How did Perrier loose its consumer confidence ?
... of Perrier stated at the time that the company believed the contamination could be traced to an employee’s mistaken use of a fluid containing benzene to clean the machinery on the bottling line that fills Perrier bottles from North American. Initially, the recall affected only the United States and Canada, which represented an inventory of some 70 million bottles. But the recall became worldwide because Dutch and Danish officials also found benzene in some Perrier bottles. The incident turned into a public relations disaster, in large part because the company’s explanation for the recall kept changing. After traces of benzene were found in Perrier bottles in other countries, company officials changed their original explanation. Benzene, they now said, is naturally present in carbon dioxide and is normally filtered out before the water is bottled. For unknown reasons workers had inexplicably failed to change the filters. What is benzene ? Benzene is a colorless liquid with a sweet odor. It evaporates into the air very quickly and dissolves slightly in water. It is highly flammable and is formed from both natural process and human activities. Benzene is widely used in the United States, it ranks in the top 20 chemicals for production volume. Some industries use benzene to make other chemicals which are used to make plastics, resins and synthetics fibers. Benzene is also used to make some type of rubbers, lubricants, detergents and pesticides. Benzene is also a natural part of crude oil, gasoline and cigarette smoke. How did Perrier face this scandal ? Perrier had to prepare a comeback strategy. First the company began to invest in other brands that did not have the Perrier name attached to them. And by 1996, the company owned seven of the top ten brands of bottled water. Secondly, Perrier wondered if they should remain silent or if they should explain the contamination problem and what was being done to remedy it. Perrier decides to plan a strategy to sustain the brand’s equity. Starting in early March, and running for several weeks an 8 million $ radio and TV ad campaign was lunched to explain the problem and to assure the customers that the problem had been remedied. The campaign was made by an American ad agency in New York. Then a survey done in late February 1990 showed that the public was generally favorable toward the Perrier brand. 90 % percent said that they thought the company had acted in a responsible manner, and 85 % said that they would buy it again. However the restaurateurs who distributed Perrier were more variable. Thirdly, Perrier started to relaunch the brand in June and sixteen million dollars were allocated for this. The plan was to spend half of this amount at the relaunch and the rest through the rest of the year. Then in 1992, the Nestlé group bought Perrier and Richard Girardot succeeded at the head of the company. He planned to reconquer lost markets. His priority has been investment, construction of glass furnaces for bottle production and regrouping all the activities in Vergèze ( headquarter in South of France ). The first aim was to restore internal confidence of the employees of the company. The number of jobs has been reduced, in 1992 Perrier employed 3000 people and this number felt to 1800 in 2000. The employees are motivated and Perrier tried to reassure its suppliers on the safety of the water. The company developed also customer loyalty with small and major customers. But Perrier has a problem with its image because its water is seen both as a luxury product and as a major consumable. Perrier won also new markets with “the traveling consumption” by offering a plastic bottle, green and pressure resistant. How did consumers react ? Obviously Perrier faced an important drop of its sales. Consumers have lost confidence in The French mineral water. Indeed, Perrier had positioned itself as a naturally pure water. Mineral water was perceived as safe compared to ordinary tap water. Purity was a kind of franchise for Perrier. Before the benzene scandal, Perrier was the industry leader with 24 % of market share. The company was also the leading imported water with about 6% of the US bottled water segment. After February 1990, it was catastrophic for Perrier. The sales decreased of 70 % in the USA, 60 % in the UK and 50 % in Japan. The number of bottles sold went down from 1,3 billion to 740 million ( with a minimum of 600 million between 1996 and 1999 ). We can notice how long this scandal has affected Perrier because the sales were still down in 1999, nine years after . Then we can notice that s...