Friday, February 26, 2010

What happens to your reputation when you unknowingly use deffective raw goods?

Earlier this month, I wrote about the Toyota recalls. The recalls were caused my manufacturing issues on Toyota’s part and have had a major effect on the company’s reputation. But what happens to the reputation of a company if the cause of a defect is not the manufacturer but the supplier of raw goods? This is exactly what happened to E&J Gallo, the largest family-owned winery in the United States.
Twelve employees of Ducasse and Sieur d'Arques, suppliers to Gallo, were convicted last week for selling incorrectly labeled wine to E&J Gallo. The accused sold 18 million bottles of wine that was labeled as Pinot Noir, but was actually made from less expensive local grape varieties. The fake Pinot Noir sold to Gallo was bottled and sold under the name “Red Bicyclette”. The scam lasted from 2006 to 2008 and profited about 7 million euros. A French judge sentenced the 12 to jail and fines ranging from 3,000 to 18,000 euros each.

It seems Gallo is trying to keep the situation quiet, unlike Toyota and their problems. On the Toyota website, there is a large box that says “Get the latest updates here”. On the Gallo website, I had to do some searching. Under the “Press Room” tab, I found 1 press release. In that 1 press release, Gallo leaves a statement only 7 lines long. In the statement, Gallo expresses their disappointment for the mislabeled bottles and declares that less than 20% of the imported wine used to make Pinot Noir was from the corrupt suppliers. Also, the press release states that the imposter wine has been removed from the marketplace.

As an agricultural business owner, do you think Gallo has done enough to reassure the public that their wines are labeled correctly? How would you handle a situation involving misrepresented raw goods that you use in making your agricultural product? As a consumer, is a single press release (only 1 paragraph long) sufficient? Do you think you will still trust Gallo even if this wasn’t their fault?

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