'The birth of crisis management'

Seven murders caused by cyanide-laced Tylenol 25 years ago occurred within a few miles -- Chicago and its suburbs -- yet the ramifications to American businesses and retail products reached far wider.

The ensuing financial repercussions for Tylenol-maker Johnson & Johnson convinced the U.S. retail packaging industry to ramp up consumer safety technologies.

Safety seals on foods and medicines were not common at the time.

On the crisis management side, Johnson & Johnson's rapid response, show of concern, reforms and restitution are credited with saving the product and inspiring public relations experts for years to come.

"You could probably point to that incident as the birth of crisis management," said Scott Farrell, managing director of Chicago-based public relations firm GolinHarris. "And it's hard to buy anything these days that doesn't have a child-proof cap or a tamper-resistant bottle."

In three days in the fall of 1982, seven Chicago-area residents died of cyanide poisoning from tainted Tylenol tablets. Nobody has been charged with the crime.

When the first deaths in Elk Grove Village and Arlington Heights were discovered and authorities later realized the connection, the scope of the poisonings was unknown and the worst had to be assumed.

Far from denying its culpability, McNeil Consumer Products, the maker of Tylenol, pulled an estimated 31 million bottles from retail shelves nationwide as a precaution.

The move reportedly cost the company more than $100 million.

A recall on that scale had never been seen before in retail history and made an impression on consumers, Farrell said.

McNeil's parent, Johnson & Johnson, responded quickly with press conferences to keep the public informed throughout the crisis.

When authorities determined someone had taken the bottles off the shelves and contaminated them before placing them back on shelves, Johnson & Johnson could have blamed the perpetrator and attempted to go back to business as usual. Instead, it made significant changes before reintroducing Tylenol.

Changes included:

• First-ever triple-seal tamper resistant packaging -- plastic shrink-wrap over cap, arrow-click caps, and glued flap inside;

• Harder-to-contaminate gel capsules and tablets;

• $2.50 coupon offers and pricing programs;

• Sales effort to tout changes to medical community.

The industry leader with 35 percent of the pain reliever market before the murders, Tylenol's market share plunged to 7 percent when reintroduced weeks after the deaths.

Still, within five months Tylenol recovered 70 percent its market share.

Later, Johnson & Johnson credited its credo, which in part read: "We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services."

Some studies indicate Johnson & Johnson's ethics saved the Tylenol brand, which accounted for about 15 percent of its revenue at the time.

Farrell said studies at the University of Southern California have found crisis-prepared Fortune 500 companies have had fewer crises, double the return on assets and score higher on business surveys.

Another business repercussion turned out to be on the packaging industry, which geared up for tamper-resistant packaging.

The packaging revolution led to a boom for area packagers, said Jack Walsh, director of sales brand protection solutions at Wood Dale-based VideoJet Technologies, a data marking and coding equipment firm.

Demand for batch-coding of products boomed in the 1980s, he said. Being able to trace products to their production sites has became a generally accepted supply-chain practice.

"Batch coding didn't really kick in until post Tylenol," Walsh said.

Once rare, large-scale recalls are becoming more common and the ability to trace problems more sophisticated.

In a year when high-profile recalls of pet food and Mattel toys dominate the news, lessons still can be learned from the Tylenol experience, Farrell said.

"I'd argue the lessons of (the Tylenol tragedy and its aftermath) are as relevant today as ever," Farrell said.