Pepsi Crisis Plan by Rhiannon Conrado

CRISIS COMMUNICATIONS PLAN By: Rhiannon Conrado, Nicole Jimenez, Marco Martinez, Erin Rader, and Winsor Williams, Jr.

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Table of Contents 1. Introduction to the Crisis Communications Plan ................................................................................................pg. 4 a. Company Background b. History c. Operational Definition of a Crisis d. Acknowledgement e. Rehearsal Dates f. Emergency Operations Center (EOC) g. EOC Supplies 2. Crisis 1 — Product Contamination ...................................................................................................................pg. 12 a. Introduction to Product Contamination i. What is “product contamination”? ii. Crisis Inventory iii. Threshold Verification 1. Threshold Verification Chart iv. Why is this plan important? v. What could happen if this plan is not followed? vi. Has a crisis involving product contamination happened at Pepsi before? vii.Has a crisis involving product contamination happened to similar companies? b. Case Studies i. “Dr. Pepper Contaminated with Gasoline Hospitalizes Texas Woman” ii. “Dasani Recall Hurts Coke’s Bid to Boost Water Sales in Europe” iii. “Coke, Pepsi Fight Product Contamination Charges in India” iv. “Coke Bottler in Belgium Recalls Product After 41 Children Are Sent to the Hospital” v. “Mold Forces Recall of Bottled Water by Coke in Poland” c. Action Plan i. Crisis Management Team ii. Crisis Directory iii. Communication Assignments iv. Employee Nondisclosure Agreement d. Press Materials i. Media Contact List ii. Standby Press Release: Notify Media of Investigation iii. Press Release: Notify Media That Pepsi Discovered the Problem iv. Types of Media Questions 1. Loaded, Naive, Speculative, Know-it-all, Multi-part, and Off-the-record questions v. Media News Conference Etiquette

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vi. Media News Conference Press Script e. Log & Report Sheets i. Telephone Log Sheet ii. Incident Report Log iii. Media Log Sheet 3. Crisis 2 — Contamination of the Bottling Process ...........................................................................................pg. 56 a. Introduction to Contamination of the Bottling Process i. What is “contamination of the bottling process”? ii. Crisis Inventory iii. Threshold Verification 1. Threshold Verification Chart iv. Why is this plan important? v. What could happen if this plan is not followed? vi. Has a crisis involving contamination of the bottling process happened at Pepsi before? vii. Has a crisis involving contamination of the bottling process happened to similar companies? b. Case Studies i. “Wells and Young’s Product Recall” ii. “Brewers Recall 800,000 bottles of Stella Artois” iii. “Sam Adams Issues Recall” iv. “Anheuser-Busch Recalls 5.7 Million Bottles of Beer in Europe” v. “Heineken Issues Recall” c. Action Plan i. Crisis Management Team ii. Crisis Directory iii. Communication Assignments iv. Employee Nondisclosure Agreement d. Press Materials i. Media Contact List ii. Standby Press Release: Notify Media of Investigation iii. Press Release: Notify Media That Pepsi Discovered the Problem iv. Types of Media Questions 1. Loaded, Naive, Speculative, Know-it-all, Multi-part, and Off-the-record questions v. Media News Conference Etiquette vi. Media News Conference Press Script e. Log & Report Sheets i. Telephone Log Sheet ii. Incident Report Log iii. Media Log Sheet

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4. Crisis 3 — General Hoax ................................................................................................................................pg. 93 a. Introduction to General Hoax i. What is a “general hoax”? ii. Crisis Inventory iii. Threshold Verification 1. Threshold Verification Chart iv. Why is this plan important? v. What could happen if this plan is not followed? vi. Has a crisis involving a general hoax happened at Pepsi before? vii. Has a crisis involving a general hoax happened to similar companies? b. Case Studies i. “The Mouse in the Monster” ii. “The Mouse in the Mountain Dew” iii. “The Finger in the Chili” iv. “The Great Pepsi Panic” v. “Gerber Glass Contamination” c. Action Plan i. Crisis Management Team ii. Crisis Directory iii. Communication Assignments iv. Employee Nondisclosure Agreement d. Press Materials i. Media Contact List ii. Standby Press Release: Notify Media of Investigation iii. Press Release: Notify Media That Pepsi Discovered the Problem iv. Types of Media Questions 1. Loaded, Naive, Speculative, Know-it-all, Multi-part, and Off-the-record questions v. Media News Conference Etiquette vi. Media News Conference Press Script e. Log & Report Sheets i. Telephone Log Sheet ii. Incident Report Log iii. Media Log Sheet 5. After Action Report .........................................................................................................................................pg. 134 6. References ........................................................................................................................................................pg. 138

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INTRODUCTION TO THE CRISIS COMMUNICATION PLAN (CCP)

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COMPANY BACKGROUND

PepsiCo is the leading global snack and beverage company. They manufacture

carbonated and non-carbonated beverages. Pepsi is organized into three divisions: North America (FLNA), Pepsi Beverages North America (PBNA), and Pepsi International (PI). The North American divisions operate in the United States and Canada. Pepsi’s international divisions operate in approximately 200 countries, with their largest operations in Mexico and the United Kingdom.

Pepsi Beverages North America (PBNA) manufactures or uses contract manufacturers,

markets and sells beverage concentrates, fountain syrups and finished goods, under various beverage brands including Pepsi, Mountain Dew, Gatorade, Tropicana Pure Premium, Lipton, Sierra Mist, and Tropicana juice drinks, Propel, Dole and SoBe. PBNA also manufactures or uses contract manufacturers, markets and sells ready-to-drink tea, coffee and water products through joint ventures with Unilever (under the Lipton brand name) and Starbucks.

Since Pepsi was formed in 1965, each of the company’s leaders — beginning with Don

Kendall, and including Wayne Calloway and Roger Enrico — have been passionately committed to operating a business with integrity, one that delivers strong, sustainable financial returns. Pepsi’s strategy over the last several years include their own CEO transition, and above all they share an equally passionate commitment to values, and to running a business that does better by doing better, achieving financial results while addressing environmental and social needs.

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HISTORY 1898 — Pepsi-Cola is formulated by Caleb Bradham, a New Bern, N.C. pharmacist. 1964 — Diet Pepsi is put on the market. 1967 — ‘Pepsi Generation’ advertising campaign named and claimed a whole generation. 1969 — Bold, modern Pepsi-Cola packaging using red, white and blue is introduced. 1970 — PepsiCo sales pass the $1 billion mark. The company has 36,000 employees. 1974 — PepsiCo sales pass the $2 billion mark. 1975 — PepsiCo has 49,000 employees 1976 — Pepsi-Cola becomes the single largest selling soft drink brand sold in U.S. supermarkets. 1977 — PepsiCo passes the $3 billion mark in sales. 1979 — PepsiCo reaches $5 billion in sales; Pepsi introduces twelve-pack cans. 1980 — PepsiCo now has 111,000 employees; Pepsi is #1 in sales in take-home market. 1981 — PepsiCo passes $7 billion in sales. 1982 — Pepsi Free and Diet Pepsi Free, the first major brand caffeine-free colas, are introduced. 1984 — Pepsi-Cola makes advertising history as Michael Jackson and his brothers usher in a new generation of Pepsi-Cola advertising in two of the most eagerly awaited television commercials featuring music marketing. 1985 — PepsiCo is now the largest company in the beverage industry. The company has revenues of more than $7.5 billion, more than 137,000 employees. 1986 — PepsiCo passes $10 billion in sales. 1987 — “Mustang,” a Diet Pepsi commercial, becomes the first ad ever to appear in a home video cassette. The cassette, "Top Gun," becomes the largest-selling video ever. 1988 — “Chase,” a four-part Pepsi ad featuring Michael Jackson in his first-ever episodic commercial, airs during the Grammy awards and becomes the most-watched commercial in advertising history. 1989 — PepsiCo enters top 25 of Fortune 500 ranking with sales of $15.4 billion, it is number 23. The company has more than 300,000 employees. 1990 — PepsiCo profits exceed $1 billion for the first time. 1991 — Pepsi-Cola introduces a new logo, its eighth in 93 years. 1994 — PepsiCo sales reach $30.4 billion. There are 470,000 employees worldwide, making PepsiCo the third largest employer. 1995 — Pepsi-Cola is top ad scorer in Super Bowl; PepsiCo is online at www.pepsico.com 1996 — (1) Filming of the world's first commercial in space. Cosmonauts shoot a large blue Pepsi can in orbit outside the MIR Space station. (2) PepsiCo is now a $20 billion company with approximately 140,000 employees worldwide. (3) Pepsi-Cola is top ad scorer in Super Bowl. 1998 — Pepsi-Cola announces breakthrough product: Pepsi One, one-calorie cola 2000 — PepsiCo sales are $20 billion and the company has 125,000 employees at year-end. 2003 — Pepsi-Cola trademark turns 100 years old. 2004 — Pepsi-Cola to launch Pepsi Edge, the first full-flavored cola with 50% less sugar, carbohydrates and calories than regular cola.

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OPERATIONAL DEFINITION OF CRISIS A crisis is any event that is, or expected to lead to, an unstable and dangerous situation affecting an individual, group, community or whole society. Crises are deemed to be negative changes in the security, economic, political, societal or environmental affairs, especially when they occur abruptly, with little or no warning. A crisis occurs when the established norm functions poorly, and an immediate decision is necessary, but the causes of the dysfunction are not known. Crises are specific, unexpected, and non-routine events or series of events that create high levels of uncertainty and threatens an organization's high priority goals.

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ACKNOWLEDGMENT (Of Commitment to Crisis Communication Plan) This is a unilateral contract agreement which fully commits the below signees to understanding, maintaining and following this crisis communications plan in times of non-crisis (rehearsals) and actual crisis. I understand and acknowledge my role as a member of the crisis team. I further understand that I will satisfy my duties as defined by the crisis communications plan. If I should not follow in accordance with this crisis communications plan I will be held responsible for any litigation that results from deviation of the crisis plan.

President and CEO _______________________________ (Signature and date) Senior Attorney ________________________________ (Signature and date) Public Relations Director ________________________________ (Signature and date) Director of Bottling ________________________________ (Signature and date)

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REHEARSAL DATES Pepsi intends to be prepared if and when crises covered in this crisis plan strike. Therefore, Pepsi must stage semi-annual rehearsals. Pepsi must make sure that these rehearsals are as realistic as possible, and should not try to make it easy for members of the crisis team. Considering that crises strike unexpectedly, Pepsi should initiate rehearsals unannounced to the crisis team. The dates below are the determined rehearsal dates that will remain unknown to the crisis team. May 9 â&#x20AC;&#x201C; 13, 2012 November 14 â&#x20AC;&#x201C; 18, 2012

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EMERGENCY OPERATIONS CENTER The Emergency Operations Center (EOC) is a facility that is self-sustaining and has the ability to facilitate the entire crisis team with ample room to effectively work and manage the crisis at hand. When the EOC is activated by the director of public relations, the EOC will have security providing physical force protection, surveillance and counter surveillance measures to insure no sensitive data is stolen or leaked by the media. The crisis team will have full access to the EOC via company identification with the proper security levels.

