Cadbury Worm Controversy

Introduction

In October 2003, just a month before Diwali, customers in Mumbai complained about finding worms in Cadbury Dairy Milk chocolates. Quick to respond, the Maharashtra Food and Drug Administration seized the chocolate stocks manufactured at Cadbury’s Pune plant.

In defence, Cadbury issued a statement that the infestation was not possible at the manufacturing stage and poor storage at the retailers was the most likely cause of the reported case of worms.

But the FDA didn’t buy that. FDA commissioner, Uttam Khobragade told CNBC-TV18, “It was presumed that worms got into it at the storage level, but then what about the packing – packaging was not proper or airtight, either ways it’s a manufacturing defect with unhygienic conditions or improper packaging.”

That was followed by allegations and counter-allegations between Cadbury and FDA. The heat of negative publicity melted Cadbury’s sales by 30 per cent, at a time when it sees a festive spike of 15 per cent. For the first time, Cadbury’s advertising went off air for a month and a half after Diwali, following the controversy. Consumers seemed to ignore their chocolate cravings.

As a brand under fire, in October itself, Cadbury’s launched project ‘Vishwa’s’ – a education initiative covering 190,000 retailers in key states. But what the company did in January 2004 is what really helped de-worm the brand.

By investing up to Rs 15 crore (Rs 150 million) on imported machinery, Cadbury’s revamped the packaging of Dairy Milk. The metallic poly-flow, was costlier by 10-15 per cent, but Cadbury didn’t hike the pack price.

Bharat Puri, managing director, Cadbury’s India says, “While we’re talking about a few bars of the 30 million we sell every month – we believe that to be a responsible company, consumers need to have complete faith in products. So even if it calls for substantial investment and change, one must not let the consumers’ confidence erode.”

Simultaneously, Cadbury’s roped in brand ambassador Amitabh Bachchan to do some heavy-duty endorsement putting his personal equity on the line for the brand.

The company upped ad spends for the Jan-March quarter by over 15 per cent. The recovery began in May 2004, and by June, Cadbury’s claimed that consumer confidence was back. These experts believe that the reason for Cadbury’s success was that it took crisis head-on. And the consumers were more forgiving, because the brand enjoyed an emotional equity in India.

    OBJECTIVES

·        Infestation could never occur at the manufacturing stage.

·        The problem was storage linked

·        Cadbury dairy milk continued to be safe for consumption.

·        Let its brand and its performance speak for it.

·        Regaining product trust.

·        Restoring the company’s image and reputation.

·        Increasing sales levels to heat they once were.

·        Cadbury dairy milk continued to be safe for consumption.

·        The problem was storage linked this without alienating trade channels.

Remedy for the Worm Controversy

·        A focused and intense communications program was implemented over the next six months to rebuild credibility and restore confidence among the key stakeholders. The results:

·        In media, the key message that infestation was a storage-linked problem, not manufacturing related, found widespread acceptance. Across the board, media carried Cadbury’s point-of-view on the issue.

·        Sales volumes climbed back to almost to pre-crisis levels eight weeks after the launch of new packaging – a concrete step taken by the company to minimize the incidence of infestation. This reflected consumer confidence in the brand and the company.

·        There was significant upward movement in ratings amongst consumers on parameters like company’s image, responsiveness of company and behavioural parameters like intention to buy Cadbury chocolates.

·        The last two helped to restore faith in the corporate brand among the trade and employees.

Problems faced by Cadbury:

When these worms were found in some of the dairy milk bars, Maharashtra food and drugs administration responded quickly to this case and seized the stocks of chocolate bars which were manufactured in Pune plant.

Cadbury issued a statement where it mentioned that problems was not at the time of manufacturing stage but the problems arose due to poor storage facility by retailers.

FDA denied the statement made by Cadbury and announced that it would prosecute Cadbury India Ltd.

After the test indicated “insect infestation” in the chocolate sample test.

FDA officials conducted raids at Telegaon plant of the company as well as stockist’s premises throughout Maharashtra.

Then there were many allegations and counter allegations between Cadbury and FDA. Due to this event reputation of the Cadbury was hampered Cadbury sales went down by 30% which they want to raise by 15% due to negativity publicity.

