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==History==
==History==
===Origin===
===Origin===
Odwalla was founded in [[Santa Cruz, California|Santa Cruz]], [[California]], in 1980 by Greg Steltenpohl, Gerry Percy, and Bonnie Bassett.<ref name="SEC">{{cite press release
Odwalla was created by Lawrence Technological University student Ian Wagner. Odwalla was founded in [[Santa Cruz, California|Santa Cruz]], [[California]], in 1980 by Greg Steltenpohl, Gerry Percy, and Bonnie Bassett.<ref name="SEC">{{cite press release
| title = Odwalla Inc. 10-K405
| title = Odwalla Inc. 10-K405
| publisher = Odwalla Inc.
| publisher = Odwalla Inc.

Revision as of 16:42, 23 October 2009

Odwalla Inc.
Company typeWholly owned subsidiary
IndustryConsumer products
FoundedSanta Cruz, California, United States (1980)
FounderGreg Steltenpohl
Gerry Percy
Bonnie Bassett
HeadquartersHalf Moon Bay, California, United States
Area served
United States
Key people
Steven M. McCormick, COO and General Manager
James R. Steichen, SVP Finance and CFO
Chris Brandt, Director Brand
Jason Dolenga, Brand Manager
ProductsDrinks, food bars
RevenueUS$187.9 million (2007)
Number of employees
900[1]
ParentThe Coca-Cola Company
WebsiteOdwalla.com

Odwalla Inc. (Template:Pron-en) is an American food product company that sells fruit juice, smoothies and food bars. It was founded in Santa Cruz, California in 1980 and is headquartered in Half Moon Bay, California.

The company experienced strong growth after its incorporation in 1985, expanding its distribution network from California to most of North America, and went public in 1993. However, a period of decline occurred as a result of a fatal outbreak of E. coli O157:H7 bacteria in 1996 caused by contamination of its apple juice. Odwalla recalled its juices and experienced a ninety-percent reduction in sales following the event. The company gradually recovered, and, after a few years, was making a profit again. Odwalla was acquired by The Coca-Cola Company in 2001 for US$181 million and became a wholly owned subsidiary of The Coca-Cola Company.

Odwalla's range of products includes juices, smoothies, soy milk, bottled water, organic beverages, and several types of energy bars, known as "food bars". While Odwalla originally sold unpasteurized juices (because the process of pasteurization alters the flavor of juice), following the E. coli outbreak, Odwalla adopted flash pasteurization and other sanitization procedures.

History

Origin

Odwalla was created by Lawrence Technological University student Ian Wagner. Odwalla was founded in Santa Cruz, California, in 1980 by Greg Steltenpohl, Gerry Percy, and Bonnie Bassett.[2][3] Odwalla's production facility is in Dinuba, California. The trio took the idea of selling fruit juices from a business guidebook, and they began by squeezing orange juice with a secondhand juicer in a shed in Steltenpohl's backyard. They sold their product from the back of a Volkswagen van to local restaurants,[3][4] employing slogans such as "soil to soul, people to planet and nourishing the body whole".[5]

The name for their start-up, "Odwalla", was taken from that of a character who guided "the people of the sun" out of the "gray haze" in the song-poem "Illistrum", a favorite of the founders, which was composed by Roscoe Mitchell and performed by the Art Ensemble of Chicago jazz group, of which Mitchell was a member. and performed by the Art Ensemble of Chicago jazz group.[6]/[7] Steltenpohl, Percy, and Bassett related this to their products, which they believe "help humans break free from the dull mass of over-processed foods so prevalent today".[8]

Incorporation–1996

The headquarters of Odwalla Inc. in Half Moon Bay, California

Odwalla was incorporated in September 1985 after five years of growth,[2] and expanded to sell products in San Francisco in 1988. Hambrecht & Quist Inc., a venture capital firm in San Francisco, was one of Odwalla's main investors at the time, investing several million dollars in the company.[6] By 1992, the company employed 80 people at its company headquarters in Davenport, California, and sold around 20 different flavors of juice for between $1.50 and $2.00 a pint.[6][9] Odwalla went public in December 1993 (NASDAQ:ODWA);[3] the company had 35 delivery trucks, almost 200 employees, and made about $13 million a year.[10] Soon afterwards, Odwalla expanded into new markets when it bought two companies in the Pacific Northwest and Colorado.[3]

Odwalla built a new production facility in Dinuba, California, in 1994 in order to better meet production demands.[11] The following year, the company moved its headquarters to Half Moon Bay, California.[12]

Continual growth and outside investments during these years allowed the company to expand and grow: Odwalla's revenue tripled from 1994 to 1995,[9] and in 1996 they made more than $59 million in sales, their highest ever.[13] This constant growth made Odwalla one of the largest fresh-juice companies in America by 1996,[14] when the company was selling its products to stores in seven states and parts of Canada.[2][15] It was estimated that they would reach $100 million in sales by 1999. Much of this growth resulted from the perception that Odwalla's products were healthier than regular juice because of unpasteurization.[6][14]