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EOC SUPPLIES Light bulbs (Enough to replace all the lights in the EOC) Wi-Fi routers (4) Beverages (Enough to sustain the crisis team for 1 week) Company cellular phones (15 digital smart phones) Televisions (Flat screens for viewing the major news networks) Radio (2 analog radios and 1 HD radio) Company letterhead (2000) Pens (100) Staplers (5) Telephone directories (10) Media contact list (8) Press kits (100) Laptops (12 Macbooks) Printers (14) Copy machines (2) Chairs and Desks (Enough for the crisis team) Fax machines (3) Land line Telephones (12) Crisis Plan (12)

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CRISIS: PRODUCT CONTAMINATION

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What is “product contamination”? Definition of Contamination: The presence of extraneous, especially infectious, material that renders a substance or preparation impure or harmful. • Contamination could be a potential problem for any Pepsi product. Example: There could be a faulty batch of Pepsi ingredients resulting in high levels of bromate, which is a chemical that can increase the risk of cancer as a result of long-term exposure.

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CRISIS INVENTORY A crisis inventory is a list of probable crises that have a high probability of occurring at Pepsi. This inventory includes the probability of product contamination, contamination of the bottling process and/or a hoax crisis occurring. This inventory also indicates the potential damage levels for each crisis, should that crisis occur. The probability that a crisis occurs is ranked on a 0-5 scale, where zero signifies it will not happen, and five is an indication that the crisis is very likely to happen. Pepsi should be ready to mitigate any issues that may turn into a crisis. The damage of a crisis occurring is also ranked on a 0-5 scale, where zero signifies that it will not happen, and five is an indication that it is very likely happen.

Crisis Inventory 5

Contamination

Contamination of Bottling Process Probability Damage

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Hoax

THRESHOLD VERIFICATION The threshold verification chart below uses the following criteria to determine when an issue officially becomes a crisis: •

Media coverage

•

Social media penetration

•

Number of affected product(s)

The purpose of the threshold verification chart is to provide a loose standard to properly activate the crisis team and the CCP. This threshold verification chart should only be used as a guideline. Factors such as media coverage and social media penetration should also be factored in when deciding if a crisis is at hand or merely an issue. Ultimately it is up to the crisis team leader to determine whether a specific issue has crossed the threshold from issue to crisis.

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Threshold Verification Chart: Contamination of the Product ATTENTION TO ISSUE(S): No action required

MANAGE THE ISSUE: No crisis team activation

ACTIVATION OF CCP

10 or fewer calls and or incident reports filed

11-20 or more calls and or incident reports filed

21 or more calls and or incident reports filed

No media coverage present

Some media attention is present E.G. local and regional newspapers along with brief mentions on local news and radio stations

Wide spread media attention local, regional, national and worldwide news outlets cover the crisis extensively

No social media penetration

Some social media penetration

Extensive social media penetration

The calls and or incident reports are confined to one region with no harm to humans

The calls and or incident reports are confined to one or more regions with reports of human harm

Calls and or incident reports are wide spread throughout one or more regions with human harm especially including death or sickness

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Why Is This Plan Important? Past beverage industry issues and crises indicate that product contamination in relation to carbonated drink manufacturing is a possible crisis that can occur. This type of crisis can negatively affect consumer demand and may affect our public(s) confidence in the Pepsi brand name and reputation. Pepsi itself could be blamed for any punitive damage(s) that may emerge from contamination of product(s). Pepsi created this plan to be executed in the case of a crisis occurring from contamination of a Pepsi product. Pepsi needs to maintain a positive reputation and good standing with shareholders, employees, customers, consumers, suppliers, distributors, and the general public.

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What Could Happen If the Plan Is Not Followed? If the CCP is not followed in the event of a crisis occurring from product contamination, the reputation of Pepsi could be damaged. Pepsiâ&#x20AC;&#x2122;s shareholders, employees, customers, consumers, suppliers, distributors, and the general public must see that Pepsi can successfully deal with the product contamination that may be perceived to be harmful if consumed. Sales are dependent on a positive public opinion of Pepsi, and if the CCP is not followed, public perception could result in unfavorable media attention, which could affect product sales.

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Has a crisis involving product contamination happened at Pepsi before? Pepsi gained worldwide attention when they experienced a case where product contamination occurred. In 2003, PepsiCo and Coca-Cola were under fire in India when they manufactured carbonated beverages that contained groundwater, which was contaminated with pesticide residue. Reports came from a New-Delhi based environmental group who claimed these products were way over the standard for contaminants, and published their findings. “The results of the study, which sampled 57 finished drink products at 25 different Indian Coca-Cola and PepsiCo plants, and ‘clearly unacceptable as we know that pesticides are tiny toxins and impact our bodies over time (Bremner & Lackamn, 2006).” Because of this, several states restricted or banned soda sales. This caused public fear of big foreign companies when they were already under harsh scrutiny for contributing to obesity. Both companies claimed their drinks were safe to consume and printed ads that pesticide levels in Indian teas and milk were higher. They also questioned the CSE’s data saying that they tested in their own labs without any outside peer review. What should have been an expansion for Pepsi into different countries turned out to be negative publicity, and a drop in consumer sales.

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Has a crisis happened to similar companies? Product contamination has transpired numerous times in the food and beverage industry. Product contamination occurs in the food and beverage industry at a higher rate since they both have a shelf life, and are managed by many different handlers before they reach consumers. Accidents happen and sometimes it is out of the companyâ&#x20AC;&#x2122;s immediate control. One well-known example is when mold was found in 1,500 glass bottles of Bon Aqua water in Poland.Â This caused a recall of all bottles. Coca-Cola, the parent company, only received one complaint about the mold problem from a consumer in the Baltic Sea coast city of Gdynia.

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CASE STUDIES This section identifies past examples of crises and management strategies. The case studies reflect Pepsiâ&#x20AC;&#x2122;s extensive risks and vulnerabilities assessment. Each case study relates similar crises within the food and beverage industry to potential crises at Pepsi. Each case study identifies a problem, a strategy and a solution. Ultimately, the case studies link past crisis management strategies and validate Pepsiâ&#x20AC;&#x2122;s crisis communication plan.

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1. Dr Pepper Contaminated With Gasoline Hospitalizes Texas Woman Who: Dr Pepper Snapple Group Where: Houston, Texas When: November, 2011 What was the crisis: A Texas woman was hospitalized after drinking a Dr Pepper that was contaminated with gasoline-type chemicals. She bought the bottle of Dr Pepper at a Houston gas station and at the bottom of the bottle was a large, white spot of unknown origin. She was taken to a hospital suffering from dizziness and vomiting. How was the crisis handled: The woman’s husband took it upon himself to have the bottle tested for contaminates. He hired a private company, Dixie Labs, whose test results came back positive for traces of multiple chemicals found in gasoline. “’We were very concerned to learn about the experience Ms. Wolmack had with our product,’ a Dr Pepper Snapple Group statement said. ‘In fact, we tested the product and other samples from the same production run and concluded that it was safe when it left our facility,’” (houston.cbslocal.com, 2011). The Houston Health Department also became involved, going to the store themselves and isolating the remaining contaminated bottles. Some were taken out of the location, while the rest were quarantined. What was the outcome: Dr Pepper Snapple Group determined the product was not contaminated when it went out for shipping. No other instances of illness had been filed with the Houston Health Department and it appeared to be an isolated incident. “It is likely this was one mishandled case, probably there at the store,” the chief of public affairs for the PEPSI Confidential -23-

Houston Health Department said, adding that proper storage would have kept the product further away from potential contaminants. â&#x20AC;&#x153;This is why we have a regulation in the food industry that food and beverages should be stored at least six inches off the floor (houston.cbslocal.com, 2011).â&#x20AC;? Lessons learned: This isolated incident did not gain much attention besides local media outlets around Houston, Texas and it did not affect beverage sales. The Houston Health Department took a more direct stance in addressing the health concerns of the contaminated Dr Pepper products, as it was determined to be a result of poor product handling by the gas station employees rather than actual product contamination from Dr Pepper Snapple Group or its affiliate manufacturing facilities. Dr Pepper Snapple Group did take a proactive approach in acknowledging the incident and gave an apologia statement. In doing so, it kept consumer trust intact.

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2. Dasani Recall Hurts Coke's Bid to Boost Water Sales in Europe Who: Coca-Cola Company’s Dasani Bottled Water Where: European market – product recall in United Kingdom When: March 2004 What was the crisis: Coca-Cola recalled all of its bottles of Dasani water in the United Kingdom after testing showed excessive levels of bromate, a chemical that can increase the risk of cancer as a result of long-term exposure, was found in the product. Recently introduced to the European market, TV and radio ads for the product were also put on hold. In addition, the British media was critical of Coca-Cola for selling filtered tap water, which Dasani was labeled as, instead of spring water which most Europeans expect. Coca-Cola wanted to expand its water business in Europe using Dasani, the second most popular bottled water brand in the U.S. behind Aquafina, which is made by PepsiCo. How was the crisis handled: Coca-Cola discovered the potential problem based on its own test results. Two days later, a second round of tests confirmed that levels of bromate exceeded U.K. legal standards and the following day Coke discussed the recall with British regulators. 500,000 bottles of Dasani water were then recalled. What was the outcome: Coca-Cola said “the problem with Dasani stemmed from adding calcium chloride to the water to comply with a U.K. requirement that bottled water contain calcium. Coke said its batch of calcium chloride contained a higher-than-expected level of bromide, and that excessive amounts of bromate, a derivative of bromide, were formed during production (Terhune & Ball, 2004).” The Food Standards Agency said Coca-Cola's PEPSI Confidential -25-

recall of all Dasani bottled waters was a “sensible measure” and said “there is no immediate risk to public health.” Lessons learned: This incident brought back memories of a contamination scare in 1999 in Belgium and France involving Coca-Cola’s soda products where children and others were hospitalized after drinking Coke. Consumer trust needed to be regained. “At the time, Coke was criticized for moving too slowly to reassure European consumers about the safety of the company's drinks. So this time, Coke officials emphasized how promptly they responded to the problem. ‘We have acted very quickly and with a high degree of competence to resolve the issue,’ said Jonathan Chandler, a spokesman for Coke's London-based European operations. ‘I think that is reassuring to consumers (Terhune & Ball, 2004).’” In addition, despite the European media’s criticisms, Coca-Cola continued with its plans to launch Dasani in France and Germany. However, the company planned to bottle Dasani by adding minerals to "source" water obtained from springs rather than sell purified tap water as it does in the United States and United Kingdom.

