.

 

 

Here is some of the language Dole used to describe the risks from the crisis in financial filings:

 

Dole reported the listeria outbreak and resulting lawsuits are potential risks for the company.

“Even if a product liability claim is unsuccessful or it not fully pursued, the negative publicity surround any assertion that our products caused illnesses or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image,” Dole’s SEC filing says.

“Moreover, claims and liabilities of this sort might not be covered by our insurance or by any rights of indemnity  or contribution that we may have against others.”

The financial filings go on to say that Dole has installed “proprietary produce wash technology in each of our salad manufacturing plants” and that it has implemented a sanitation program which “leverages the most recent advancements in cleaning chemistry.” Dole says it has gone with an “industry-leading” program for environmental surveillance and the “latest technology “for trending environmental test results within a produce processing environment.”

 

 

 

The Springfield facility was shut down for four months at a cost of $25.5 million to Dole.  The exact figures for the two recalls are available because the information is part of the SEC disclosures Dole provided in the 2017 effort to take the company public.  Dole is still being investigated by the Department of Justice for possible criminal charges from the recall.  The investigation centers on if Dole knowingly sold a product tainted with Listeria.  The case is a perfect example of the costs associated with a product harm crisis.  The case provides evidence for the need to mitigate crisis risks and costs an organization can incur from a crisis.

 

Questions to Consider

 

  1. What are the key communication concerns for Dole during and after the recall?
  2. How do product harm crises related to food safety illustrate how crisis and risk communication often merge?
  3. What effect does the Department of Justice investigation have on the crisis and crisis communication?
  4. How did Dole address the adjusting information needs in the crisis?

 

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