Odwalla

Origin

Odwalla was founded in Santa Cruz, California, in 1980 by Greg Steltenpohl, Gerry Percy, and Bonnie Bassett. 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, employing slogans such as "soil to soul, people to planet and nourishing the body whole".

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. 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".

Incorporation to 1996

Odwalla was incorporated in September 1985 after five years of growth 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. 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. Odwalla went public in December 1993 (NASDAQ:ODWA); the company had 35 delivery trucks, almost 200 employees, and made about $13 million a year. Soon afterwards, Odwalla expanded into new markets when it bought two companies in the Pacific Northwest and Colorado.

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

Continual growth and outside investments during these years allowed the company to expand and grow: Odwalla's revenue tripled from 1994 to 1995, and in 1996 they made more than $59 million in sales, their highest ever. This constant growth made Odwalla one of the largest fresh-juice companies in America by 1996, when the company was selling its products to stores in seven states and parts of Canada. 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 they were not pasteurized.

1997–2001

On October 7, 1996, Odwalla made a batch of apple juice using blemished fruit contaminated with E. coli resulting in one death and 66 sickened customers. The outbreak occurred because Odwalla sold unpasteurized fruit juices, though pasteurization had long been standard in the juice industry, claiming that pasteurization alters the flavor and destroys nutrients. Because of the lack of pasteurization and numerous other flaws in its safety practices, the company was charged with 16 criminal counts of distributing adulterated juice. Odwalla pleaded guilty, and was fined $1.5 million: at the time, the most significant penalty in a food poisoning case in the United States.

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. Another new product was the Future Shake, a "liquid lunch" aimed at younger consumers. Because of these efforts, Odwalla was again profitable by the end of 1997, reporting a profit of $140,000 for the third quarter.

Having recovered, the company worked to expand geographically into markets like Philadelphia and Washington, D.C., and by the end of 1998 reported that revenue had surpassed pre-crisis levels. Growth continued over subsequent years, in part through the $29 million acquisition of Fresh Samantha, a large juice company based in Saco, Maine, in 2000. 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. 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.

Production

Odwalla used what it characterized as "fresh-sourced" produce (fruits and vegetables that had recently been harvested) to make many of its products, 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. Because Odwalla used fresh produce, some juices were seasonal. Fruit availability and price were also affected by adverse weather, disease, and natural disasters. Throughout the year, Odwalla juice colors and flavors changed slightly because different types of fruit were used.

After the E. coli outbreak, Odwalla improved the safety of several of its production processes. Before the fruit entered the factory, it was washed, sorted and sanitized. Once it reached the plant, the apples, carrots, and citrus fruits were separated and washed again. The fruit was pressed to get the juice, which was then flash pasteurized and bottled. A sample underwent quality testing, and, if it passed, the batch was shipped in refrigerated trucks to various distribution centers in the United States. Odwalla juice had a relatively short shelf life compared to other beverages and thus required refrigeration. However, the shelf life was considerably extended after the introduction of flash pasteurization in 1996 and a new plastic bottle in 2001. Generally, Odwalla products were sold in special Odwalla-brand displays at grocery and convenience stores, instead of being intermixed with other products.

Products

Drinks

Odwalla Inc. produced many flavors of fruit and vegetable drinks, as well as dairy-free soy milk (marketed under the "Soy Smart" name), "PomaGrand" pomegranate juice, "Serious Energy" caffeinated fruit juice, bottled spring water, and Odwalla's Superfood smoothie line of products (see green smoothie), which are viewed as the core products of the company and are made of various fruit purées, wheat grass, and barley grass. These products accounted for roughly 95 percent of Odwalla's revenue in 2001.

Odwalla juice was sold in individual 12 fl oz (formerly 450 millilitre or 15.4 US fl oz) bottles made of plant-based recyclable HDPE plastic, as well as larger 64 US fluid ounce (1.9 litre) containers.