Analysis of Arla Boycotting in Middle-East

Case

Arla Foods is a cooperative based in Århus, Denmark, and the largest producer of dairy products in Scandinavia. It is owned by 11,000 Danish and Swedish farmers. The company has a large presence in the Middle East, with annual sales there of US$480 million. On 30 September 2005, Danish newspaper Jyllands-Posten published 12 editorial cartoons that depicted the prophet Muhammad. Besides depicting the prophet – which is blasphemy to Muslims – the cartoons were considered by many to be Islamophobic and racist. The newspaper said the cartoons were an attempt to contribute to the debate regarding criticism of Islam and self-censorship. Between October 2005 and February 2006, the cartoons were reprinted in several major European newspapers in Norway, the Netherlands, Germany, Belgium and France. This led to protests from Muslims across the world. Protest action included: setting fire to the Norwegian and Danish embassies in Damascus and Beirut; attacks on the Danish embassy in Tehran; and gunmen storming an EU building in Gaza City demanding an apology from Denmark and Norway.

Soon after the widespread publication of the cartoons, ambassadors from Muslim-majority countries requested a meeting with the Danish prime minister, Anders Fogh Rasmussen, to discuss the publications and perceived wider mistreatment of Muslims in Denmark. The Danish government declined the meeting, saying it could not influence the press. In his New Year speech, the prime minister chose not to apologize, but instead spoke of sensitivities when exercising free speech. On 20 January 2006, Saudi Arabian political and religious figures called for a boycott of Danish products. Arla responded by placing advertisements in Saudi newspapers distancing itself from the cartoons. Arla told the offending newspaper, Jyllands-Posten: ‘We fear that we will be hit by a wave of consumer anger.’ The company also decided to put full-page advertisements in Saudi newspapers showing the official Danish stance on Islam. But Arla later admitted this action had not helped.

On 27 January, the Confederation of Danish Industries appealed to Jyllands-Posten to print an apology for having commissioned the drawings, which they did on 31 January. The newspaper published two open letters on its website: one from the newspaper itself apologizing for the offence caused to Muslims; and the other from the artist who had depicted Muhammad with a bomb in his turban, justifying his cartoon. The prime minister welcomed the apology, but said: ‘The Danish government cannot apologize on behalf of a Danish newspaper… independent media are not edited by the government.’ Meanwhile, Swiss giant Nestlé admitted to advertising in a Saudi paper telling consumers that two of the products it sold in the region were not of Danish origin. The company denied it was an ‘anti-Danish’ measure and justified the advert by saying it had achieved its purpose, with Nestlé sales normalizing.

At the end of January, Arla said the boycott of Danish products in the Middle East was almost total and that all its customers in the region had cancelled their orders. This resulted in 100 lay-offs. Arla said: ‘We have found ourselves in the middle of a game we have no part in.’ It added that it was very difficult to get this particular message across to its Muslim customers. ‘We have taken 40 years to build up a very big business in the Middle East, and we’ve seen it come to a complete stop in five days.’ January also saw an attack on two Arla employees, and in February Arla said the boycott was costing the company £1 million per day.

Outcome

On 1 March, Arla estimated the cost of the boycott would amount to US$64 million. But it reaffirmed its commitment to the Middle East: ‘Even if the situation looks very difficult, we believe that Arla has a future in the Middle East.’ Later that month, Arla began remarketing in the Middle East with full-page advertisements in 25 Arab newspapers. At the beginning of April, Arla products were beginning to be put back on the shelves of stores in the Middle East. It also said it would be sponsoring humanitarian causes in the region. However, it said: ‘While we may be seeing a slow lifting of the boycott by retailers, it remains to be seen whether customers will in fact buy our products.’ By August, sales had returned to pre-boycott levels in most Gulf states with the exception of Saudi Arabia (Arla’s largest market in the region). Arla’s chairman, Knud Erik Jensen, said: ‘With regard to the Middle East, the outcome has been slightly worse than expected last spring’.

Analysis

The crisis happened when Danish newspaper named Jyllands-Posten published 12 editorial cartoons that depicted the prophet Muhammad. Arla whom does nothing to the related cartoon post affected by the cartoon. Their income decrease significantly because of the middle-east country ban the danish product. Based on Kriyantono (2012:177) this crisis can be categorized as confrontation crisis which caused by the danish newspaper then, the middle east government rage and declare that they ban danish product over their market. This isn't decrease the image reputation from the Arla company itself but also the whole nation of Danish affected. The unedited post that published over europe trigger this event. The crisis itself is the ban of Danish product including Arla products. Based on Kriyantono (2012:174) crisis charateristic is:

1. spesific event.