For the first time Cadbury’s advertisement went of air for one and a half months after Diwali due to this controversy.

The authorities have however decided not to shut down the plant or cancel the license of company to manufacture chocolates.

Recovery strategies:

Target market:

The problem started in one city, Mumbai. But after it is spread to other towns in the states of Maharashtra and Kerala. But it becomes a national wide crisis because national media covered it. So clearly the first target audience that needed to be addressed was the media both electronic and print media, national and local. Additionally, two other stake holder groups were identified. Trade partners, as their confidence was shaken. Finally, as intense media coverage continued. It became important and critical to include the employees especially sales as the third group.

Strategy:

It was decided to take whatever steps were necessary to restore the confidence. Having historically maintained a low profile with media and let its brands and its performance speaks for it. The company began to cultivate relationships with the media and rebuilt stake holder’s confidence.

Phase-1

·        Presenting Cadbury’s point of view.

·        The day which crisis broke the agency setup a media desk to ensure that no media query went unanswered from day 1 story carried Cadbury’s point of view.

·        The Cadbury’s managing director addressed consumer concerns with following key messages.

·        Infestation is storage linked problems.

·        It is safe to eat Cadbury chocolates.

·        Consumers must exercise the same care in purchasing a chocolate as they would when buying any food items.

·        Cadbury announced significant steps to restore consumer confidence.

Implementation of action

Internal Action

·        Letters from MD to Employees.

·        Employees were asked to go the market and check for themselves.

·        Series of town hall meeting were held.

·        Regular E-mails updates.

External Action

·        Packaging

·        Project Vishwas

·        Two advertisements featuring AMITABH BACHCHAN.

·        Media conference

·        Platform of BQC (Bournvita Quiz Competition)

·        Retail monitoring and educational program

·        Toll-free numbers and E-mails to retailers.

They called the project Vishwas (TRUST) which entailed.

Project Vishwas:

Cadbury was losing on its sales and also reputation was being hampered. So, recovering from this type of situation was a challenge for Cadbury. In the month of October only Cadbury launched Public Relations (PR) campaign ‘Vishwas’ which was an education initiative covering 190,000 retailers in key states.

Project Vishwas a three-pronged program that addressed the trade, consumers, media and employees. The project incorporated the following measures:

For Trade:

A retail monitoring and education program was launched in which quality checks at over 50,000 retail outlets and educated 190,000 wholesalers and retailers was done regarding storage requirements.

A press ad regarding ‘Facts about Cadbury’ was also published by Cadbury nationally in 55 trade publications which were about channel members taking remedial measures in the company.

Posters and leaflets on the issue were also distributed to retailers, encouraging them to share them with consumers.

Cadbury also linked the trade with response cell through a toll-free number and an email id to let them contact the company directly.

For Media:

The point-of-view of a company was explained to media, media was also given updates about actions initiated by the company, and encouraged to share them with consumers.

The company instituted a media desk and diligently answered every media query, friendly or not. The company’s managing director urged media to assure consumers that Cadbury was safe to eat, but that consumers exercise the usual care in purchasing a chocolate that they exercise in purchasing a food item.

Furthermore, it also promised to implement packaging changes within two months to ensure against poor storage. Cadbury’s MD and key spokespersons had one-to-one sessions with 31 media editors as part of an ‘Outreach’ program initiated in November 2003.

For Employees:

Employees were also briefed about actions taken through meetings with senior managers and email updates from the MD.

Change in Packaging:

January 2004, the company launched a new double packaging that was able to wrap even the smallest 13 gm chocolate in an aluminium foil, heat-sealed for complete protection from all sides and further encased in a poly flow pack. The over-engineered pack, the first of its kind in India, cost a lot to a company, but fulfilled the company’s promise to consumers and media. By investing up to Rs.15 crore (Rs.150 million) on imported machinery, Cadbury’s revamped the packaging of Dairy Milk. The metallic poly-flow was costlier by 10-15 per cent, but Cadbury didn’t hike the pack price.