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3. Coke, Pepsi Fight Product-Contamination Charges in India Who: PepsiCo and Coca-Cola Where: India When: 2003 What was the crisis: PepsiCo and Coca-Cola, two of the largest beverage companies in the world, both came under fire for manufacturing carbonated beverages that contained local groundwater which was contaminated with pesticide residue. Reports from a New-Delhi based environmental group triggered the crisis when they published their findings, claiming that PepsiCo and Coca-Cola’s products tested way over the standard for contaminates. The New Delhi Center for Science and Environment [CSE] alleged that that pesticide residue found in Coca-Cola and PepsiCo brands were 24 times higher than new safety standards on soft drinks that had been developed by the Bureau of Indian Standards. “The results of the study, which sampled 57 finished drink products at 25 different Indian Coca-Cola and PepsiCo plants, are ‘clearly unacceptable as we know that pesticides are tiny toxins and impact our bodies over time,’ CSE Director Sunita Narain said when the group's findings were released on August 2, 2003 (Bremner & Lakchamn, 2006).” Consumer reaction in India was swift and the reports gained worldwide media attention. “Protesters in Mumbai and Kolkata defaced Pepsi and Coke ads and burned placards depicting soda bottles. Several states restricted or banned soda sales. Blasted with e-mail alerts from CSE, journalists and bloggers worldwide leapt on the story, raising the specter of a global consumer reaction just when soda makers were coming under harsh scrutiny for contributing to obesity (Brady, PEPSI Confidential -27-

2007).” To add to the controversy, the groundwater the companies used to make their products were also used by farmers and the local populations so in addition to the contamination crisis, Indians were also outraged that the global companies were cutting into the local water supply. How was the crisis handled: In a surprising move, the two beverage giants worked hand in hand to fight the allegations. Both companies were receiving a large amount of negative publicity and saw a significant drop in consumer sales in India after CSE’s reports were made public, which gained worldwide media attention. Both companies insisted that their products were safe for consumption and presented no health threats, as the CSE’s report claimed. PepsiCo and Coca-Cola attacked the CSE's findings in advertorials published in Indian newspapers. “And Coca-Cola has posted background information on its testing and quality procedures done at labs in Hyderabad, California, and London for its Indian drink lineup on the Web site of its Indian subsidiary. It has even offered to take Indian customers on guided tours of its processing plants as a goodwill measure (Bremner & Lakchman, 2006).” PepsiCo noted in its printed ads that pesticide levels in Indian teas and milk were far higher. PepsiCo, also questioned the accuracy of CSE's data, given the work was done by its own labs without any outside peer review. What was the outcome: The Indian population and media attention was more driven by public fear of big foreign companies infiltrating the market, rather than the actual product contamination. The product contamination simply gave the Indian public, which were already skeptical of the companies, a reason to protest against PepsiCo and Coca-Cola, which were

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introducing carbonated beverages into markets throughout India that had never had it before. The southern state of Kerala banned the manufacture and sale of all Coke and Pepsi products while other states cut soft-drink sales in schools, colleges, and hospitals. Lessons learned: Both companies went on the attack against CSE and made general statements that their products were safe. Madan Bahal, managing director of AdFactors Public Relations, a Mumbai-based firm that represents international companies such as IBM India, Barclays Bank, and ABN Amro Banking Group suggested that “a better approach would be a more ‘substantive response’ on precisely what levels of pesticides are in their drinks, why that isn't a health threat, and exactly what both companies do to keep it that way (Bremner & Lakchman, 2006).” Bahal also pointed out the contrasting approach that Cadbury India took three years prior when live worms were reported in the company's chocolate products in Mumbai. “When Indian government lab reports confirmed the problem, the company quickly investigated and overhauled its packaging procedures to calm consumer fears. That quick action and candor, plus recruiting Bollywood legend Amitabh Bachchan as a new pitchman, quickly restored the brand image (Bremner & Lakchman, 2006).” Both companies also should have addressed on a global scale the local populations’ concerns regarding their use of India’s valued water supply and the public’s fear of water shortages. “Rather than promote the company's efforts to improve water and crops, Pepsi had run splashy ads bursting with Indian celebrities. It painted titanic versions of its red, white, and blue logo on ancient Himalayan rocks and buildings around the country (Brady, 2007).” PepsiCo implemented new measures to cut down its water consumption. One bottling

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facility, in the city of Panipat, near New Delhi, has reduced water usage to 8.6 liters for every case of two dozen 8-oz.Â bottles, down from 35 liters at the start of 2005.Â However, these new measures were not bolstered about by the company to its local Indian market target audiences.

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4. Coke Bottler in Belgium Recalls Product After 41 Children Are Sent to Hospital Who: Coca-Cola Enterprises Belgium Where: Bornem, Belgium When: June, 1999 What was the crisis: 2.5 million bottles of Coke were recalled in Belgium after 41 children became ill after drinking it at a school. They were treated at a hospital in Bornem for symptoms including headaches, stomach aches, and diarrhea after drinking Coke at O.L. Vrouw-Secondary School. Thirty-three children were treated the same day they drank the Coke and another eight children were treated the next day. All of the children were subsequently released. “The children, ages 12 to 14, told hospital officials that the Coke had smelled different than normal and gave a burning sensation to the tongue, but they drank it anyway because of a contest. Under a promotion in Belgium, Coke is giving away prizes in return for bottle caps (Brannigan, 1999).” How was the crisis handled: The company traced the problem to a batch of 20-centiliter bottles produced at a Coca-Cola bottling plant in Antwerp, Belgium in early June of 1999. Coca-Cola voluntarily removed all of the products, about 100,000 cases totaling 2.5 million bottles, from shelves within 24 hours of the children’s hospitalization. Coke dispatched a team of scientists and engineers to the Antwerp plant to investigate the cause of the unusual smell and taste reported by the children. Coca-Cola’s manufacturing controls made it easy to determine where the product came from, where it went and what ingredients went into it. This enabled the company to isolate and limit the problem. PEPSI Confidential -31-

What was the outcome: Tests of samples from the batch turned up no evidence of toxins or anything harmful and no other batches were found to be affected. “It's very difficult to find the cause of off-taste issues’, Rob Baskin, a Coca-Cola Co. spokesman in Atlanta said. ‘You can test for toxicity. The fact that all the kids were released from the hospital is a demonstration they are fine (Brannigan, 1999).’” The spokesperson for Coke in Brussels, Belgium also released a statement saying that Coca-Cola was concentrating its efforts to try to determine what caused the off flavor of the affected batch and insisted that the incident was a quality issue not a health issue. Lessons learned: “The recall was an embarrassment for Coca-Cola which prides itself on maintaining consistent quality and routinely tests beverages from its bottling plants around the world for quality (Brannigan, 1999).” It was the first large recall the company initiated within the European market, which Coca-Cola had recently began to heavily target.

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5. Mold Forces Recall of Bottled Water by Coke in Poland Who: Polish unit of Coca-Cola – London bottling company 50% owned by Coca-Cola Where: Warsaw, Poland When: June 1999 What was the crisis: Coca-Cola recalled all glass bottles of Bon Aqua water in Poland after about 1,500 bottles of the water were found to contain mold. The recall came as the company tried to repair damage to its image in the wake of huge recalls of soft drinks in Belgium and France earlier the same month. How was the crisis handled: Coca-Cola said it received only one complaint about the mold problem in Poland which came from a consumer in the Baltic Sea coast city of Gdynia. “A spokesman said the mold created no health risk and posed ‘only an appearance problem.’ But the bottling company said it notified Polish health authorities and decided to recall all bottles as a precaution (Williams & Hagerty, 1999).” A Coca-Cola spokesperson said the company was being extremely proactive, especially given the company’s recent negative widespread criticism in the European market, referring to health scares which resulted in temporary restrictions on sales of Coca-Cola soft drinks in Belgium, France and Luxembourg earlier that month. What was the outcome: Coca-Cola Beverages said it would use plastic bottles for Bon Aqua in Poland from now on. Polish health authorities inspected two plants in Poland that produce Coca-Cola products in glass bottles. “A spokesman for the Polish unit of Coca-Cola Beverages, said the company was trying to determine the exact source of the mold. He PEPSI Confidential -33-

couldn't provide a figure on how many bottles would be recalled but said that 99% of Bon Aqua bottles weren't affected by mold. The company said Bon Aqua isn't exported from the Polish plants (Williams & Hagerty, 1999).” Coca-Cola blamed the recalls in France and Belgium on separate quality-control breakdowns at two bottling plants. At its plant in Antwerp, Belgium, the company said, contaminated carbon dioxide produced a bad odor. At a plant in Dunkirk, France a fungicide accidentally rubbed off on the bottom of some cans, producing a “medicinal” odor that might make some people ill. It was deemed that none of the incidents were a health threat and authorities in Belgium, France, and Poland declared the company could continue with its current sales and distribution. Lessons learned: Coca-Cola was already trying to repair a damaged reputation in Europe from two prior product recalls earlier in the month. The company also was planning on introducing new products to the European market. This mold recall only hurt the company’s reputation further and made their target publics in Europe even more skeptical on the company and its products. Overall sales for the company fell 4% over the course of a couple months.

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CRISIS MANAGEMENT TEAM Director of Public Relations 1. The director will activate the crisis team in an event of a crisis (via internal phone line if crisis occurs during working hours). If members of crisis team are on a regular day off (RDO), or if members of the crisis team are on vacation, the director will contact crisis team members via issued communications devices, i.e., pagers and cell phones that crisis team members are required to carry at all times. 2. The director will keep the crisis team up-to-date on all issues surrounding the crisis. The higher ranking members of the crisis team, the senior investigator, organic chemist, director of engineering, doctor of internal medicine, and the supply chain president report directly to the director of public relations. 3. The director will approve press releases drafted by the public relations team on the status of the crisis. The director will have final approval on the release of all information that pertains to media relations.

Director of Supply Chain (Bottling) 1. The director of the Pepsi supply chain will assist the crisis team with his/her knowledge of Pepsi logistical information, and his/her familiarity and understanding of the bottling process that Pepsi utilizes. The director of the Pepsi supply chain will also help in locating contaminated product(s). 2. The director of the Pepsi supply chain will determine which product(s) need to be recalled based on the information he/she gathers from the investigation. The director of the Pepsi supply chain will also work directly with Pepsi distributors, vendors and retailers.

Doctor of internal medicine or Ph.D in microbiology 1. The Doctor of internal medicine or Ph.D, in microbiology will assist the crisis team with the accurate dissemination of medical information concerning the issue. He/She will also conduct all the laboratory parts of the investigation. He/She will identify all the scientific information necessary and will compile the information to inform the general public of the truths and myths of the issue(s) at hand.

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Senior Attorney (internal) 1. The senior attorney assists the director of public relations on legal aspects relating to the crisis. The senior attorney will act as a consultant to the director of public relations during the release of information when dealing with media outlets. 2. The senior attorney will mitigate all aspects of lawsuits, both in civil and criminal court cases that are levied at Pepsi.

Director of Engineering 1. The director of engineering will assist the investigation team on where the contamination began. The director of engineering has intimate knowledge about the machines and the mechanical processes. He/She can act as a resident advisor to the investigation team and the director of public relations. His/Her job will be to disseminate information to the media regarding Pepsiâ&#x20AC;&#x2122;s hazard analysis and critical control points (HACCP) that are in place at the Pepsi bottling and manufacturing plants. 2. The director of engineering will assist the crisis team on the disbursement of information of quality control measures and mandates that Pepsi requires at all of its manufacturing and bottling plants.

Organic Chemist (Internal) 1. The organic chemist will assist in the investigation on the issues surrounding the crisis based on his/ her scientific knowledge of carbonated drink manufacturing processes. He/She understands the stepby-step process that is taken in order to make the Pepsi products, and also understands the ingredients used. He/She can dispel any rumors or hearsay about the integrity of the organic and non-organic ingredients used by Pepsi.

Senior Investigator (HR) 1. The senior investigator will be a retired police officer from a major metropolitan city (preferably from a homicide unit) or a retired sworn federal agent. The senior investigator will investigate the claims brought up by members of the public not employed by Pepsi as well as employees of Pepsi. He/She will also explore any leads of possible employee involvement and/or misconduct in the issues at hand. 2. The senior investigator questions all people who may have information regarding the issue at hand. He/She will also be the liaison between any law enforcement agencies (LEAs) that may become involved in the investigation.

