CADBURY’S

WORM

CONTROVERSYA Public Relations project

Apeksha Gupta 8126

Pranav Malhotra 8097

EXECUTIVE SUMMARY

Three years back, Cadbury's found itself in the eye of a storm, when a

few instances of worms in its Dairy Milk bars were reported in

Maharashtra  , . In less than two weeks, the company launched a PR

campaign for the trade. And three months later, came an ad campaign

featuring Big B  ,  and a revamped poly-flow packaging.

Marketing and communications experts brought together by AICAR and

the Subhash Ghoshal Foundation say that Cadbury moved quickly to

bear the cost of damage.

And thanks to its equity with the consumers, Cadbury's won back

consumer confidence, with hit on sales notwithstanding.

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 defense, 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 commisioner, 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

'Vishwas' - 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.

Santosh Desai, former president, McCann-Erickson says, "The nature of

the relationship that Cadbury's has built with the consumer is

responsible for latitude the consumers are giving it.

"They are seeing it as a lapse, not a breach of trust - this difference is

key. What Cadbury's set out to deliver, it goofed up once but it seemed

to be very sincere in its intent to get things right."

Even so, other experts felt Cadbury's was itself to blame for the worm

crisis.

Mahnaz Curmally, PR counsel, explains, "Cadbury's had known for a

long time that packaging needed change, so in a sense, they waited

for something to happen before they made that change and perhaps in

hindsight, they could have made that change voluntarily."

Cadbury's could be case study of a sweet recovery from a crisis. It

continues to lead the Indian chocolate market with over 70 per cent

marketshare. However, the experts feel that today's constantly

changing environment should keep the company on guard.

EARLY HISTORY

The history of Cadbury as manufacturers of chocolate products in

Birmingham dates back to the early part of the 19th century, when John

Cadbury opened a shop in the centre of the city, trading as a coffee and tea

dealer. Soon a new sideline was introduced - cocoa and drinking chocolate,

which he prepared himself using a mortar and pestle.

The founding of the Cadbury business dates back to 1831 when John

Cadbury first made cocoa products on a factory scale in an old malt house in

Crooked Lane, Birmingham.

In 1847 the business moved to larger premises in Bridge Street, which

had its own private canal spur linking the factory via the Birmingham

Navigation Canal to the major ports of Britain.

Business continued at the Bridge Street site for 32 years and by 1878 the

workforce had expanded to 200, so more space was needed. This heralded

the move to Bournville and the building of what is now one of the largest

chocolate factories in the world.

John Cadbury retired in 1861 handing over the business to his eldest sons

Richard and George. It is to their leadership that the success of the enterprise

is owed as the company prospered.

The origin of the group goes back over two centuries. Some of the most

loved international brands are from the stable of Cadbury Schweppes –

Cadbury Dairy Milk, Dr Pepper, Flake, Trebor Basset, Snapple, Motts and

with the acquisition of Adams, brands like - Halls, Clorets, Trident, Dentyne

and Bubbas bubble gum range will now be part of the Group’s portfolio.

55,000 people populate the humming offices of Cadbury Schweppes across

the globe.

Cadbury Schweppes is the No.1 confectionery and third largest soft drinks

company in the world. They manufacture, market and distribute branded

chocolates, confectionery and beverages that bring smiles to millions of

consumers across 180 countries.

The Core purpose of Cadbury Schweppes is “Working better together to

create brands people love”.

They are respectful of the social and natural environment in which

theyoperate; supportive of our consumers, customers and colleagues; proud

of our heritage, and passionate about success.

This passion for success led to the company expanding its business overseas

and thus briging the flavour of chocolate to people and tickling their taste

buds.

Cadbury’s expanded their business to many countries like Australia,

America, Canada, India etc.

When Cadbury Dairy Milk chocolate was first introduced in the early 1900s

it made an immediate impact quickly becoming the market leader. The

success story has continued. It is still the top selling chocolate brand in the

country and the Cadbury Mega Brand's broad family of products today has

an international retail value approaching US$1billion.

