Bausch & Lomb Shortsighted in Crisis

Marketer Faulted on MoistureLoc Recall and PR Response

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NEW YORK (AdAge.com) -- For a company whose business is all about clear vision, Bausch & Lomb showed some remarkably fuzzy judgment in how it managed a crisis that could do its $500 million contact-lens-care brand portfolio untold damage.
Bausch & Lomb waited three days between the time it suspended shipments of ReNu MoistureLoc lens cleaner and actually withdrew the product, forcing retailers -- including powerful Wal-Mart -- to yank it from shelves themselves.
Bausch & Lomb waited three days between the time it suspended shipments of ReNu MoistureLoc lens cleaner and actually withdrew the product, forcing retailers -- including powerful Wal-Mart -- to yank it from shelves themselves.

At first, it seemed as if the Rochester, N.Y.-based company was doing the right thing, with a proactive response to reports that its ReNu MoistureLoc lens-cleaner brand caused a rare but potentially blinding cornea infection. It ran full-page ads in 12 major daily newspapers last month to announce a U.S. withdrawal of the brand and last week trotted out CEO Ronald Zarrella in a network TV ad to reassure consumers of Bausch & Lomb's commitment to safety and steer them to its MultiPlus brand.

But behind the scenes it bungled-badly. The company waited three days between the time it suspended shipments of the product and actually withdrew it, forcing retailers-including powerful Wal-Mart-to yank ReNu MoistureLoc from shelves themselves. Then it was revealed in a damaging Food and Drug Administration report that the company waited a full 35 days before telling U.S. regulators the brand had been withdrawn from two key Asian markets. That report hit only a day after the Zarrella ads began airing.

"The issue is not whether they were proactive," said Larry Kamer, North America president of public-relations and crisis-management firm Manning, Selvage & Lee. "One of the keys to success in any product recall or corporate crisis is how they calibrate their ethical compass."

That compass now seems pretty far awry. B&L faces a PR backlash that threatens not just its $100 million ReNu MoistureLoc business, but its overall lens-care portfolio, which generated more than $500 million, or about 23% of last year's $2.2 billion in sales.

Spillover effect?
"I don't think consumer concern will be relegated solely to the MoistureLoc brand," said FTN Midwest Securities analyst Chris Cooley, noting that lens care is such an acute industry that the MoistureLoc fiasco could cast a cloud over B&L's other brands and give rivals an opportunity.

A B&L spokeswoman cited a Centers for Disease Control report issued May 18, which said no other brands are associated with an increased risk of the infection.

The company commanded about 43% of total lens-care sales in the U.S. last year, according to FTN, while rival Alcon and its OptiFree Replenish brands had 41%. Fort Worth, Texas-based Alcon acknowledges it is already reaping some benefit.

"In the U.S., MoistureLoc has or had about a 10% share," said Jackie Fouse, Alcon's senior VP-chief financial officer. "We think that we are getting about half of the changeover, with the other half being evenly split, probably between patients [staying with] ReNu or going to private label."

For that reason, B&L's next move will be crucial. "There is a danger here," said Mr. Kamer. "It is imperative now that the communications from the company make people understand that the product that had the controversy is off the market and not available anymore. They need to reassure the public that MultiPlus is the way to go."

B&L declined to make Mr. Zarrella available for comment. It also would not identify who produced the ads featuring the executive -- though it's believed to be Rochester, N.Y., shop Partners & Napier, which declined to comment for this story. The company would not discuss its strategy or say whether it has hired a crisis-management firm.

Using Mr. Zarrella in an ad is a dubious choice. This is his second tenure at the helm of Bausch & Lomb, with a contentious stint in between during the late 1990s as president of General Motors Corp.'s North American division. GM spent hundreds of millions of dollars trying to create brand images for dozens of models, some of which looked too much alike, and Mr. Zarrella was broadly criticized for his stated belief that GM could sell cars like soap.

In 2002, about a year after returning to B&L, he forfeited a bonus of at least $1.1 million after falsely claiming to have completed a master's degree in business administration from New York University.

"For better or worse, B&L has put Mr. Zarrella out there as the spokesman for the company," Mr. Kamer said. "Time will tell whether it's the right move, but I think you'll see more of him now."

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Jean Halliday contributed to this report.
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