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THE ACTION PLAN The Public relations office receives notification of an issue concerning Pepsi bottled and canned products. Pepsi can receive notification via phone call, or by consistently monitoring all major news networks and websites. Pepsi will also monitor social media sites for any negative mentions of Pepsi, or Pepsi Products.

If the complaint is from a person: Public Relations team member will complete incident report while on the phone with the caller to ensure Pepsi gets as much information from the call as possible (i.e., lot numbers).

Is the claim from the media reporting on a story?â&#x20AC;&#x201D;If a reporter is calling about a story, do not give out any assumed information, contact the director of the public relations department. The director of the public relations department will contact all necessary personal to adequately answer the reporterâ&#x20AC;&#x2122;s inquires and to get all pertinent information (i.e., lot numbers), and agree to have a representative from Pepsi call the reporter back at an agreed time.

Public Relations Action Plan

Establish if the claim is already being circulated on major news mediums. If the claim is being circulated on major media outlets, begin recording all news coverage around-the-clock until the crisis has been officially mitigated. For print media, begin cataloging all mentions of Pepsi. Then assert if the claim is already being circulated on social media. If the claim is being circulated on social media sites, compile a list of the sights and begin to catalog all the mentions.

-Initiate an internal investigation to compile information about the said occurrence. -Consolidate all results from the investigation and compile the facts. -Are the claims found to be true after the investigation? -The director of the public relations team will validate the investigative reports. -If the director of the public relations team validates the investigative reports proceed to the next step below.

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Activation of the crisis team and crisis communications plan

The public relations director will instruct all members of the crisis team to meet at the primary EOC for implementation of the CCP. The director of public relations will instruct the Pepsi call center to direct all media inquiries to the EOC call center after verification of journalist credentials. The director of public relations will email all Pepsi personnel the expectations of Pepsi employees not to talk to the media on or off work hours. Public relations team prepares response to media inquiries.

The director of public relations will consult with pertinent crisis team members about a more in depth investigation into the affected lot numbers of Pepsi products. Director of public relations, supply chain president, director of engineering and senior investigator make the necessary arrangement to pull all affected products off of shelves and make sure they are no longer distributed. The senior investigator will pinpoint the origin of the problem and affected plant(s). An investigation into the most likely sources of contamination will include the senior investigator, organic chemist, director of engineering, and doctor of internal medicine / PHD in microbiology and Supply Chain President.

Inform key publics (shareholders, employees, customers and suppliers, distributors and the general public) using press release materials that an investigation into the crisis has begun. Upon confirmation of contamination at the specific plant(s), production will be temporarily suspended pending resource and water testing. Senior investigator, organic chemist, director of engineering, and doctor of internal medicine / PHD in microbiology and supply chain president. Senior investigator, organic chemist, director of engineering, and doctor of internal medicine / PHD in microbiology and supply chain president will conclude as to if it is safe to recommence manufacture. Sanitization of affected plants will take place regardless if it necessary or not.

Director of public relations will maintain contact with media representatives and attempt to bolster in order to discredit all hoax claims. The director of public relations will inform media outlets that the claim is nothing more than a hoax. The Public Relations team will use pre-produced news releases to disseminate information to media outlets announcing that hoax is circulating and all Pepsi products are safe to consume. Pepsi will make the public aware that Pepsi is the victim of a malicious hoax and nothing more. If the media demands a press conference, the public relations team will organize a press conference. The director of public relations will again monitor media penetration and will examine if the stories have subsided. Once the crisis has been mitigated, the director will evaluate the response to crisis using the post crisis evaluation.

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CRISIS DIRECTORY Chief Executive Officer (CEO) Marco Martinez (555) 555-5551 mmartinez@pepsi.com Director of Public Relations Nicole Jimenez (555) 555-5552 njimenez@pepsipr.com Supply Chain President (Bottling) Winsor Williams (555) 555-5553 wwilliams@pepsibottling.com Senior Attorney (internal) Rhiannon Conrado (555) 555-5554 rconrado@pepsilegal.com Doctor of internal medicine/ PHD in microbiology Erin Rader (555) 555-5555 eradar@medicine.com Director of Engineering Sean Smith (555) 555-5556 ssmith@engineering.com Organic Chemist (Internal) Melvin Ingram (555) 555-5557 mingram@pepsichemist.com

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Public Relations Team Rusty Bauer President of Public Relations (555) 555-6546 rbauer@publicrelations.com Adam Herrera Director of Media Organization (555) 555-6587 aherrera@publicrelations.com Andy Smith Director of Press Drafting (555) 555-9854 asmith@publicrelations.com Roxanne Southern Director of Onsite Communications (555) 555-1234 rsouthern@publicrelations.com Paul Jones Director of Communications and Management (555) 555-8329 pjones@publicrelations.com Senior Investigator (HR) Kurt Edwards (555) 555-5559 kedwards@humanresources.com

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COMMUNICATION ASSIGNMENTS R. Conrado

N. Jimenez

M. Martinez

EMPLOYEES

- telephone - news release - letter by messenger

- community bulletin board

- email - letter by mail - Newsletter - Meetings

- fax

N/A

EXECUTIVES

- letter by mail - newsletter

- fax

- telephone - email - letter by messenger - news release

N/A

- meetings - community bulletin board

BOARD OF DIRECTORS

- letter by mail

- telephone - fax - news release

N/A

- email - newsletter - meetings

- letter by messenger - community bulletin board

ELECTRONIC MEDIA

- fax - letter by messenger - letter by mail - news release

- newsletter

- community bulletin board

- telephone

- email - meetings

DAILY NEWSPAPER

- email - letter by mail

- community bulletin board - meetings

- fax - newsletter - news release

- letter by messenger

- telephone

WEEKLY NEWSPAPER

- telephone - newsletters - meetings

- letter by mail - community bulletin boards

- email - letter by messenger

- fax

- news release

SHAREHOLDERS

- fax - newsletter

- telephone - letter by messenger - meetings

- email - newsletter

- letter by mail - community bulletin boards

N/A

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E. Rader

W. Winsor

EMPLOYEE NONDISCLOSURE AGREEMENT To: Pepsi employees Subject: Employee protocol regarding release of information to media

In light of the recent media attention that our company is receiving, it is necessary that all employees are aware and follow company protocol regarding the release of information. Every employee will be required to sign a document stating his or her cooperation concerning the release of information. Any communication with media personnel is discouraged. Proprietary information, such as Pepsi’s ingredients, past incidents, or the current incident, are not to be discussed without the approval of upper management. Thank you for your cooperation.

Sincerely, NAME TITLE

EMPLOYEE NONDISCLOSURE AGREEMENT THIS EMPLOYMENT NONDISCLOSURE AGREEMENT (this “Agreement”) is made as of ______ , 2012 (the “Effective Date ”), by and between ______(Employee) , and Pepsi. This is an agreement between Pepsi and _______ (Name of employee) concerning the confidentiality of information relating to Pepsi.

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MEDIA CONTACT LIST ABC News 147 Columbus Ave., New York, NY 10023 Phone: 212-456-7777 Associated Press 450 West 33rd St., New York, NY 10001 Phone: 212-621-1500 Fax: 212-621-1723 General Questions and Comments: info@ap.org BBC Television Center, Wood Lance, London, W12 7RJ, United Kingdom Phone: 44 (20) 8743 8000 BBC America 747 Third Avenue, 6th Floor, New York, NY 10017 Phone: 212-705-9300 CBS News 524 W. 57 St., New York, NY 10019 Phone: 212-975-4321 Fax: 212-975-1893 Emails for all CBS news programs: CBS Evening News: evening@cbsnews.com The Early Show: earlyshow@cbs.com 60 Minutes: 60m@cbsnews.com 48 Hours: 48hours@cbsnews.com Face The Nation: ftn@cbsnews.com CNBC 900 Sylvan Avenue, Englewood Cliffs, NJ 07632 Phone: (201) 735-2622 Email: info@cnbc.com

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CNN One CNN Center, Box 105366, Atlanta, GA 30303-5366 Phone: 404-827-1500 Fax: 404-827-1784 (Public Relations) Email forms for all CNN news programs Fox News Channel 1211 Ave. of the Americas, New York, NY 10036 Phone: (212) 301-3000 Fax: (212) 301-4229 comments@foxnews.com Emails for all Fox News Channel programs: Special Report with Bret Baier: special@foxnews.com FOX Report with Shepard Smith: Foxreport@foxnews.com The O'Reilly Factor: oreilly@foxnews.com Hannity: hannity@foxnews.com, On the Record with Greta: ontherecord@foxnews.com Glenn Beck: GlennBeck@foxnews.com The Los Angeles Times 202 West First Street, Los Angeles, CA 90012 Phone: 213-237-5000 Fax: 213-237-4712 MSNBC/NBC 30 Rockefeller Plaza, New York, NY 10112 Phone: (212) 664-3720 Fax: (212) 664-4426 (NBC News) Emails for all MSNBC/NBC news programs: Dateline NBC: dateline@nbcuni.com NBC Nightly News with Brian Williams: nightly@nbc.com NBC News Today: today@nbc.com NBC Weekend Today: WT@nbc.com National Public Radio (NPR) 635 Massachusetts Ave. NW, Washington, DC 20001-3753 Phone: 202-513-2000 Fax: 202-513-3329 PEPSI Confidential -44-

The New York Times 620 8th Ave., New York, NY 10018 Phone: 212-556-1234 D.C. Bureau phone: 202-862-0300 Letters to the Editor (for publication): letters@nytimes.com Write to the news editors: news-tips@nytimes.com Corrections: nytnews@nytimes.com Newsweek 7 Hanover Square, Newyork, Ny, 10004 Phone: 212-445-4000 Letters to the Editor: letters@newsweek.com PBS 2100 Crystal Drive, Arlington VA 22202-3785 Phone: 703-739-5000 or 703-739-5290 (Ombudsman) Fax: 703-739-5777 The Rush Limbaugh Show 1270 Avenue of the Americas, New York, NY 10020 Phone (on air): 800-282-2882 (Between 12 and 3 PM) Fax: 212-445-3963 E-mail: ElRushbo@eibnet.com Sean Hannity Show Phone (on air): 800-941-7326 (3-6 PM Mon-Fri) Sean Hannity:212-613-3800 James Grisham, Producer: 212-613-3832 E-mail: Phil Boyce, Program Director phil.boyce@citcomm.com Email: the Sean Hannity Show Time Time & Life Bldg., Rockefeller Center, 1271 Avenue of the Americas, New York, NY 10020-1393 Phone: 212-522-1212 Fax: 212-522-0003 Letters to the Editor letters@time.com

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United Press International 1133 19th Street, NW Washington, DC 20036 Telephone: 202-898-8000 FAX: 202-898-8048 Comments and Tips: newstips@upi.org U.S. News & World Report 1050 Thomas Jefferson St., NW, Washington, DC 20007 Phone: 202-955-2000 Fax: 202-955-2049 Letters to the Editor letters@usnews.com USA Today 7950 Jones Branch Dr., McLean, VA 22108 Phone: 703-854-3400 Fax: 703-854-2078 Corrections: accuracy@usatoday.com The Wall Street Journal 1211 Avenue of the Americas, New York, NY 10036 Phone: 212-416-2000 Fax: 212-416-2658 Letters to the Editor: wsj.ltrs@wsj.com Comment on News Articles: wsjcontact@dowjones.com Comment on News Coverage: newseditors@wsj.com The Washington Post 1150 15th St., NW, Washington, DC 20071 Phone: 202-334-6000 Ombudsman: 202-334-7582 Fax: 202-334-5075 Letters to the Editor: letters@washpost.com Ombudsman: ombudsman@washpost.com

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STANDBY PRESS RELEASE: NOTIFY MEDIA OF INVESTIGATION

PEPSICO, INC. 700 Anderson Hill Road Purchase, NY 10577 Contact: Director of Public Relations Marco Martinez Phone: (XXX) XXX-XXXX email: xxxxxxxxx@pepsico.com FOR IMMEDIATE RELEASE

PEPSI BEGINS INVESTIGATION OF TAINTED DRINKING PRODUCTS PURCHASE, N.Y.—Due to recent reports of possibly contaminated and/or tainted Pepsi products, Pepsi has announced a recall on ______ number of bottles/cans to be removed off shelves.

