Business

06.28.13

Racism Is a Tough Sell: The Real Reason Everyone Dumped Paula Deen

In business, it’s OK to be a sexist, a felon, or an adulterer. But a racist? Uh-uh—especially if your brand has a national reach. Daniel Gross on Paula Deen’s swift fall.

Paula Deen has come undone.

First came details of a lawsuit in which a former employee alleged racial insensitivity on the part of Deen. Then came her amateurish, tentative apologies on YouTube. A mawkish attempt at self-exculpation in an interview on the Today Show with Matt Lauer didn’t go much better.

Instantly, a bevy of Fortune 500 companies that were more than happy to do business with Deen, have dropped her like a hot (sweet) potato. The sharp and swift fall makes for a concise case study on the impact of reputation on a personal brand.

Deen may have been known to most laypeople as a television chef and cookbook author. But the beauty of today’s world is that you can quickly leverage fame gained in one arena into others. She had a show on the Food Network, restaurants, a line of cookware sold in Walmart, Home Depot, Target, and other stores, cookbooks, an endorsement deal with the pork giant Smithfield. Deen was also able to mine commercial gold out of self-inflicted wounds. Critics had long warned that a diet larded with pork, butter, cream, and sugar could lead to diabetes. Lo and behold, after Deen revealed that she had diabetes, she signed a deal with pharmaceutical firm Novo Nordisk to help promote a diabetes drug.

Within a week, all of it—well, almost all of it—has melted away. Giant corporations that were happy to plaster Deen’s face on their products and stock their goods in their store have run away. Political correctness run amok? No. It illustrates a larger truth. In 2013, no national brand, in any industry, can afford to have an association with a person who expresses racial animus, or who taints a company with the stain of racial animus. It’s just not acceptable. It is OK for endorsers and business partners to be gamblers (Michael Jordan), convicted felons (Martha Stewart), or adulterers (too many to name). The commercial culture will tolerate multiple divorces, trips to rehab, and all sorts of boorish behavior. You can even recommend that people eat really unhealthful diets. But the hint of racism is simply a deal-killer. No questions asked.

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Here’s your checklist of former Paula Deen sponsors who have cut ties with the embattled celebrity chef.

Of course, companies will be more likely to stick with an employee, or a business partner, if they are minting money. Over his long career, Rush Limbaugh has suffered astonishingly little blowback for off-color remarks. (It was sexism that got him into the most trouble with advertisers.) But in Deen’s case, her ratings at the Food Network were already slipping. Deen’s show had been running for 11 years (a close approximation of the life expectancy of people who subsist solely on her cuisine), which is an extremely long time. But as The Wall Street Journal reported, Deen’s show was slipping: “Ratings for Ms. Deen’s show “Paula’s Best Dishes” were down 15% in total viewers—and 22% in the 18–49 demographic that advertisers care most about—for the 2012–13 season, compared with last season, according to Nielsen ratings provided by Horizon Media.”

The other companies to jettison Deen were more interested in their image than the bottom line. Every company has official statements, codes of conducts, and principles that bar their employees from using the type of language that Deen allegedly did in the workplace.

Deen didn’t have big exclusive deals with department stores, the way Martha Stewart does. Rather, she put her name on kitchen products that were sold in a wide range of stores. As of this week, they are sold in a narrow range of stores.

Walmart issued  a terse statement on Wednesday. “We are ending our relationship with Paula Deen Enterprises and we will not place new orders beyond those already committed.” You can still get her dinnerware and other products at Walmart.com.

On the one hand, Deen was a perfect fit with Walmart, which remains a down-scale, predominantly Southern company. But Walmart has been trying to branch out of its blue-state base for years. With domestic sales stagnating, its only prospect for growth in the U.S. is in markets where it has generally been underrepresented: urban areas, places like Chicago and New York that house large minority populations. Walmart’s culture—low wages, a pathological hostility to unions—has posed a major stumbling to the company as it seeks to break in to diverse areas like New York. So any negative press surrounding race relations is particularly toxic for Walmart.

Target, which cultivates an inclusive, hip image, likewise found the comments attributed to Deen unacceptable. It announced that it won’t order any more Paula Deen cookware and dinnerware products once its existing stocks are sold out. Home Depot, based in Atlanta, the city famously too busy to hate, went a step further—it took the products off its website entirely.

It seems unlikely that Smithfield, the pork giant that had put Deen’s face on hams, would have been the target of boycotts had it continued to do business with the chef. But Smithfield, which recently agreed to be acquired by a Chinese company, has become controversial. It needs friendly treatment in Washington and media as it shoots the rapids. The less public noise surrounding the company, the better. And so it jettisoned her. “Smithfield condemns the use of offensive and discriminatory language and behavior of any kind. Therefore, we are terminating our partnership with Paula Deen,” the company told CNBC on Monday.

On Thursday, QVC took a notably softer stance, announcing it was “taking a pause” from Deen, not just for the sake of the company but for “Paula to concentrate on responding to the allegations against her and on her path forward.” While she’s doing that, QVC will be “phasing out” her products and she won’t be appearing on any TV broadcasts. President and CEO Mike George concluded this wasn’t necessarily a “forever decision” because, after all, “people deserve second chances.”

While companies based in the southern U.S. have been quick to convict and sentence Deen, a Danish company that Deen works with was much more tolerant and forgiving. Novo Nordisk, whose diabetes drug Victoza Deen promotes, at first said it would reserve judgment on Deen “while she takes a more proactive approach to clearing up her comments.” On Thursday it suspended the partnership.

Of course, none of this means that Deen is finished entirely. It just means that she can no longer be a national brand. Defenders of Deen note that she comes from a particular time and place. To condemn her for her language and attitudes is to condemn the huge number of white people who grew up in the segregated South and used the same type of language that their friends and parents did. And it is indeed true that we continue to make concessions to Southerners of a certain age. The fact that Rick Perry had a camp with an offensive name didn’t stop him from becoming governor of Texas. Haley Barbour’s willful blindness to the nastiness of segregation in the 1960s didn’t preclude him from heading the Republican National Committee. And I would love if it some reporter started quizzing elderly Southern officeholders—say, Jefferson Sessions of Alabama—as to whether they’ve ever used racially insensitive language in their lifetimes.

But here’s the deal. Even today, what is acceptable in one part of the country is unacceptable in another. And it is definitely the case that a history of racial insensitivity—especially a recent history of racial insensitivity—can stop you from being a national public figure. So Deen is commercially viable, just not on the national stage. To survive, she’ll have to revert to being a niche figure. You can prosper and remain rich by appealing to a small sliver of America’s vast population. And there is every sign that she’s capable of pulling that off.

Fans, including some African-American ones, are still lining up at her Savannah restaurant. Her next book, co-written with New York Times columnist Melissa Clark and published by Ballantine Books, Paula Deen’s New Testament: 250 Favorite Recipes, All Lightened Up, is already No. 1 on Amazon.com. And in Albany, Georgia, plans to open a Paula Deen museum are moving ahead.