harry & David

1. harry & David By Erik Anthony

2. History • Harry & David a famous fruit distributor has survived plenty of change in their 102-year history • Has been bought and sold a handful of times since 1984 • The New York-based private equity firm called Wasserstein & Co. bought out Harry and David for $253 million in 2004 • Laundry list of recalls from 2007 through 2008, concerning undeclared allergens

3. Undeclared allergen recall • April of 2007 • U.S. Food and Drug Administration announced the recall of approximately 2,000 boxes of candy including: The Ultimate Walnut Cherry Caramel Indulgence The Ultimate Peanut & Peanut Butter Indulgence The Ultimate Pecan Cranberry Caramel Indulgence Whole Almond Confection Whole Cashew Confection • Might contain undeclared peanuts, almonds, pecans, walnuts and cashews

4. The sequel • November of 2007, • H & D voluntarily recalled approximately • 5880 tubs of the Milk & Dark Chocolate & White Chocolate Macadamia and • 4400 tubs of the Peanut Butter, Milk Chocolate, Macadamia Nut • Undeclared Macadamia nut allergens

5. Third time is the Charm • December 7, 2007 Harry & David voluntarily recalled approximately 50 jars each of the Oatmeal Chocolate Chip, Chocolate Peanut Butter and Cranberry Vanilla Chip cookie mixes • Contained coconut, peanuts, milk and/or sulfites not declared on the ingredient statement.

6. Five times in one year • 2008 Harry and David recalled 66,500 8 oz. bags of their chocolate covered espresso beans • The bags might have milk as an "undeclared ingredient" inside • October 22, 2008 they voluntarily recalled approximately 400 1 lb. 4 oz. boxes labeled Harry & David Moose Munch Confection (there best seller) • The packages may have contained a different Moose Munch product which contains pecans not declared on the ingredient statement

7. Issue and possible crisis • A customer could go into anaphylactic shock • Loss of sales • Loss of customers • Third party packagers could bail • Suppliers and distributers could leave

8. Key Stakeholders • Harry and David’s employees • Stores who sold the recalled products • Suppliers • Distributors • Consumers

9. Interested Observers • Medford Oregon • Growers in the region • Cities with H&D stores • Local & international news • H&D’s competitors

10. H&D’s Options for Action • They could “Ignore” the undeclared nut allergen and hoped that no one ever noticed the problem or was hurt because of it + Not to many people notice the undeclared allergen and sales stay the same for a while -Harry and David find out the reproductions of this method the hard way • Death • Lawsuit • Write a very discrete press release noting the recall of the undeclared allergen products, but blame it on the third party + Attentive consumers are aware of the undeclared allergens - Don’t take ownership to what went wrong and by doing so the same thing is bound to happen again

11. Options ConT... • Taken ownership of the mistake, sent out the same press release, and learned from what happened + Preventing possible harm to consumers Costumers would develop a sense of trust for H&D - Initial lull in sales • Taken ownership, written FDA press release and verbal conference with the press stating how they will fix the problem, and what they will do to compensate customers. + Weeks and years to come people would trust Harry and David to give them the best product Harry and David come out better than they were before the crisis -Drastic decrease in sales for the first couple days

12. Harry & David’s solution • The spokesperson Harry and David used was the FDA • Audiences were the people who happened to catch the FDA announcement • Announce, in the last part of the press release, “There have been no injuries reported to date. Anyone concerned about a potential illness associated with this product should contact a physician immediately.” • The next step was the forgive and FORGET process

13. Harry & David’s demise

14. Harry & David’s NEW “top DOGS” • Steve Heyer — CEO • Suggestive and provocative e-mails and text messages • Inappropriate physical encounter with a female employee outside a restaurant restroom • Ross Klein — Chief branding officer • and Executive VP • Under Federal investigation • Starwood claimed he carried off thousands of pages' worth of documents and shared them with Hilton management • Both worked together at Starwood

15. Harry & David’s grade: ‘I’ Incomplete • Get out of my class • April 2007 I would have been somewhat pleased with how Harry and David handled their first recall crisis - B • One letter grade lower after every undeclared allergen recall • 5 undeclared allergen recalls – you do the math • Same thing five times; same reaction every time (What They Should Have Done) • Taken ownership • Written FDA press release • Verbal conference with the press • Stating how they will fix the problem, and what they will do to compensate customers. +Weeks and years to come people would trust Harry and David to give them the best product Come out better than they were before the crisis

16. Bibliography • http://www.bloomberg.com/news/2011-03-29/harry-david-bankruptcy-rocks-medford- after-wasserstein-s-lbo.html • http://www.fda.gov/Safety/Recalls/ucm323010.htm • http://harry-and-david.pissedconsumer.com/ • http://www.harryanddavid.com • http://www.hotelnewsnow.com/articles.aspx/4744/Klein-finds-refuge-with-former-boss • http://mylocalhealthguide.com/2008/10/22/harry-david-issues-recall-because-of-pecan- allergy-concerns/ • http://phys.org/news95957620.html#jCp • http://www.state.in.us/isdh/24076.htm • http://www.wsbtv.com/news/news/harry-and-david-chocolates-recalled/nJWpS/