Pepsi is currently investigating reports that ________________ occurred (possible cause

of contamination). The investigation is ongoing, and Pepsi is committed to discovering the origin of the problem.

Pepsi’s main concern is the safety of our consumers, so Pepsi will take all necessary

precautions to ensure that all products are of the highest quality before distribution.

More information will be released as more details become available. ### PEPSI Confidential -47-

PRESS RELEASE: NOTIFY MEDIA THAT PEPSI DISCOVERED THE PROBLEM PEPSICO, INC. 700 Anderson Hill Road Purchase, NY 10577 Contact: Director of Public Relations Marco Martinez Phone: (XXX) XXX-XXXX email: xxxxxxxxx@pepsico.com FOR IMMEDIATE RELEASE

PEPSI DISCOVERED THAT THE CAUSE OF CONTAMINATION WAS DUE TO PURCHASE, N.Y. —Due to reports from different locations in the United States, Pepsi has announced a recall on ________ number of bottles to be removed off shelves. After a through internal investigation by ____________(name), director of quality control, Pepsi has determined that the product contamination was from ____________(where is came from).

Pepsi wants to personally apologize to all who were affected by this incident. Pepsi

identified that ________(number) of bottles where affected, and that only ____ percent were affected by this incident.

As of ________(date), Pepsi has pulled all bottles of production and issued a deferment

in production. Pepsi stands by its set of corporation’s values that helps ensure we achieve all outcomes with integrity. PEPSI Confidential -48-

PEPSI â&#x20AC;&#x201D; Page 2

When someone files a claim through Pepsi, we take the claim seriously, and investigate

the issue thoroughly.

At the end of this investigation, it was concluded that contamination of the product did

occur, but the incident was isolated. We are currently taking the necessary steps to ensure that an incident such as this never happens again.

Each bottle or can is labeled with its own serial number which is located on the bottom of

each can or bottle. All bottles ending in these serial numbers ______ were found to be contaminated. Any purchased bottles/cans containing these serial numbers should visit the Pepsi website at www.pepsi.com to obtain a full refund.

All Pepsi products will be safe to drink as of _________(date) and will be free of

contamination. Pepsi upholds the highest standards and takes consumer safety extremely serious and will continue to ensure that all safety standards are met. Thank you for your continued trust and confidence in Pepsi products.

###

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TYPES OF MEDIA QUESTIONS Loaded Question: Q: “Isn’t it true that your company was aware of the product contamination of lot # 9567459832 and Pepsi allowed its customers to purchase a contaminated product?” A: Do you mean were we aware of the contamination? No, we were not. Pepsi would never intentionally put the public at risk.

Naïve Question: Q: “Tell me, what is the situation regarding the contamination of Pepsi’s Diet Pepsi product?” A: The situation is still under investigation. We will keep the public informed as information is verified and confirmed.

Speculative Question: Q: “If Pepsi bottles and cans have been contaminated with chemicals and are responsible for the recent customer complaints, is your company prepared to stop production and investigate?” A: As of right now, there is no indication that Pepsi bottles or cans have been subject to contamination of any kind, nor is there any evidence to indicate a connection to the recent outbreak and our product.

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Know-it-all Question: Q: “We have been covering the cyanide contamination of Pepsi and would just like you to confirm some of the details of the contamination.” A: We cannot speculate on the alleged product contamination at this time, it is still under investigation.

Multi-part question: Q: “How do you plan to handle the recent product contamination and do you have anything to say to those affected by the contamination?” A: I’ll take the first part of the question. We are currently investigating the recent contamination and want to pledge to the public that the necessary resources are being invested to resolving customer complaints. I would like to reassure those affected that Pepsi is doing everything in our power to amicability resolve the current situation.

Off the record question: Q: “Just between you and me, is there anything that you can give me about the groundwater contamination of Pepsi?” A: No.

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NEWS CONFERENCE ETIQUETTE 1. Make sure you clearly identify your name by spelling it out audibly to ensure the media gets your name and title correct. 2. Identify the crisis team and the titles they hold. 3. Briefly cover what each team memberâ&#x20AC;&#x2122;s responsibilities cover. 4. Clearly outline the conference format, and when it is appropriate for the media to answer questions. 5. If there is human harm involved in the crisis be sure to look and express Pepsiâ&#x20AC;&#x2122;s grief, surprise and disappointment. 6. Make sure to cover any Pepsi approved status updates and corrective action being taken. 7. Do not use any personal statements that could come off as selfish. 8. Do not attempt to answer any questions that you do not have a definite correct answer. 9. Look directly at the audience when you are answering a question. 10. Do not read the answers to any questions you are asked from a piece of paper at your podium.

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NEWS CONFERENCE PRESS SCRIPT

Good morning/afternoon/evening ladies and gentlemen. Thank you for being here today. We are here to discuss the claims regarding Pepsi products. My name is ___________ (name), and I am the __________ (title) here at Pepsi. On ___________ (date), we began receiving reports that Pepsi products were allegedly compromised. After a series of similar reports were brought to attention of our company, we promptly launched an internal investigation that was led by________ (name), our director of quality control. The investigation is ongoing, and while we have nothing concrete to disclose at this time, we will provide additional details as they become available. Pepsi takes consumer safety extremely serious and has invested significant resources to ensure that our safety standards are met. We are committed to maintaining our high-quality production standards and thank our consumers for their continued trust and confidence in our brand. We are committed to maintaining our reputation as a world leader in the beverage industry by setting industry standards for the safe handling and manufacturing of carbonated beverages. Pepsi believes in our products and will work tirelessly to rebuild the relationship of trust our consumers have placed in us. We are grateful for their trust and will strive to exceed their expectations. At this time, I will not be taking any questions.

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TELEPHONE LOG SHEET

Priority:_______________________________ Date: ______________ Time: _______________

Call Received From: Name: ________________________________________________________________________ Organization:_________________________________________________________________ Location: _____________________________________________________________________ Message:______________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

Call Back by: Date: ______________ Time: ______________ Notes:________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

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INCIDENT REPORT SHEET DATE OF INCIDENT REPORT___________________________________________________ INCIDENT CLAIM PERSONAL INFORMATION FULL NAME:__________________________________________________________________ HOME ADDRESS:_____________________________________________________________ PRIMARY PHONE NUMBER: ___________________________________________________ PLEASE CIRCLE: EMPLOYEE/NON-EMPLOYEE IF EMPLOYEE, JOB TITLE _____________________________________________________ INFORMATION ABOUT INCIDENT DATE OF INCIDENT:_____________________ TIME:_______________________________ LOCATION OF INCIDENT (CITY, STATE):________________________________________ WAS ILLNESS OR INJURY INVOLVED (PLEASE CIRCLE) YES/NO DESCRIBE INCIDENT:_________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ SERIAL NUMBER OF AFFECTED BOTTLE(S)/ CAN(S) ______________________________________________________________________________ INCIDENT REPORTER INFORMATION NAME OF PERSON SUBMITTING REPORT:_______________________________________ POSITION WITH COMPANY:____________________________________________________

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MEDIA LOG SHEET

NAME: ______________________________________________________________________ DATE/TIME OF CALL: ________________________________________________________ TYPE OF MEDIA: ____________________________________________________________ REPORTER NAME: ___________________________________________________________ REPORTER’S DEADLINE: ____________________________________________________ PHONE NUMBER: ___________________ EMAIL: ________________________________ DATE/TIME CALL RETURNED: ______________________________________________________________________________ OUR RESPONSE: _________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ FOLLOW-UP PROMISED? Y/N TIME AND DATE:_____________________________________________________________

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CRISIS: CONTAMINATION OF THE BOTTLING PROCESS

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What is “contamination of the bottling process”? Definition of Contamination: The presence of extraneous, especially infectious, material that renders a substance or preparation impure or harmful. • Contamination of the bottling process could become an apparent problem for Pepsi. Example: It’s possible that shards of glass could fall into Pepsi bottles, making faulty Pepsi products.

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Crisis Inventory 5

Contamination

Contamination of Bottling Process Probability Damage

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Hoax

THRESHOLD VERIFICATION The threshold verification chart below uses the following criteria to determine when an issue officially becomes a crisis: •

Media coverage

•

Social media penetration

•

Number of affected product(s)

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Threshold Verification Chart: Contamination of the Bottling Process ATTENTION TO ISSUE(S): No action required

MANAGE THE ISSUE: No crisis team activation

ACTIVATION OF CCP

10 or fewer calls and or incident reports filed

11-20 or more calls and or incident reports filed

21 or more calls and or incident reports filed

No media coverage present

Some media attention is present E.G. local and regional newspapers along with brief mentions on local news and radio stations

Wide spread media attention local, regional, national and worldwide news outlets cover the crisis extensively

No social media penetration

Some social media penetration

Extensive social media penetration

The calls and or incident reports are confined to one region with no harm to humans

The calls and or incident reports are confined to one or more regions with reports of human harm

Calls and or incident reports are wide spread throughout one or more regions with human harm especially including death or sickness

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Why Is This Plan Important? Contamination of the bottling process has become an increasingly possible crisis within the beverage industry because manufacturing errors do happen. If these manufacturing errors do affect bottles of Pepsi being distributed to customers, Pepsi needs to be ready to handle the situation. Pepsi does not want customers to be harmed due to internal mistakes, so Pepsi will do everything in its power to ensure the safety of its customers. While customer safety is the number one priority, consumer demand would also be another rising issue. In a crisis like this, our publics may stop purchasing Pepsi because of the possibility that the information surrounding the issue becomes increasingly negative and widespread. As a result, Pepsiâ&#x20AC;&#x2122;s brand and reputation could change drastically, but this is an issue that can be prevented. By understanding the mistakes of the contamination of the bottling process at previous companies, and following the guidelines of this plan, Pepsi can take the necessary steps needed to ensure the best possible outcome for its shareholders, employees, customers, consumers, suppliers and distributors and the general public.

