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Some of that milk made its way into products at a plant in Osaka that was the source of the mass food-poisoning.

Snow Brand’s shares were hit hard by the scandal, falling nearly 40 per cent. They have since recovered modestly and on Thursday ended up 0.23 per cent on the day at 427 yen.

Last Wednesday, the company said it posted a parent net loss of 11.2 billion yen for the April-July period due to the scandal, which forced it to temporarily close all 21 of its milk-producing plants in Japan.

As a result of the incident, sales for the company took a nosedive and Snow Brand’s president, Tetsuro Ishikawa, closed eight of his factories.

Before the food poisoning, Snow Brand had a market share of 45 per cent. This dropped to under 10 per cent and the brand has still to recover back to its pre-2000 levels. Sales growth between March 2008 and March 2010 was barely 1.75 per cent, or less than 1 per cent a year. The incident also took a personal toll for Tetsuro Ishikawa, who had to be admitted to hospital as a result of stress. Later he resigned and apologised to the media.

Lessons from Snow Brand

Respond quickly. Snow Brand’s initial response to the crisis was too slow as the company was reluctant to issue a full product recall and to communicate with the press.

Don’t sound selfish. When Snow Brand eventually did talk to the media, it focused on the financial consequences for the company, rather than the suffering of its food-poisoned customers.

Be prepared. The company was ill-prepared when it made public statements and did not have all the information.

43 Rely tampons

Procter Gamble’s toxic shock

In 1980, Procter & Gamble launched a super-absorbent tampon called Rely. However, the super-absorbency of the product was a result of a synthetic substance called carboxymethyl cellulose, which would sometimes leave a synthetic residue inside a woman’s body after the tampon had been removed. ‘From the moment super-absorbent tampons hit the market there were published accounts of vaginal ulcerations, lesions, and lacerations,’ writes Laurie Garrett in her 1994 book, The Coming Plague.

However, things became even more worrying later in the year with a sudden increase in cases of toxic shock syndrome in the state of Wisconsin. Almost all the cases were menstruating females. Following further research by health authorities it emerged that most victims had been using the Rely tampon.

This was clearly very bad news, not only for the victims, but also for Procter & Gamble, the company which had virtually started the tampon category in 1936. Furthermore, Rely had been one of the most expensive products ever to develop, with more than 20 years of research and marketing efforts behind it.

From the start of the crisis, Procter & Gamble acted defensively. When the Centers for Disease Control (CDC) in Atlanta started to investigate the link between Rely and toxic shock syndrome, Procter & Gamble began its own investigation, which (surprise surprise) found no link. When the CDC published its findings, the link was backed up with comprehensive figures. But Procter & Gamble dismissed this research as ‘insufficient data in the hands of a bureaucracy’.

However, by this time the company had started to realize it was fighting a losing battle and began to cooperate and look for a compromise solution. Procter & Gamble suggested a warning label be added to the product. But when the results of the CDC study were confirmed by an independent research firm, Procter & Gamble had little choice but to suspend sales of the product.

The withdrawal of Rely from the market was estimated to cost US $75 million. However, although Procter & Gamble initially made matters worse by denying responsibility, the company was now embarked on a damage limitation exercise.

It worked jointly with the CDC to draft a consent agreement. The CDC allowed Procter & Gamble to deny any product defect or violation of federal