1996 E. coli outbreak

Safety issues prior to the E. coli outbreak

The Odwalla plant had several food safety issues, many of which arose because Odwalla did not pasteurize its juice.[14] Tests discovered low levels of Listeria monocytogenes, a pathogen that can harm pregnant women, at the Odwalla factory in 1995.[16] In response, the company spent several million dollars to upgrade the plant's safety features, and bacteria levels were reduced to "relatively low levels".[14]

The next year, Dave Stevenson, Odwalla's technical services director who oversaw quality assurance, suggested to Odwalla executives that the company should add a chlorine rinse to guard against bacteria on the skin of processed fruit, supplementing its existing phosphoric acid wash process. However, this plan was dropped by Chip Bettle, Odwalla's senior vice president, who feared that the chemicals would harm the fruit and alter the flavor of the juice.[14][17]

In a letter to The New York Times written on January 5, 1998, Odwalla's director of communications, Christopher C. Gallagher, wrote that "Odwalla continuously upgraded its manufacturing process in the period leading up to the recall. Moreover, our primary indicator of overall quality was daily bacteria-level readings, which were relatively low and decreasing in apple juice".[18]

Outbreak and subsequent recall

On October 30, 1996, health officials from the state of Washington informed Odwalla that they had found a link between an outbreak of the E. coli O157:H7 bacterium and a batch of Odwalla's fresh apple juice produced on October 7. This was confirmed on November 5, and may have resulted from using rotten fruit; one account tells of fruit being used that was highly decayed.[14] Another possible source of contamination was fallen apples ("grounders"), that had come into contact with animal feces and not been properly cleaned.[19][20] Confirmation that the bacteria came from outside the factory was provided when an inspection on November 15 found no evidence of E. coli contamination in the facility.[15] The outbreak came as a surprise—the plant had been inspected by the FDA three months earlier, and Odwalla supervisors were not aware that the E. coli bacteria could grow in acidic, chilled apple juice.[14] Based on a recommendation from the FDA, however, on October 30 Odwalla's Chief Executive Officer Stephen Williamson voluntarily recalled 13 products which contained apple juice from about 4,600 stores.[21] Carrot and vegetable juices were also recalled the following day as a precautionary measure, since they were processed on the same line.[2][15] The recall cost the company $6.5 million and took around 48 hours to complete,[22] with almost 200 trucks being dispatched to collect the recalled products. Odwalla opened a website and a call center to handle consumer questions about the recall.[15]

As a result of the outbreak, 16-month-old Anna Gimmestad from Denver, Colorado, died from kidney failure,[19] and at least 66 people became sick.[23] Fourteen children were hospitalized with hemolytic uremic syndrome, a severe kidney and blood disorder, and were, according to doctors, "likely to have permanent kidney damage and other lasting problems".[14] In consequence, Odwalla stock fell by forty percent and sales of its products dropped by ninety percent.[3][24] The company laid off 60 workers, and, at the end of the fiscal year, posted a loss of $11.3 million.[2][25]

The outbreak occurred because Odwalla sold unpasteurized fruit juices,[3][17] though pasteurization had long been standard in the juice industry,[26] claiming that the process of pasteurization alters the flavor and destroys at least 30% of nutrients and enzymes in fruit juice.[17] Instead, Odwalla relied on washing usable fruit with sanitizing chemicals before pressing. Because of the lack of pasteurization and numerous other flaws in its safety practices (one contractor warned that Odwalla's citrus processing equipment was poorly maintained and was breeding bacteria in "black rotten crud"),[14] the company was charged with 16 criminal counts of distributing adulterated juice. Odwalla pled guilty,[23][27] and was fined $1.5 million: the largest penalty in a food poisoning case in the United States. With the judge's permission, Odwalla donated $250,000 of the $1.5 million to fund research in preventing food-borne illnesses.[28] In addition, the company spent roughly another $12 million settling about a dozen lawsuits from families whose children were infected.[29]

To boost sales following the recall, Odwalla reformulated five products to remove their apple juice content, and released them in November 1996.[2] Flash pasteurization, as well as several other safety precautions,[25] were introduced to the manufacturing process, and the juices reappeared on store shelves on December 5, 1996.[9]

From 1997

A bottle of Odwalla Future Shake

Despite a net loss for most of 1997, Odwalla worked to rehabilitate its brand name. In addition to advertising its new safety procedures, Odwalla released its line of food bars (its first solid food product line) and entered the $900 million fruit bar market.[3][30] Another new product was the Future Shake, a "liquid lunch" aimed at younger consumers.[31] Because of these efforts, Odwalla was again profitable by the end of 1997, reporting a profit of $140,000 for the third quarter.[28]

Having recovered, the company worked to expand geographically into markets like Philadelphia and Washington, D.C.,[32] and by the end of 1998 reported that revenue had surpassed pre-crisis levels.[9] Growth continued over subsequent years,[33][34] in part through the $29 million acquisition of Fresh Samantha, a large juice company based in Saco, Maine, in 2000.[35][36][37] This allowed Odwalla to expand into additional East Coast markets, but incurred high transportation costs as products had to be shipped across the United States from California. To address this problem the company announced plans to build a second production facility in Palm Beach County, Florida. However, facing difficulties in obtaining building permits and allocating sufficient funds, the project was first delayed and eventually cancelled.[36][38] Odwalla produced and sold products under both its own and the Fresh Samantha brand names for a few years; however, in 2003, the company decided to stop selling juice under the Fresh Samantha name and to only sell Odwalla-brand juice.[37][39]