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What Could Happen If the Plan Is Not Followed? If the issue of contamination of the bottling process arises, and Pepsi does not follow the plan presented here, then Pepsi would be inviting the possibility of a major crisis. In the event that this crisis may occur, negative media coverage could damage Pepsiâ&#x20AC;&#x2122;s brand and reputation, when it would have been just as easy to address the issue and prevent the crisis altogether. By successfully following the CCP (Crisis Communication Plan), Pepsi can take preventative measures in order to properly secure and contain the amount of damage caused by bottling process being compromised.

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Has a crisis involving contamination of the bottling process happened at Pepsi before? There have been no major incidents that involve the contamination of the bottling process. Â If this were to occur, Pepsi will take all necessary precautions. Pepsi has created a crisis plan that in the event this did happened when we would be prepared and act accordingly.

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Has a crisis with the bottling process happened to similar companies? Contamination of the bottling process has occurred to similar companies in the beverage industry copious of times. The beverage industry is commonly targeted for contamination and the most common occurrence is small shards of glass that enter the bottle. For example, a major incident that happened in 2011 where glass was found in a small number of beer bottles produced by the Wells and Young’s Brewing Company. Wells and Young’s Brewing Company had to recall up to 750,000 bottles from 12 different brands of beer and launched and investigation investigating how fragments of glass could have entered the bottles. As a highly visible member of our industry, Pepsi must be prepared to implement the following crisis communication plan. Pepsi takes pride in its reputation and must protect its relationship with its shareholders, employees, customers, suppliers, distributors and the general public.

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CASE STUDIES This section identifies past examples of crises and management strategies. The case studies reflect Pepsiâ&#x20AC;&#x2122;s extensive risks and vulnerabilities assessment. Each case study relates similar crises within the beverage industry to potential crises at Pepsi. Each case study identifies a problem, a strategy and a solution. Ultimately, the case studies link past crisis management strategies and validate Pepsiâ&#x20AC;&#x2122;s crisis communication plan.

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1. Wells and Young’s Product Recall Who: Wells and Young’s Brewing Company Where: England, UK When: 2011 What was the crisis: Glass was found in a small number of beer bottles produced by the Wells and Young’s Brewing Company. “The company said the problem was identified by internal quality checks and no customers had complained (BBC News).” How was the crisis handled: Wells and Young’s Brewing Company recalled up to 750,000 bottles from 12 different brands of beer, providing a list of the beers affected to the media. A spokesperson for the brewing company stated that the company is inspecting how fragments of glass could have entered the affected bottles. And the production director Jim Roberston said, “The risk of glass in bottles is extremely low, however consumer safety is our number one priority and that is why we have made this decision (BBC News).” What was the outcome: Because Wells and Young’s discovered the problem, and they responded quickly and effectively, there was minimal if any negative aftermath. Lessons learned: Be proactive and honest with key publics, and the issue can be contained.

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2. Brewers Recall 800,000 bottles of Stella Artois Who: Stella Artois Where: England, UK When: 2010 What was the crisis: Shards of glass were found in a batch of Stella Artois bottles. How was the crisis handled: When the issue was discovered, the brewers, InBev, recalled 800,000 bottles of the brand Stella Artois. InBev contained the issue by acknowledging which batches were affected. InBev then announced the codes printed on the neck of the bottles that they believed to be affected by the damaged batch. Any customers who purchased cases of Stella Artois with these codes were then asked to return the cases for a full refund. InBevâ&#x20AC;&#x2122;s spokesperson apologized on behalf of the company and addressed that the issue at hand was an isolated incident, blaming the faulty bottles on the supplier (France, 41). What was the outcome: Because the affected batch of faulty bottles were only the result of a single production run, and because the company discovered the issue before it could affect customers, there was minimal to no backlash. Lessons learned: It is important for companies, like InBev or Pepsi, to take-charge of a bad situation immediately and effectively, which they did. InBev also found the root of the problem to be from the supplier, and focused the blame on them, deterring customers and consumers from viewing the brand Stella Artois with a negative impression. Overall, what Pepsi can take from this incident is understanding how to successfully shift blame to the culpable party. PEPSI Confidential -68-

3. Sam Adams Issues Recall Who: Samuel Adams Where: United States When: 2008 What was the crisis: Boston Beer Co., the Boston brewer of Sam Adams craft beers, discovered defective bottles containing glass particles. “The ‘small grains or bits of glass’ were discovered during a quality control operation at the firm's Cincinnati brewery, Boston Beer said (Krasner).” How was the crisis handled: First the brewer, Boston Beer Co., recalled an undermined amount of Sam Adams beers, specifically the 12-ounce brown glass bottles. Then the company stated that the defective bottles were at the fault of the glass company that provides Boston Beer with about a quarter of its glass bottles. Boston Beer’s spokesperson, Michelle Sullivan, “estimated the particles of glass [were] found in fewer than 1 percent of the bottles coming from the problem plant (Krasner).” Boston Beer then released the code information listed on the bottom of the potentially defective bottles. In addition, the founder of Boston Beer, Jim Koch, addressed his disappointment with the situation, stating that “Brewing great beer is not enough. Because these bottles [are] supplied to us from an outside vendor, we didn't live up to our drinkers' expectations.” What was the outcome: Sam Adams resolved the problem internally, media coverage was minimal. Lessons learned: If you can, resolve the issue internally. PEPSI Confidential -69-

4. Anheuser-Busch Recalls 5.7 Million Bottles of Beer in Europe Who: Anheuser-Busch Companies Where: Spain, Belgium, Portugal, Germany, Denmark, Sweden, the Netherlands, Switzerland, Latvia, Cyprus, Malta, and France. When: 1999 What was the crisis: Customers complained of glass slivers found on the rim of bottles with twist off caps. Anheuser-Busch “traced the defects to two glass suppliers, one in Madrid and the other in Portugal, where faulty manufacturing equipment caused the rims of some bottles to extend more than normal, making them susceptible to breaking off (Goodman, 1999).” How was the crisis handled: The Anheusner-Busch Companies first recalled 5.7 million bottles its Budweiser and Bud brands. Then the companies worked with the glass suppliers to fix the problem. The two glass plants that were accused of causing the glass slivers to appear on the rim of beer bottles across Europe worked “to help resolve the problem by revising their production equipment that will assure the problem will not recur (Goodman, 1999).” What was the outcome: The recall only affected “less than 1 percent of its beer sold annually in Europe (Goodman, 1999),” and because Anheuser-Busch took the initiative to quickly address the problem and issue the recall, their sales and product image were not damaged by negative media attention. Lessons learned: Respond quickly, be proactive, and be honest with customers and other important publics.

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5. Heineken Issues Recall Who: Heineken Where: Britain, Sweden, Hungary, Hong Kong, Israel, Finland and Austria When: 1993 What was the crisis: Glass splinters were found in Heineken bottles. How was the crisis handled: Heineken decided to destroy 17 million undistributed bottles of beer, and recalled 3.5 million from seven different countries. These countries included Britain, Sweden, Hungary, Hong Kong, Israel, Finland and Austria. A spokesperson for Heineken, Chris Woerts stated that only about 1 percent of the beer destroyed and recalled contained glass splinters, but that the company does not want to take any risks. “It may only be one case, but even that would be one case too many,” Woerts said. It was discovered that the slivers of glass “were caused by defective glass used to make the export bottles,” and Heineken “ruled out any question of sabotage or foul play (Reut).” Heineken informed their publics of the incident through a series of press announcements and advertisements. What was the outcome: There was no reported incidents where customers were harmed, and there was very minimal media coverage. Lessons learned: Providing materials like announcements and advertisements to the general public can be effective when relaying a need-to-know information. It can also be helpful when trying to maintain an honest and trustworthy company image.

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Public Relations Action Plan

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Activation of the crisis team and crisis communications plan

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COMMUNICATION ASSIGNMENTS R. Conrado

N. Jimenez

M. Martinez

EMPLOYEES

- telephone - news release - letter by messenger

- community bulletin board

- email - letter by mail - Newsletter - Meetings

- fax

N/A

EXECUTIVES

- letter by mail - newsletter

- fax

- telephone - email - letter by messenger - news release

N/A

- meetings - community bulletin board

BOARD OF DIRECTORS

- letter by mail

- telephone - fax - news release

N/A

- email - newsletter - meetings

- letter by messenger - community bulletin board

ELECTRONIC MEDIA

- fax - letter by messenger - letter by mail - news release

- newsletter

- community bulletin board

- telephone

- email - meetings

DAILY NEWSPAPER

- email - letter by mail

- community bulletin board - meetings

- fax - newsletter - news release

- letter by messenger

- telephone

WEEKLY NEWSPAPER

- telephone - newsletters - meetings

- letter by mail - community bulletin boards

- email - letter by messenger

- fax

- news release

SHAREHOLDERS

- fax - newsletter

- telephone - letter by messenger - meetings

- email - newsletter

- letter by mail - community bulletin boards

N/A

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E. Rader

W. Winsor

EMPLOYEE NONDISCLOSURE AGREEMENT To: Pepsi employees Subject: Employee protocol regarding release of information to media

Sincerely, NAME TITLE

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STANDBY PRESS RELEASE: NOTIFY MEDIA OF INVESTIGATION

PEPSICO, INC. 700 Anderson Hill Road Purchase, NY 10577 Contact: Director of Public Relations Marco Martinez Phone: (XXX) XXX-XXXX email: xxxxxxxxx@pepsico.com FOR IMMEDIATE RELEASE

Pepsi is currently investigating reports that ________________ occurred (possible cause

of contamination). The investigation is ongoing, and Pepsi is committed to discovering the origin of the problem.

Pepsi’s main concern is the safety of our consumers, so Pepsi will take all necessary

precautions to ensure that all products are of the highest quality before distribution.

More information will be released as more details become available. ### PEPSI Confidential -84-

PEPSI DISCOVERED THAT THE CAUSE OF CONTAMINATION WAS DUE TO PURCHASE, N.Y. —Due to reports from different locations in the United States, Pepsi has announced a recall on ________ number of bottles to be removed off shelves. After a through internal investigation by ____________(name), director of quality control, Pepsi has determined that the contamination of the bottling process was from ____________(where is came from).

Pepsi wants to personally apologize to all who were affected by this incident. Pepsi

identified that ________(number) of bottles where affected, and that only ____ percent were affected by this incident.

As of ________(date), Pepsi has pulled all bottles of production and issued a deferment

in production. Pepsi stands by its set of corporation’s values that helps ensure we achieve all outcomes with integrity. PEPSI Confidential -85-

PEPSI â&#x20AC;&#x201D; Page 2

When someone files a claim through Pepsi, we take the claim seriously, and investigate

the issue thoroughly.

At the end of this investigation, it was concluded that the bottling process was at fault,

but the incident was isolated. We are currently taking the necessary steps to ensure that an incident such as this never happens again.

Each bottle or can is labeled with its own serial number which is located on the bottom of

All Pepsi products will be safe to drink as of _________(date) and will be free of

###

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TYPES OF MEDIA QUESTIONS Loaded Question: Q: “Isn’t it true that your company was aware of the contamination during the bottling process and Pepsi continued to produce and allowed its customers to purchase a contaminated product?” A: Do you mean were we aware of the contamination? No, we were not. Pepsi would never intentionally put the public at risk.

Naïve Question: Q: “Tell me, what is the situation is regarding the contamination of Pepsi?” A: The situation is still under investigation. We will keep the public informed as information is verified and confirmed.

