Confidential Memorandum

Date: Friday September 15, 2000
To: Ms. Laurie Gannon, Public Relations Director of Taco Bell Corporation
Copy: Taco Bell Corporation Senior Executives and Legal Dept.
From: Dean Hegwood, V.P. Risk Management
Subject: Unfavorable Media Exposure within 48 hours
Taco Bell Corporation’s Director of Public Relations has in the last few hours received a phone call from the company’s Government Relations Team. The Government Relations Team has learned that a special interest group known as “Friends of the Earth” will be releasing information on Monday September 18, 2000 to the Washington Post. This press release will be implicating the Taco Bell labeled taco shells which are manufactured, distributed, and sold by Kraft Foods, Inc. as containing a genetically modified corn ingredient unapproved for human consumption. The substance is known as StarLink and is a product of Aventis.
Background
* On August 1, 1996, Taco Bell and Kraft Foods, Inc. entered into a licensing agreement for Kraft Foods to manufacture, distribute, and sell Taco Bell branded taco shells in the retail grocery market. * In August 1998, the EPA granted Aventis registration of protein “Cry9c” known as StarLink as a plant pesticide. * In August 1998, the EPA granted Aventis approval to use StarLink only for commercial use as animal feed. Precautions must be in place to ensure prevention of StarLink from entering the human food supply. * In April 1999, the EPA denied Aventis request to allow StarLink to enter the human food supply due to lingering concerns related to allergens. * In November 1999, customers in California, Arizona, Minnesota, North Dakota, and South Dakota were sickened with E-Coli O157:H7 tainted ground beef.
Unfavorable Media Exposure
September 15, 2000
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* In 1999, the European Parliament imposed tighter restrictions on the use of genetically modified foods. * In August 2000, certain nongovernmental organizations (NGOs) began public debates related to a series of tests which were conducted on 23 leading corn based foods * These tests concluded the Kraft Foods product labeled Taco Bell Home Originals taco shells contained the “Cry9c” protein StarLink which has been deemed unfit for human consumption. * Today, September 15, 2000, Taco Bell Corporation notified about upcoming press release related to Kraft Foods product labeled Taco Bell Originals containing StarLink.
Discussion
When the Washington Post releases the finding from “Friends of the Earth” that Kraft Foods product labeled Taco Bell Originals taco shells contain “Cry9c” known as StarLink, Taco Bell Corporation will face a public perception that Taco Bell restaurants are serving or selling tinted food products. Less than one year ago (November 1999) Taco Bell Corporation lost some public confidence due to the E-coli outbreak from tainted ground meat. Our response during the November 1999 outbreak should be duplicated to assist with the public perception related to tainted products. While the restaurant products are separate from the home products, they will be linked by our Taco Bell branding. Our use of media outlets, phone banks, and websites should be used. Our legal team will need to begin its preliminary research into the subject for reports and recommendations before the press release. Senior executives from Kraft Foods are being contacted to begin planning a united response to the upcoming press release, action steps to be taken in the next 24 and 48 hour timeframes, and action plans post press release. Aventis is the developer, manufacturer, and distributer of the genetically altered corn product. This product has a protein altered to act as a “plant pesticide”. In reported studies, the product is “heat stable” meaning it can withstand stomach acids and digestive enzymes. This can lead to allergic reactions in some people. Aventis has repeated requests to use its StarLink product in the human
Unfavorable Media Exposure
September 15, 2000
Page 3 of 3 food supply. Aventis has been denied by the FDA who has restricted the use of genetically altered products in the human food supply. Other US government agencies which may become involved will be the USDA, and the EPA. While the FDA allows the use of the genetically altered food product StarLink for commercial animal feed supply, it does not allow genetically modified products in the human food supply. Our immediate goal is to ensure our customers that the Taco Bell food products are safe for consumption and that no Taco Bell restaurant products are related to the upcoming press release.
Recommendations
* Contact and coordinate actions with Kraft Foods. The united response from the two companies is necessary to instill confidence with the customer. (Action:CEO) * Activate emergency response plans. Organize and activate public relations media response via phone banks, websites, and public broadcast. (Action: Public Relations Dept.) * Assign response team, team lead and team spokesperson. A single voice with a streamlined message in necessary to build positive public perception. (Action: HR Director with V.P.) * Recommend legal actions to protect brand and shareholders. A single focus team from Legal to be assembled. (Action: Director of Legal Dept.) * Initiate contact with FDA, USDA, and EPA. Open communication with governmental branches which may have oversight. (Action: Government Relations Team)
Other Issues
Reporting from all action areas will be coordinated through the Risk Management office. The Risk Management office will require three daily briefings starting at 8:00 am, noon, and 4:00 pm over the next 48 hours leading up to the press release.
DCH