                 The new packaging was launched in a media conference. In a conference comparison kits were distributed. These kits were useful in comparing old packs and new packs. A video with packaging and factory shots for television coverage was also launched.

Ad Campaign:

Just after changing packaging Cadbury roped in Amitabh Bachchan as a brand ambassador. From the month January to March 2004, Cadbury came up with a strong Ad campaign which helped them to get back the consumer confidence. During this period Advertising expenses went up by 15% but it really helped Cadbury to get back its reputation.

WHY BIG-B             

·        Appointed as brand ambassador for a period of two years.

·        The company believed that the reputation he has built up over the last three decades compliments their own, which was built over a period of 50 years.

·        AMITABH BACHCHAN played pivotal role in all communication related to Cadbury’s products and brands.

·        Aimed at rational and emotional appeal.

·        Because everyone accepts Amitabh Bachchan words even child to old man, after that everyone started eating Dairy Milk.

Campaign Results:

•       Media Coverage: The media relationship effort clearly helped in making media accept that the infestation was genuinely caused by storage-linked problems. From the start, all media reports carried the Cadbury’s point-of-view. Bad news automatically gets great coverage. However, the agency helped Cadbury get a total of 378 clips in over 11 languages covering the new packaging, and its benefits, in January 2004. The Business Today clip is a typical representation of the changed media perception and a better understanding of the problem over a three-month period.

•       Sales: Sales volumes, which declined drastically between week 1 and week 10 of crisis, climbed back almost to the pre-incident levels by week. within 8 weeks of introduction of new packaging and communication. This is a clear reflection of restoration of consumer and hence trade confidence in the corporate brand.

•       Image: There was significant upward movement in ratings amongst consumers on parameters like company image, responsiveness of company and behavioural parameters like intention to buy Cadbury chocolates. While the new product introduction and advertising had their role to play in the changing consumer perceptions, the media’s positive coverage and the trade’s positive pre-disposition played a huge part in helping Cadbury regain its reputation in the market.

Role of Public Relations

Public Relations concerns the total communications of your total organization/group of organizations. It is unlike advertising, where you are sharing skills of planning, creative and media buying teams with an out-sourced agency. PR calls for a very intimate understanding of the total inner workings of your organisation at all levels – workers to Board levels. It requires the integration of knowledge and communications. It is not a part time job for a Marketing Services Manager. If it is to work and serve the larger objective, the PR department should be independent, servicing others like production, personnel, marketing, finance, corporate agendas.

 Therefore, the PR Head should be part of the top management team – reporting directly to the CEO. He also needs to share everyone’s confidences.

The PR department of Cadbury’s played a very effective role in managing the reputation and keeping up the goodwill of the company.

Conclusion

In this report we explained and highlighted the evolution of warm controversy in Cadbury, just before Diwali the food and drug administration commission received complaints about infestation in two bars of Cadbury dairy milk. Then we did certain analysis and searched about how Cadbury overcome from the crisis. The next step was to look over the strategy, i.e., how company overcome worm controversy and at last we mentioned about the target market i.e. what was the response of the market on Cadbury after the controversy and what were the challenges of company in the market.

Through timely and consistent marketing communication Cadbury succeeded in solving a daunting business crisis.

With 360-degree communications approach that targeted various audience, Cadbury could quickly have controlled and offset the negative word of mouth it had received.

By integrating a variety of tools like press release and conference, consumer advertising, trade advertising, point of purchase communications, packaging initiatives, email communications, and the like, all focusing on the same problems, Cadbury could communicate a unified message and get audience to appreciate the efforts it had taken to minimize instance of future occurrence.

Suggestions & Recommendations

·        People tend to trust hard statistics in crisis situations: Cadbury should have released a report comparing the worm infected chocolate with perfectly.

·        Address the victims: They should have had important company official publicly address the people affected by the infected chocolate bars and offer them compensation.

·        No mention on the Cadbury website: Cadbury’s website history does not address this issue at all. I would suggest that they reflect on what happened on their website and provide full and comforting information for consumers. This way, people aren’t as likely to look for information on other sites, which could be critical.

·        Apology: The company never officially issued an apology to the customers, trade partners, stake holders or the victims.

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