CADBURY INDIAIn India , Cadbury began its operations in 1948 by importing chocolates

Cadbury India operates in four categories viz. Chocolate, Confectionery, Milk Food Drinks, Candy and Gum category

Cadbury enjoys a value, market share of over 70% - the highest Cadbury brand share in the world!

In 1824 John Cadbury began selling tea, coffee and chocolate produced by himself

CADBURY INDIA Leading Global confectionery

company Employ around 50,000

people and have direct operations in over 60 countries

After 60 years of existence has five company owned facilities at Thane, Pune, Gwalior, Bangalore and Himachal Pradesh

4 sales office – New Delhi, Mumbai, Kolkata and Chennai

The brand name ‘Cadbury’ is synonymous with chocolates in India

A SWEET STORY TURNING SOUR

Worm controversy hit Cadbury in Oct 2003Fungus layer on portions of its chocolatesFood and Drugs Administration ( FDA ) began seizure of the chocolate from all outets across the state FDA also ordered inspection of Stock at company’s Mumbai Plant Peak Season Sale and outsourcing model affected due to controversy

EFFECTS The heat of negative publicity melted

Cadbury's sales by 30 percent, at a time when it sees a festive spike of 15 percent

Net profit in 2003 dipped 37 per cent to Rs 45.6 crore as compared to a 21 per cent increase the previous year

Retailer stocking and display dropped, employee morale especially that of the sales team was shaken

REASONS Aggressive marketing by Company while

neglecting on the Quality of Retailers Lack of efforts to Educate Retailers and

ensure adequate hygienic storage conditions at retail outlets

Poor quality in packaging of product Issues related to transportation of product No Norms in terms of Storage for

Chocolates

TWO PHASE STRATEGY Phase 1 : Presenting Cadbury’s view

(October – December 2003 ) the agency set up a media desk to ensure

that no media query went unanswered the Cadbury’s Managing Director

addressed consumer concerns Project Vishwas (Trust) Editorial Outreach Program with 31media

editors across affected cities

TWO PHASE STRATEGY

Phase 2 : Packaging Change and Communication ( January – March 2004 ) Advertisement weapon :

Brand Ambassador to reinforce the credibility

Amitabh Bachchan, a legendary Indian film star, was chosen, as he embodied the values of Cadbury as a brand

TWO PHASE STRATEGY Phase 2 : Packaging Change and Communication

( January – March 2004 )Packaging :

New ‘purity sealed’ packaging ( Jan 2004) -investment of Rs 15crore on imported machinery

Metallic Poly-Flow was costlier by 10-15% but Cadbury didn’t hike the Pack Price

Investment of millions of Dollars leads to achieve a production process in 8 weeks, that would normally take 6 months.

CAMPAIGN RESULTS AND MEASUREMENT

Media Coverage all Media reports carried Cadbury’s point of view 378 clips in over 11 languages covering the new packaging and

its benefits Sales Sales declined drastically between week 1 to week 10 of the

crisis Within 8 weeks of introduction of new packaging and

communication sales volume reached to the pre-incident levels Image Upward movement in ratings amongst consumer Media’s positive coverage and the trade’s positive pre-disposition

played a huge part in helping in Cadbury regain its reputation

COST OF QUALITY Prevention Design Quality Progress Reviews Requirements Documentation

Quality planning Supplier capability surveys Appraisal Unit Testing Regression Testing Automated Test Tools User

Interface Reviews Internal Failure Rework , Scrap, Re-inspection, Defect Tracking & Reports,

Requirement Changes External Failure Product Recall, Liability Costs, Help Desk/Warranty Claims, Lost

Sales/Market Share

EXTERNAL FAILURE COST OF CADBURY

Sales declined by 30% during festival season as compared to previous year

In 2002 the NPAT was Rs. 72.72 cr. but after the worm controversy in 2003 the NPAT was Rs. 45.6 cr. which was down by 37%

Cadbury spent additional Rs. 40 cr. on advertisement to save its brand value

Cadbury hired Advertising Agency O & M to bail them out this worm crisis Cadbury's roped in brand ambassador Amitabh Bachchan to do some heavy duty endorsement to regain confidence of consumer which cost Cadbury Rs. 15 cr

INTERNAL FAILURE COST OF CADBURY

Lost Production Potential Loss of Morale of the Sales Staff  Rework -Rebuild Problem Tracking Transportation / Storage Cost

PREVENTIVE COST FOR CADBURY INDIA

The company already had an Internationally accepted HACCP(Hazard Analysis and Critical Control Points) for food safety system.With this controversy the company had to incur cost on

Complete overhauling of packaging and spend around Rs 15 cr on Imported machinery to improve packaging of Chocolates

Double Protection Packaging of Chocolates to counter the allegations of FDA

Various levels of Quality Checks at Its facilities and plants Carrying/Forwarding Warehouses and Distributor

warehouses To ensure that its products are free of infestation

CONCLUSION Factors that led to Cadbury’s sweet recovery from

crisis- Brand equity Customer’s perceptions Media coverage New product introduction

“An optimist sees an opportunity in every difficulty where as a pessimist sees a difficulty in every opportunity” -Winston Churchill