Speculative Question: Q: “If Pepsi bottles and cans have been contaminated during the bottling process and are responsible for the recent customer complaints, is your company prepared to stop production and investigate?” A: As of right now, there is no indication that Pepsi bottles or cans have been subject to contamination of any kind during the bottling process, nor is there any evidence to indicate a connection to the recent outbreak and our product.

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Know-it-all Question: Q: “We have been covering the contamination of Pepsi and would just like you to confirm some of the facts of the contamination.” A: We cannot speculate on the alleged contamination at this time, it is still under investigation.

Multi-part question: Q: “How do you plan to handle the recent contamination of Pepsi lot # 45621358 which was contaminated during the bottling process and do you have anything to say to those affected by the contamination?” A: I’ll take the first part of the question. We are currently investigating the recent contamination and want to pledge to the public that the necessary resources are being invested to resolving customer complaints. I would like to reassure those affected that Pepsi is doing everything in our power to amicability resolve the current situation. Off the record question: Q: “Just between you and me, is there anything that you can give me about the recent contamination?” A: No.

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NEWS CONFERENCE PRESS SCRIPT

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TELEPHONE LOG SHEET

Priority:_______________________________ Date: ______________ Time: _______________

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MEDIA LOG SHEET

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CRISIS: HOAX

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What is a “general hoax”? Definition of a General Hoax: Something intended to deceive or defraud • A hoax is a likely crisis to happen to Pepsi and could cause severe damage to Pepsi’s image. Example: An individual could make a false claim about finding a foreign object found in their Pepsi can.

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Crisis Inventory 5

Contamination

Contamination of Bottling Process Probability Damage

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Hoax

THRESHOLD VERIFICATION The threshold verification chart below uses the following criteria to determine when an issue officially becomes a crisis: •

Media coverage

•

Social Media Penetration

•

Number of affected product(s)

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Threshold Verification Chart: Hoax ATTENTION TO ISSUE(S): No action required

MANAGE THE ISSUE: No crisis team activation

ACTIVATION OF CCP

No media coverage present

Some media attention is present E.G. local and regional newspapers along with brief mentions on local news and radio stations

Wide spread media attention local, regional, national and worldwide news outlets cover the crisis extensively

No social media penetration

Some social media penetration

Extensive social media penetration

The calls and or incident reports are confined to one region with no harm to humans

The calls and or incident reports are confined to one or more regions with reports of human harm

Calls and or incident reports are wide spread throughout one or more regions with human harm especially including death or sickness

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Why Is This Plan Important? Pepsi and industry history conclude a tampering/ hoax can irreparably harm a companyâ&#x20AC;&#x2122;s reputation and adversely affect how its publics view the company. This can result in consumer demand being decreased. Shareholders may sell their stocks at an accelerated rate thus dropping the financial standing of the company. Employees may lose their pride in working for the company, which can hurt employee productivity. Distributors may want to stop distributing Pepsi products and potential distributors may become reluctant to enter into distribution agreements with Pepsi. The general publicâ&#x20AC;&#x2122;s negative sentiment may cause people who have never tired Pepsi products before to have negative views of Pepsi and therefore not willing to try its products, resulting in a loss of new customers. Pepsi has drafted this crisis communications plan to be implemented in the case of a crisis arising from tampering/ hoax where the extent of damage, if any, has spread and effective communication to the public must occur. Pepsi must implement this plan to determine a course of action for this particular type of crisis as well as to inform consumers that the cause is merely a malicious hoax and nothing more.

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What Could Happen If the Plan Is Not Followed? If the crisis communications plan is not followed in the event of a crisis arising from tampering/ hoax, the Pepsi company name and reputation could be severely damaged. Shareholders, employees, customers, suppliers and distributors and the general public must feel that Pepsi can effectively deal with any crisis, especially in the event of tampering/hoax, which may cause several of our publics to perceive that our product is no longer safe and reputable. Sales and profit are attainted on a positive public perception of Pepsi. If a strategic crisis plan is not followed, public perception could be turn negative, affecting sales adversely. Our name and reputation are imperative toward maintaining an amicable business relationship with our shareholders, employees, customers, suppliers and distributors and the general public.

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Has a Hoax Crisis Happened to Pepsi Before? Pepsi experienced a particularly notable incident that caused repetitional and monetary damage to Pepsi arising from tampering /hoax. During the summer of 1993, Pepsi-Cola began receiving customer reports of Diet Pepsi cans and bottles containing hypodermic needles. Customers stated that they found the hypodermic needles inside the soft drink cans that had been purchased at various retailers of Pepsi products. â&#x20AC;&#x153;Though most involved syringes, the list of items allegedly recovered from Pepsi, Diet Pepsi and Caffeine Free Diet Pepsi included a wood screw, a bullet, a crack vial, a broken sewing needle and a blob of mysterious brown substance,â&#x20AC;? (Miller, 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. Pepsi, along with the FDA, issued a warning to consumers specifically in the Pacific Northwest region - the marketing area where the first reported cans had been bottled. By restricting the consumer alerts to the affected marketing area, the FDA hoped to avoid a nationwide panic and the possibility of copycat incidents. However, the syringe scare turned into a national media circus and new complaints poured in from across the country. Within the course of about a week, the approximate number of product tampering reports was up to 50, with reports coming from more than 20 states in the continental United States. What had started out as a local incident easily turned into a multimillion-dollar disaster for Pepsi.

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Has a Crisis Happened to Similar Companies? A tampering of products/hoax has occurred numerous times in the food and beverage industry. The food and beverage industry is a particularly targeted industry for hoaxes and other vindictive behavior by outside parties, especially those looking to make easy money from a quick settlement. For example, one infamous hoax that gained worldwide attention was a woman who allegedly found a severed finger in her bowl of chili at a Wendyâ&#x20AC;&#x2122;s fast food restaurant in northern California. It was ultimately found that she had planted the finger in her chili in hopes of a lawsuit settlement. The same woman had also â&#x20AC;&#x153;been involved in other legal disputes as well. According to a police affidavit filed in the case, Ms. Ayala has filed at least 13 civil actions in California and Nevada involving her or her children, at times settling cases for a cash payout before going to trial,â&#x20AC;? (Ritchel, 2005). As a highly visible member of our industry, Pepsi must be prepared to implement the following crisis communications plan. Pepsi must protect its reputation and robust relationship with its shareholders, employees, customers, suppliers and distributors and the general public.

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CASE STUDIES This section identifies past examples of crises and management strategies. The case studies reflect Pepsiâ&#x20AC;&#x2122;s extensive risks and vulnerabilities assessment. Each case study relates similar crises within the beverage industry to potential crises at Pepsi. Each case study identifies a problem, a strategy and a solution. Ultimately, the case studies link past crisis management strategies and validate Pepsiâ&#x20AC;&#x2122;s crisis communication plan.

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1. The Mouse in the Monster Energy Drink Who: Monster Energy drink Where: King County, Washington When: 2011 What was the crisis: Monster was sued after a Vitaliy Sulzhik, a Washington resident, claimed to have found a dead mouse at the bottom of a can of Monster Energy drink. "I put it down, and I felt it was still heavy. So I backwashed it, and all this debris went into my mouth," said Sulzhik. The can and it’s remnants were sent to MDE Inc., a Seattle based company that concluded there was no trauma or poison involved in the mouse’s death. How was the crisis handled: In a statement from Monser Energy drink, the company bolstered about it’s company’s strict safety standards as well as addressed the alleged mouse incident. Monster stated, “Mr. Sulzhik has stated he drank part of a Monster Energy drink and then left the can opened and unattended for hours in his car, providing ample opportunity for a small mouse to crawl into the can. He later returned, finished the drink, and at that point allegedly found a mouse in the can.” The large time lapse from the time the can was opened and consumed allowed for outside variables. Monster then went on to state that if a mouse had been introduced into the can at production months prior, it would have deteriorated and the product would have been undrinkable. Also, Monster pointed out the fact that the species of mouse found in the can was not commonly found in industrial areas, where it would have entered the can, but rather native to rural areas.

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What was the outcome: Monster was able to successfully manage the crisis and maintain it’s consumer base. The energy drink company was able to show that Mr. Sulzhik’s claim had no factual basis and was actually a hoax. Lessons learned: Like Pepsi, Monster was able to dispel a hoax through the use of factual information about their production lines. Monster also highlighted a few common sense ideas such as the fact that the mouse had not deteriorated. Once again honesty, transparency and belief in one’s product was essential.

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2. The Mouse in the Mountain Dew Who: Mountain Dew Where: Edwardsville, Illinois When: 2009 What was the crisis: Oil company worker, Ronald Ball, said he found a dead mouse in his Mountain Dew can which caused him to gag. Upon noticing the mouse, Ball placed the mouse in a Styrofoam cup and displayed it his co-workers. He immediately contacted PepsiCo to report his findings. How was the crisis handled: Once Pepsi was notified that a mouse had been found in a can of Mountain Dew, they sent a representative to collect the mouse. The collected evidence was later destroyed. Ball proceeded to sue the company seeking damages totally more than $50,000. Pepsi responded to Ballâ&#x20AC;&#x2122;s lawsuit by stating that it was not possible for a mouse to survive inside a can of Mountain Dew and that it would instead turn into a â&#x20AC;&#x153;jelly-like substance.â&#x20AC;? What was the outcome: Mountain received negative backlash on the web for their claims that a mouse could not survive inside a can of Mountain Dew since the rodent would have been dissolved before it ever reached the vending machine. The company also received negative backlash for not notifying the public that the company was being sued for allegedly having a dead mouse in one of their soft drinks. Pepsi handled the incident poorly and slightly damaged their brand as a result.

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Lessons learned: While defending your brand, be careful of bolstering claims. Also, attempt to remain transparent during times of tribulation.

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3. The Finger in the Chili Who: Wendy’s Where: San Jose When: 2005 What was the crisis: A woman, Anna Ayala, claimed to have found a finger in her beef chili while dining at a Wendy’s restaurant. How was the crisis handled: Wendy’s worked in conjunction with the San Jose Police Department who eventually received a tip through a hotline they had established. A Nevada man who lost his finger in a construction incident had given it to the husband of Anna Ayala. Investigators then found that Ayala had filed claims more than 13 times in either her name or her children’s. Wendy’s also launched their own investigation of the franchise and found that no employees were missing any fingers. Also, no suppliers of Wendy’s ingredients reported losses of fingers amongst their employees. There was also no proof that the finger had been cooked. What was the outcome: Wendy’s rightfully and strongly stood by their brand. The woman at fault, Ana Ayala, was arrested and charged with attempted grand larceny for her attempt to shakedown the Wendy’s franchise. Ayala decided to withdraw Although Wendy’s won the case, their brand and many Northern California franchises were adversely affected and suffered losses. The actual franchise where the incident took place stated immediate losses of 60-70% of business. Wendy’s itself stated losses of millions in sales.

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Lessons learned: Wendyâ&#x20AC;&#x2122;s suffered short-term losses due to the hoax, but standing strongly by their brand was best in this case. The company remained transparent and was honest with the public throughout the whole ordeal.