Odwalla was purchased by the Coca-Cola Company in 2001 for $15.25 a share, a deal which totalled $181 million and was unanimously approved by the Odwalla board of directors.[40][41] Under the terms of the merger, Odwalla's management stayed on as heads of the company, and it was "folded" into Coca-Cola's Minute Maid department.[42] The acquisition was one of several similar mergers which were aimed at expanding Coca-Cola's product line to include non-carbonated drinks.[43][44] Odwalla benefited by obtaining up to a 124.3 percent premium on shares of the company, as well as from the stability and strength that ownership by the Coca-Cola Company offered.[45] Odwalla also was able to expand into new markets because of Coca-Cola's well-established distribution network.[44]

Odwalla continued to grow following the acquisition. This growth resulted in part from new product releases, which included a line of PomaGrand pomegranate juice (released at the 2006 Sundance Film Festival),[5] two flavors of energy drinks,[46] and three flavors of "Soy Smart" drinks, which contain soy protein, omega-3 fatty acids, and calcium.[47][48]

Coca-Cola promoted Odwalla products in 2006 when the company aimed at removing carbonated soda products in schools.[49] Odwalla continued to have good growth in 2007, when Coca-Cola, squeezed by poor growth in its North American markets, issued a company-wide hiring freeze; Odwalla, because of its good performance, was one of the few exceptions to the rule.[50]

Production

A refrigerated Odwalla display case at a grocery store; Odwalla uses these cases to increase its products' visibility.

Odwalla uses what it characterizes as "fresh-sourced" produce (fruits and vegetables that have recently been harvested) to make many of its products,[2][51] as well as organic oats for food bars and certain tropical fruits in a frozen purée form, purchased from an outside source and blended with fruit juice.[36][2] Because Odwalla uses fresh produce, some juices are seasonal.[52][53] Fruit availability and price is also affected by adverse weather, disease, and natural disasters.[36] Throughout the year, Odwalla juice colors and flavors change slightly because different types of fruit are used.[13][51]

After the E. coli outbreak, Odwalla improved the safety of several of its production processes. Before the fruit enters the factory, it is washed, sorted and sanitized. Once it has reached the plant, the apples, carrots, and citrus fruits are separated and washed again. The fruit is pressed to get the juice, flash pasteurized, and bottled.[51][54] A sample undergoes quality testing, and, if it passes, the batch is shipped in refrigerated trucks to various distribution centers in the United States.[36][51] Odwalla juice has a relatively short shelf life compared to other beverages and thus must be refrigerated. However, after the introduction of flash pasteurization in 1996 and a new plastic bottle in 2001, the shelf life has been considerably extended.[36][2][14] Generally, Odwalla products are sold in special Odwalla-brand displays at grocery and convenience stores, instead of being intermixed with other products.[36][5]

Products

Drinks

A box of Banana Nut bars and two Chocolate Chip Protein bars

Odwalla Inc. produces many flavors of fruit and vegetable drinks, as well as dairy-free soy milk (marketed under the "Soy Smart" name),[36][47] "PomaGrand" pomegranate juice,[5] "Serious Energy" caffeinated fruit juice,[46][55] bottled spring water,[2] and Odwalla's Superfood smoothie line of products, which are viewed as the core products of the company and are made of various fruit purées, wheat grass, and barley grass.[5][56] These products accounted for roughly ninety-five percent of Odwalla's revenue in 2001.[36] Odwalla juice is sold in individual 450 millilitre (15 US fl oz) bottles made of recyclable HDPE plastic,[36] as well as larger 64 US fluid ounce (1.9 litre) containers.[53][56][57] Odwalla's juice, because of production costs, is "typically sold at prices higher than most other juice products", and the price of the juice can vary over time because of weather or disease affecting the supply of fruit and vegetables.[2]

Throughout its history, Odwalla has produced and subsequently withdrawn various juice flavors due to their lower popularity, including the Odwalla Superfood Amazing Purple,[58] Soy Vanilla,[59] and Pomegranate Mango drinks.Cite error: The <ref> tag has too many names (see the help page). as an alternative to its drinks in an attempt to raise revenue following the 1996 E. Coli outbreak.[3] The first three flavors released were Cranberry Citrus, Organic Carrot & Raisin, and Peach Crunch, all three of which are now discontinued.[30] Within eight weeks of their release, the Odwalla Bar was one of the top-selling energy bar brands in the market.[60] The bars come in a variety of flavors, and weigh roughly 68 grams per bar.[61] As of 2001, before Odwalla was acquired by Coca-Cola, food bars accounted for less than five percent of Odwalla's revenue.[36]

References

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  61. ^ "Raising the Bar - energy bars - Buyers Guide - Statistical Data Included". Nutrition Action Healthletter. BNET. 2000. Retrieved 2008-09-19. {{cite web}}: Unknown parameter |month= ignored (help)

See also

Template:Companies portal

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