Many companies—and many industries—are reluctant to communicate with key stakeholders about complex and controversial issues.
The conventional wisdom appears to be that ordinary consumers lack the sophistication to make rational decisions based on complicated technical information. Rather than supply stakeholders with the information that would help them make up their own minds, companies and trade associations would prefer to stifle any discussion that involves alternate viewpoints, to avoid external scrutiny.
The phenomenon manifests itself in a wide range of industries. Many food companies, for example, continue to resist the labeling of bioengineered food products, in part because they believe consumers would be panicked by such labels—incapable of assessing the scientific evidence in a rational manner.
By rejecting calls for transparency, companies send the message that they don’t trust companies—but expect companies to trust them.
So when Hanzell Vineyards discovered an elevated level of the chemical TCA (2,4,6-trichloroanisole) in its wines earlier this year, the temptation to deal with the problem quickly and quietly was almost overwhelming.
TCA is not a health risk—it causes a musty flavor and odor in affected wines—but it can have a devastating economic impact. It can destroy an entire vintage if it infects a winery of cellar, as it did at Hanzell.
For the most part, the wine industry had chosen not to talk about TCA. Last year, for example, Beaulieu Vineyard of Rutherford admitted it had TCA in one cellar, but elected not to recall the win, saying the TCA was present in quantities too low to be detected by consumers.
So Hanzell’s response to the crisis was striking. The company not only stopped sales and abandoned its wood and stone winery, built almost 50 years ago by its founder, it also launched an educational campaign aimed at both consumers and other wineries.
The approach won applause from the media. In October, a cover story in the San Francisco Chronic;e praised the company for its candor. Under the headline, “Hanzell Comes Clean,” reporter Carol Emert wrote: “Hanzell’s response is laudable in an industry where problems with wine taint are often ignored or denied for fear of lost sales and a tarnished image.”
James Laube, the California critic for Wine Spectator, who tasted TCA in Hanzell samples, alerted Hanzell to its problem. Laube awarded the company’s wine 78 points out of 100, the equivalent of a failing grade, because of a “troubling musty character.”
After discovering the outbreak, Hanzell was referred to San Francisco public relations firm Fineman PR, which had some expertise in the issue of tainted wine because of its work with French wine cork supplier Sabaté. (Corks are the most common source of wine taint.)
“Hanzell Vineyards is blessed with a rich heritage and has set the very highest of standards in California wine production for decades,” says Hanzell president Jean Arnold. “Our bottom line was to uphold our name and reputation, so we were not going to hide from this issue.”
Henzell, says Arnold, is one of the pioneers of the California wine industry, founded in 1953 by Ambassador James Zellerbach. The company’s reputation was built mostly through word of mouth—Arnold was brought in to provide a more professional marketing approach—and it had not worked with a public relations firm before. Nor had it created anything resembling a crisis communications plan.
“This posed a significant risk,” says Arnold. “We could have lost two vintages of our wine. We could have lost consumer sales, and momentum. But the worst case scenario was losing the trust of our consumers, tarnishing the legacy of the Henzell name.”
Arnold and agency president Michael Fineman decided to acknowledge the problem and accept responsibility; investigate the problem thoroughly and transparently; let consumers and the trade know what the winery would do about the bottles on shelf or in their homes; and communicate how the winery planned to solve the problem for future vintages.
Not everyone agreed with that course of action. Says Fineman, “When we first proposed the strategy, Hanzell’s board was quite cynical about the media’s willingness to recognize honesty and integrity, but the board took a chance, approved our plan, and the winery has earned trust and goodwill in spades as a result.”
The wine industry as a whole has taken a low-key approach to TCA, which is commonly perceived as a problem caused by the cork—even though it can come from barrels or from the cellar itself. The subject “makes the industry nervous,” says Fineman.
But Arnold felt her company had done nothing wrong. “We didn’t want to bury our heads in the sand,” she says. “We wanted to be up front about this, to help people understand what had happened. We felt by talking about it we could help others who might find themselves in the same situation.”
The first step was to test the wines in question with a sensory analysis of wine-knowledgeable consumers. Says Arnold, “We pulled 30 bottles and sent them to an expert for analysis.” Lab tests revealed very low levels of TCA—so low that only expert palates (like Laube’s) would be able to detect the chemical compound in the wine.
As a result, Hanzell re-released its 2000 Chardonnay, with a press release announcing its findings. The company assured all customers (retailers and restaurants) and consumers that the winery would stand behind its wine and take back any bottles for any reason.
The press release also discussed the measures taken at the winery to address the problem, how the winery was changing its procedures to eradicate it, and the hundreds of thousands of dollars it was spending to eradicate TCA. At the same time, the news release assured the wine buying public that these very low levels of TCA would not detract from the wine drinking experience.
But Arnold went even further. After paying an estimated $500 an hour in consulting fees to solve Hanzell’s TCA problem, Arnold is giving away her findings to anyone who wants them. She commissioned a short guide to avoiding endemic TCA, written by sommelier Catherine Fallis, and distributed within the industry, as well as posting it online at hanzell.com. By following the guidelines, wineries without Hanzell’s substantial financial backing can take inexpensive steps to avoid taint, says Arnold.
Arnold began a two month tour of cities across the country speaking with customers, wine media and others in the local wine trade about her wine and her findings, culminating with a luncheon in San Francisco, where she poured wines for tasting.
Arnold wanted the media to taste the wines for themselves and also to assure them that other Hanzell wines had not been affected. The 16 wine professionals present detected no flaws in either the 1999 Pinot Noir or the 2000 Chardonnay.
In fact, only a handful of customers experienced any problems.
“We’ve had only five customers return their wine nationwide out of more than 1,000 customers,” says Arnold. San Francisco’s Aqua restaurant, Hanzell’s largest account, poured 30 cases of the 2000 Chardonnay by the glass—1,800 servings, at $24 a pop—without a single complaint, the Chronicle reports.
Arnold says the company’s decision to be upfront about its problem has paid off in increased customer trust. Fineman is not surprised.
“In a crisis, it is always best to show candor and to make ethical decisions when confronted with the difficult question of costs versus reputation,” says Fineman. “Public relations professionals must be prepared to assist by providing strategic choices, objective counsel, and professional communications. When a company earns trust, a crisis can become an opportunity to enhance the brand, long term.”
The original Henzell winery is still closed, but there are hopes that it can be reclaimed. But thanks to an open and honest communications strategy, there will be no need for a similar effort to restore the company’s reputation.