By Katie Paine
When cat and dog owners began calling the customer hotline of Canadian-based Menu Foods this past February, no one would have suspected that the end result would be the
largest recall in the pet food industry, with implications on international and trade relations with China. What started out as a potential problem with a few sick cats has made
an obscure pet food company, and an even more obscure food additive business, into household names. Finger-pointing has evolved into charges and counter-charges in front of
congressional subcommittees, law suits, and ultimately the suspension of wheat gluten imports from China.
In February, pet owners began calling Menu Foods hotline with reports of kidney failure and vomiting in cats and dogs that had eaten Menu pet foods. To make matters more
complicated, Menu produces pet food that is packaged and sold for dozens of other companies, including Wal-Mart, Iams and Eukanuba.
After several days of investigations, Menu tracked the source of the problem to melamine in wheat gluten provided by ChemNutra, a Las Vegas-based importer of chemicals
and food additives from China. ChemNutra launched its own investigation and laid the blame squarely on the Chinese supplier: Xuzhou Anying Biologic Technology Development Co.
Ltd.
In the meantime, the FDA raided ChemNutra's offices and, in the latest development, has issued warnings about 20 million chickens that may have been contaminated with
melamine.
We tackle this issue this month because of the vastly different approaches to crisis communications taken by the two principles: Menu Foods and ChemNutra, and the lessons we
can learn from both.
Menu Foods Income Fund
Menu Foods is listed on Google Finance as an "open-ended trust." There is no information on the company Web site other than recall information. All links to the home
page or any company information are either broken or lead to a home page with nothing on it other than a picture of cats and dogs eating out of bowls. Cute, but hardly a great
source of information. For example, if you click on "Annual Meeting," you are immediately redirected to the Recall page. The Recall page contains a number of press releases and
refers you to the FDA for more information. Thankfully, the ASPCA has a much more informative page for pet owners.
While its CEO, Paul Henderson, did a credible job in his testimony on Capital Hill, the subsequent lack of transparency and information isn't helping calm customers fears.
ChemNutra
While their Web site is a bit sketchy on details, ChemNutra's News and Information "Blog" is well organized and full of information. (We put "blog" in quotes since in our book
it's not a blog if it doesn't accept comments. You can, however, e-mail the PR guy if you have anything to say.)
Every article that's been published on the crisis is posted, and there are easy-to-find links to company information, recall info and just about anything else you would need.
They use the blog to rebut what they perceive as inaccuracy in quotes in The New York Times on the part of their Chinese suppliers. Frankly, their blog provides a
much clearer picture of the entire situation than anything else out there, illustrating once again that he/she with the most data wins. They are much more likely to get their
messages across because their site is where the most in-depth information resides.
It is clear that ChemNutra has called in the experts, since noted crisis communications guru Jonathan Bernstein is listed as a contact person on their Web site. And Steve
Stern at SternPR is the official go-to guy for questions.
While it's too early to know how the various suits and counter-suits, allegations and charges will all play out, ChemNutra is doing a much better job of diffusing the
situation.
CONTACT:
Katie Paine is the CEO, KDPaine & Partners. She can be reached at [email protected].
| Menu Foods | |||
|---|---|---|---|
| Criteria | Grade | Comments | Advice |
| Extent of coverage | F | The recall was front-page news in South
Africa, Canada, the U.S. and throughout Europe. You'd have to be dead to miss it. |
Wherever you do business is where you have
to be in a crisis. You are just as vulnerable to a crisis in Capetown as you are to a crisis in your home town. |
| Effectiveness of spokespeople | F | Other than Paul Henderson, Menu Foods doesn't
appear to have any employees at all. Even the press releases are missing any contact information. |
If you want people to hear your side of
the story, it really helps to have effective spokespeople. Even more useful is enabling the media to contact them. |
| Communication of key messages | D | The major message they've been communicating
is that they are not the ones to blame - it's all ChemNutra's fault. The lack of information on their Web site tells people they really don't care about keeping the public informed. |
In any crisis, use all the available tools.