The crisis cause can be identified. But it's possible that the company may have more than 2 crisis in this case, the event itself is started because of the newspaper cartoon that offend behalf of islam in middle east.

2. Crisis can happen anytime, also crisis is unwanted.

Crisis tend to endanger lifecycle of an organizations or its public so none of any organization want crisis happen, in Arla case, they didnt predict that such newspaper will spread racist cartoon. This event cause their profit decrease.

3. Crisis create misguided information.

Arla whose known has the bigest consumer in middle east area affected by the ban of their product. Their consumer would think that all danish product contributed to the cartoon itself so, the public will think that all Danish citizens are racist to islam.

4. Cause panic.

Panic in this term, Arla whose not involved in the offensive cartoon panic because they fear the reaction of their middle-east consumer will affect to their company image and product image.

5. Affecting to organization operational.

Boycoting from the middle-east government cost their product become canceled by the consumer there. This action disadvantage Arla and make their income become worst.

6. Tend to create conflict.

The cartoon that Jyllands-Posten publish could affect the two nation conflict between Denmark and Middle-east country even Muslim around the world.

Issue lifecycle

This case can be explained by issue lifecycle. Based on Kriyantono (2012:159):

1. Potential Stage.

This stage is where the issue become widespread. The issue starts from the Jyllands-Posten whoose publish offensive cartoon that contain Prophet Muhammad in it. And then the newspaper publish it around Europe and some of muslim notice the cartoon. This create issue around muslim country that they think that Denmark wants to confront islam.

2. Imminent stage

After the widespread of racist cartoon, muslim country driven some muslim extremist to attack certain location in hope that Denmark embassy giving apologize. Soon, Muslim majority country request to meet with Denmark prime minister Fogh Rasmussen to discuss the publication. But the reaction from Danish prime minister was unpleasant. The prime minister decline the meeting and also, in his new year speech he decline apologize.

3. Current Stage.

In this stage, public starts to creat organization to confront the realted organization. Saudi Arabian political and religious figures called for a boycott of Danish products. Because of the offensive cartoon, it drives middle-east country to agree that they will boycot every single product in their country. This action is in purpose to show to Denmark country their anger about the newspaper. And taking it seriously.

4. Dormant Stage.

At this stage, organization can handle the issue and publics please because of the un-answered question regarding to the issue. On 27 January, the Confederation of Danish Industries appealed to Jyllands-Posten to print an apology for having commissioned the drawings, which they did on 31 January. This action at least calm the situation of the issue, and also the apologize letter published from the newspaper and the artist whom create the cartoon. Also, the government apologize but state that the independent media content isn't controled by the government. This is the end of the issue for the Denmark nation.

Analysis of Organization respond.

After all the suffer from the issue, Arla began to rethink their way out to stop the boycoting in middle east. Arla first step is totold the offending newspaper, Jyllands-Posten: ‘We fear that we will be hit by a wave of consumer anger.’ The company also decided to put full-page advertisements in Saudi newspapers showing the official Danish stance on Islam. But Arla later admitted this action had not helped. Then arla start to spread the message that they didnt involve in the cartoon making. Finally, they start to remarketing their product in middle east again followed by printing advertisment in 25 Arab newspaper. Also, they start to supply their product to the store. The next move is Arla began to sponsor humanitarian cause in the region.

From the outcome, we can see that Arla whose not involved in the cartoon but affected by its effect did well in retoring their image in middle east.

Arla only has 3 step to encounter the issue. Kriyantono(2012:165) There are 5 universal step to manage issue that is:

1. Public relation should recognize the issue.

The way that Arla company recognize the issue is monitoring the media that is Jyllands-Posten. From the case above i can tell that Arla didnt silence during the issue development. Their move is to tell that newspaper that their cartoon could affect the Denmark reputation around the world.

2. Evaluate and analyze the issue.

Arla company realize that the racist cartoon could affect their product selling in middle east. Their move is after the boycotting action from the middle east, they plan to remarketing their product again so they wont lose more consumer.

3. Formulate the strategy to respond the issue.

The Arla strategy is by posting that they are innocent and start sponsoring humanitarian cause response. This move isnt only restore the product image but also make the selling goes well.

Sources

Kriyantono,Rachmat (2012). Public Relation & Crisis Management:Pendekatan Critical Public Relations Etnografi Kritis & Kualitatif. Jakarta. Kencana Prenada Group.