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4. The Great Pepsi Panic Who: Pepsi-Cola Where: Initially in Tacoma, Washington, but spread to more than 20 states. When: 1993 What was the crisis: An elderly couple in Tacoma, Washington made a complaint after finding a syringe inside a can of Diet Pepsi. Shortly after their complaint, a woman 10 miles from Tacoma made a similar complaint after discovering a syringe inside her can of Diet Pepsi. Within days of the initial complaint, Pepsi-Cola Co. as well as the FDA had received complaints from consumers spanning more than 20 states. Ensuing complaints included bullets, a wooden screw and even a crack vial. The complaints also encompassed Pepsi and Caffeine Free Diet Pepsi. How was the crisis handled: Initially, Pepsi considered a voluntary recall but after speaking with the U.S. Food and Drug Administration, Andrew Giangola, a company spokesman, said, “the FDA told us there was no need, that there wasn’t a health risk,” (Miller, A. & Glick, D. 1993). Pepsi then contacted Alpac Corp, a Pepsi bottler in Washington, State since two cases of the at risk Pepsi had come from their plant. After having a crisis team analyze all the reports, they came to the conclusion that the complaints had no logical pattern and were most likely hoax. "We knew all along this wasn't a manufacturing issue," Giangola said. "Canning lines are high-speed production lines in which cans are inverted upside down, shot with a blast of air or water and then [turned] right side up and filled." Since the cans are open for only nine-tenths of a second, he said, "it would be highly unlikely for one needle to find its PEPSI Confidential -110-

way into a can. And it would be astronomically improbable to have numerous needles in different cans in different states, produced months apart, and then have them all somehow show up in a 48-hour period. It was absolutely ludicrous," (Miller, A. & Glick, D. 1993). Pepsi then had it’s president, Craig Weatherup, appear on ABC’s Nightline explain as well as defend the innocence of Pepsi. The showing was followed by the first successful arrest of a consumer tampering with a Pepsi product on camera. What was the outcome: Pepsi was able to maintain its brand and protect its trademark by acting swiftly. It mobilized a crisis team that was able to recognize the issue and assess it accurately. Accuracy is key in a situation that involves consumer health. Pepsi’s showing on ABC Nightline placed the company in good standing once again and removed it from the hot seat. By offering facts to the public and remaining transparent, Pepsi successfully handled the crisis. Lessons learned: The major lesson learned is to believe in your product as well as your production line. Always act swiftly and logically when consumer health is at risk. If consumer complaints place a company at risk, issues should addressed in a timely manner and transparently. As in the case of Pepsi, visually showing their bottling process to consumers proved to be very beneficial for a company since it removes doubt from the consumer and replaces it with facts.

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5. Gerber Glass Contamination Who: Gerber Where: 13 U.S. States When: 1986 What was the crisis: Glass shards had been found in opened jars of Gerber baby food. No deaths resulted from the glass shards, but several babies had been severely cut. How was the crisis handled: Gerber handled the crisis unlike many other companies. Only a week prior to the March 3 discovery, glass had been found in jars of Beech-nut baby foods in New York. Unlike Beech-nut baby foods, Gerber decided not to recall their product, but instead to remain out of the public sight. After many more complaints, Maryland removed the product from shelves as a safety precaution. Gerber then sued Maryland with it’s vice president, Kenneth Peirce stating , “Gerber strongly believes that the unilateral conduct of the Governor of the state of Maryland has only created a climate of fear and confusion among the consuming public at a time when copy-cat actions should not be encouraged by acts of public officials.” Gerber continued to avoid the media, limited statements and most importantly, never issued a recall. What was the outcome: Local grocers were blamed for the isolated incidents after neither the FDA nor Gerber were able to find manufacturing related causes. Gerber did not do a recall since it felt that it was not at fault. The company lost more than $1.4 million due to the

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incident and wished to not bring more attention to it by doing a recall. The company decided it was best to settle cases individually rather than pull Gerber baby jars off of shelves. Lessons learned: Large companies, especially those dealing with infants should practice corporate ethics. Gerber should not have bolstered initially since infants were injured regardless if the situations were hoaxes.

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Public Relations Action Plan

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Activation of the crisis team and crisis communications plan

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COMMUNICATION ASSIGNMENTS R. Conrado

N. Jimenez

M. Martinez

EMPLOYEES

- telephone - news release - letter by messenger

- community bulletin board

- email - letter by mail - Newsletter - Meetings

- fax

N/A

EXECUTIVES

- letter by mail - newsletter

- fax

- telephone - email - letter by messenger - news release

N/A

- meetings - community bulletin board

BOARD OF DIRECTORS

- letter by mail

- telephone - fax - news release

N/A

- email - newsletter - meetings

- letter by messenger - community bulletin board

ELECTRONIC MEDIA

- fax - letter by messenger - letter by mail - news release

- newsletter

- community bulletin board

- telephone

- email - meetings

DAILY NEWSPAPER

- email - letter by mail

- community bulletin board - meetings

- fax - newsletter - news release

- letter by messenger

- telephone

WEEKLY NEWSPAPER

- telephone - newsletters - meetings

- letter by mail - community bulletin boards

- email - letter by messenger

- fax

- news release

SHAREHOLDERS

- fax - newsletter

- telephone - letter by messenger - meetings

- email - newsletter

- letter by mail - community bulletin boards

N/A

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E. Rader

W. Winsor

EMPLOYEE NONDISCLOSURE AGREEMENT To: Pepsi employees Subject: Employee protocol regarding release of information to media

Sincerely, NAME TITLE

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STANDBY PRESS RELEASE: NOTIFY MEDIA OF INVESTIGATION

PEPSICO, INC. 700 Anderson Hill Road Purchase, NY 10577 Contact: Director of Public Relations Marco Martinez Phone: (XXX) XXX-XXXX email: xxxxxxxxx@pepsico.com FOR IMMEDIATE RELEASE

Pepsi is currently investigating reports that ________________ occurred (possible cause

of contamination). The investigation is ongoing, and Pepsi is committed to discovering the origin of the problem.

Pepsi’s main concern is the safety of our consumers, so Pepsi will take all necessary

precautions to ensure that all products are of the highest quality before distribution.

More information will be released as more details become available. ### PEPSI Confidential -126-

PEPSI ANNOUNCES FALSE CLAIM PURCHASE, N.Y. —Due to reports about Pepsi products, we launched a thorough investigation by ____________(name). Pepsi found that the allegation of ____________ was a false claim.

While we take all consumer claims very seriously, this particular claim was malicious and

untrue. All of our products are produced and packaged under the strictest safety standards in the industry.

All Pepsi products are currently safe to drink and are free of any ____________. Pepsi

upholds the highest standards and takes consumer safety extremely serious and will continue to ensure that all safety standards are met. Thank you for your continued trust and confidence in Pepsi products. ###

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TYPES OF MEDIA QUESTIONS Loaded Question: Q: “Isn’t it true that your company was aware of the hoax and Pepsi is suing the person for millions?” A: Do you mean were we aware of the intentional product tampering? No, we were not aware. However, Pepsi does intend to bring the person who is alleging they found a mouse in their Diet Pepsi can to justice.

Naïve Question: Q: “Tell me, what is the situation is regarding a customer finding a mouse in one of Pepsi’s cans?” A: The situation is still under investigation. We will keep the public informed as information is verified and confirmed.

Speculative Question: Q: “If Pepsi bottles and cans have been found with syringes in them and are responsible for the recent customer complaints, is your company prepared to stop production and investigate?” A: As of right now, there is no indication that Pepsi bottles or cans have been found to contain syringes, however we do plan on investigating the source of the alleged incidents.

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Know-it-all Question: Q: “We have been covering the story that customers are finding syringes in their Pepsi bottles and cans and would just like you to confirm some of the details.” A: We cannot speculate on the alleged product tampering at this time, it is still under investigation.

Multi-part question: Q: “How do you plan to handle the recent onslaught of complaints of HIV contaminated syringes being found in Diet Pepsi cans and do you have anything to say to people who have been affected?” A: I’ll take the first part of the question. We are currently investigating the source of the complaints and want to pledge to the public that the necessary resources are being invested to resolving customer complaints. I would like to reassure those affected that Pepsi is doing everything in our power to amicability resolve the current situation. Off the record question: Q: “Just between you and me, is there anything that you can tell me about the HIV contaminated syringes being found in Diet Pepsi cans?” A: No.

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NEWS CONFERENCE PRESS SCRIPT

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TELEPHONE LOG SHEET

Priority:_______________________________ Date: ______________ Time: _______________

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MEDIA LOG SHEET

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AFTER ACTION REPORT

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AFTER ACTION REPORT All members of the Pepsi crisis management team should complete this post-crisis evaluation within 24 hours after the completion of this crisis plan. Pepsi believes effective crisis management revolves around the crisis management team learning from experience and applying lessons learned to be better prepared for any future crisis.

Your name: _________________________________________ Date: _____________________ Your role on the team: ___________________________________________________________ What was the crisis? _____________________________________________________________ Were you notified in a timely manner? If not, how can the notification system be improved? _____________________________________________________________________________ On a scale of 1 (poor) to 10 (excellent), how would you rate the way our company managed the incident? ____________________ Explain._______________________________________________________________________ ______________________________________________________________________________ What are your recommendations for improvement of the crisis management plan? ______________________________________________________________________________ ______________________________________________________________________________ What were our strengths? ______________________________________________________________________________ _____________________________________________________________________________ PEPSI Confidential -136-

What were our weaknesses? ______________________________________________________________________________ ______________________________________________________________________________ Do members of the crisis management team need additional training? If so, what type of training should be conducted to facilitate and create a more effective team? ______________________________________________________________________________ ______________________________________________________________________________ How well did we communicate with our employees? Please rate on a scale of 1 (poor) to 10 (excellent). ______________________________________________________________________________ ______________________________________________________________________________ How well did we communicate with all of our key publics? Please rate on a scale of 1 (poor) to 10 (excellent). ______________________________________________________________________________ ______________________________________________________________________________ How did you perceive media coverage? Was it reported in a balanced fashion? Please explain. ______________________________________________________________________________ ______________________________________________________________________________

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Did our spokesperson(s) communicate our key message(s) effectively? Please explain. Also, please rate on a scale of 1 (poor) to 10 (excellent) and why you chose that rating. ______________________________________________________________________________ ______________________________________________________________________________ Does the crisis management plan need to be enhanced or revised? If so, please explain. ______________________________________________________________________________ ______________________________________________________________________________ Were there any employees who you believe would be an asset to the crisis-management team? If so, please name who you believe would be a strong addition to the crisis management team. ______________________________________________________________________________ ______________________________________________________________________________ What recommendations would you make for our spokesperson(s) Pepsi experience another crisis? ______________________________________________________________________________ ______________________________________________________________________________ What were some weaknesses of the crisis team or crisis management plan? ______________________________________________________________________________

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REFERENCES

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Bremner, B., & Lakshman, N. (2006). India: Pesticide claims shake up coke and

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Fearn-Banks, K. (2011). Crisis communications: A casebook approach. New York, NY:

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Memmott, M. (2012, Janurary 06). Mountain dew mouse story goes viral. Retrieved from

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Miller, A., & Glick, D. (1993). The great pepsi panic. Newsweek,121(26), 32. Reut. (1993, August 27). Heineken issues recall. The Globe and Mail. Rothschild, P. (1998, December 7). Gerber management’s response to the glass scare of 1986: an

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Washington man finds dead mouse in energy drink. (2011, march 31). Retrieved from

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