No one gets their news from just one source anymore. And if you don't put up an explainer video on YouTube, someone else will. |
| Management of negative messages | C | By blaming ChemNutra for their woes, Menu
Foods has actually done a fairly good job of deflecting the negatives. ChemNutra, however, has done a far more effective job in shifting the attention to China. |
Blaming the other guys only increases the
likelihood that those things you don't want to show up in print not only show up, but linger for much longer. |
| Impact on customers | F | Every pet owner is now aware of the problem,
and will no doubt avoid anything Menu produces for a long time to come. More important, this gives a huge boost to the organic pet food industry and further supports arguments for knowing where your food comes from. |
Your crisis is always someone else's opportunity.
Be prepared for all the possible implications of bad news on your customers and your market. |
| Impact on ?employees | D | Chances are good that employees at Menu
Foods are fielding a million questions every time they go out in public. While it's unclear what they've been told, it's likely they're worrying about their jobs as they see their market share disappear. The fact that the Chief Financial Officer sold half of his shares just before the recall was announced sends a very negative message to employees. |
If your business is taking a dive as a result
of a crisis, your most important audience is your employees. Let them feel demoralized and you won't have a company to worry about. They'll all leave to take more secure jobs somewhere else. |
| Overall score | F | Lack of information and general un-helpfulness
of the company's Web site make this a perfect example of what not to do in a crisis. |
There is simply no excuse for not taking
advantage of all the communications tools available these days. You can't influence the media if you're not using the tools journalists rely on for information. |
| ChemNutra | |||
|---|---|---|---|
| Criteria | Grade | Comments | Advice |
| Extent of coverage | F | ChemNutra's role in this unfolding crisis
has given it a visibility that I'm guessing it never wanted. However, now that it's out there, they're doing the best they can to manage the media. |
Even if you're a tiny company and not used
to the media spotlight, make sure you at least know a PR professional you can call in a crisis. Either network in your community to find the best local talent that understands your company, or go online to find the expert in your industry. |
| Effectiveness of spokespeople | B | While their PR contacts, Jonathan Bernstein
and Steve Stern, aren't very visible, they are clearly having an impact on decisions being made. CEO Steve Miller did an adequate, if not stellar, job in his appearance before Congress. Other than that, the spokespeople are pretty invisible. |
In these days of skepticism and doubt, putting
a face on your crisis is critical. Find the most credible, empathetic person possible and put him/her front and center. |
| Communication of key messages | A | ChemNutra has been very successful in shifting
the blame for the crisis onto its Chinese suppliers. The company has conveyed the idea that it is trying to identify the source of the problem, despite stonewalling on the part of the Chinese. |
Use the blame game very carefully in a crisis.
In this case, it works because the "blame" is on an unknown foreign company. But trying to shift blame to an organization with an existing reputation frequently backfires. |
| Management of negative messages | A | Given the raid by the FDA and the lawsuits
filed against them by Menu Foods, the negative messages could be devastating. However, by using full disclosure at every opportunity, they seemed to have diffused much of the criticism. |
The media love to wallow in information,
so the more you give them, the more they like you. Withhold data from them and they will pursue you with a vengeance, most likely getting their information from your enemies. |
| Impact on customers | F | The short-term - and long-term - impact
on ChemNutra's industrial clients will be significant, despite their best media efforts. The FDA is looking with much greater scrutiny at every food substance coming in from China, and that is ChemNutra's only source of product. |
When the feds step into a crisis, most bets
are off. You are no longer in control and the next move is generally up to either the courts or the government agency. |
| Impact on ?employees | C | It's not clear that ChemNutra has many employees.
It has two principles and qualifies as a woman-owned and minority-owned small business, so the impact may be minimal. |
Your employees are your ambassadors and
will be the first ones to express an opinion, whether you're ready for them or not. |
| Overall score | C | Not bad, all things considered. | You can't stop all the bad news, but with
open and freely available information you can go a long way towards mollifying an angry mob. |