As an international brand Cadbury Dairy Milk carries the same distinctive

image all over the world. Wherever you buy a bar of Cadbury Dairy Milk

the pack design will be exactly the same, only the language will be different.

The famous slogan "glass and a half of full cream milk in every half pound"

with the picture of milk pouring into the chocolate bar, is one of the all-time

greats of British advertising.

ABOUT CADBURY INDIA LTD.

Cadbury India began its operations as a trading concern in 1947. Cadbury in

the Indian sub continent defined the first taste of chocolate. The company

today employs nearly 2000 people across India.

With brands like Dairy Milk, Gems, 5 Star,

Bournvita, Perk, Celebrations, Bytes, Chocki,

Delite and Temptations, there is a Cadbury

offering to suit all occasions and moods.

They bring the sweetest of smiles to millions of consumers through their dearly loved brands distributed through 5.5 lakhs outlets.

Cadbury India's four factories in India churn out close to 8,000 tons of

chocolate and the company sells a million bars every day. (locations of

factories.)

THE CADBURY’S WORM CONTROVERSY

RISE OF THE CONTROVERSY

State FDA Commissioner Uttam  Khobragade said a group of people

approached with chocolates that had worms in them. Sebastian

Fernandez had purchased Cadbury Dairy Milk chocolate from a shop at

Pick and Pay, Vile Parle. Fernandes discovered that the chocolate

(Batch No 28F3I10703) had worms in it.

Fernandes complained to the shopkeeper Jitendra Shah who later

informed Pravin Marve, vice-president, Andheri Vyapar Manch. Marve

then contacted the FDA and gave them the sample. FDA Joint

Commissioner Hindurao Salunkhe said Cadbury's Talegaon plant will

also be inspected.

Bharat Puri, managing director of Cadbury India will never forget the

batch of Dairy Milk chocolates numbered 28F311 manufactured last

year at the company's plant in Thane, near Mumbai.

That was the worm-infested batch that triggered a crisis for the company that had always

prided itself on its squeaky clean image.

Pictorial Presentation of the Worms

EFFECTS OF THE CONTROVERSY ON CADBURY

The discovery of worms in some samples of Cadbury’s Chocolate in

early October 2003 created one of the biggest controversies in India

against a Multi National reputed for being a benchmark of QUALITY.

The state Food and Drug Administration has ordered seizure of

Cadbury's Dairy Milk chocolates from all over Maharashtra after worms

were found in two of them in Mumbai.

Cadbury India, whose chocolates had ridden into controversy late last

year during the festival season because worms were discovered in

some stocks of its Dairy Milk chocolates is probably hoping the

association with Bachchan will help consumers forget the bad press

the company got on account of the discovery. 

The Food and Drug Administration had then seized the company's

stocks and the Cadbury India management had explained it was bad

storage practices by retailers and distributors that had led to the

worms. Cadbury India's sales fell following the discovery. And even the

government got into the act with the central health ministry asking for

a report on the controversy.

The "worms’ controversy" came at the worst time. The next few

months were the peak season of Diwali, Eid & Christmas. Cadbury sells

almost 1,000 tonnes of chocolates during Diwali. In that year, the sales

during festival season dropped by 30 per cent. The company saw its

value share melt from 73 per cent in October 2003 to 69.4 per cent in

January 2004. In May, however, it inched up to 71 per cent. CDM sales

volumes declined from 68 per cent in October’03 to 64 per cent in

January 2004 Clearly, the worm controversy took a toll on Cadbury's

bottom-line. For the year ended December 2003, its net profit fell 37

per cent to Rs 45.6 crore (Rs 456 million) as compared with a 21 per

cent increase in the previous year.

The controversy created an deep adverse impact on the company with

their sales not only drastically dipping down, but at the same time

allowing the competitors to establish their foothold and taking

maximum advantage of Cadbury’s misfortune.

The controversy, and the adverse publicity received in several

countries, set back its plan of outsourcing model which would have

resulted in significant revenue generation, several months back.

ROLE OF THE PUBLIC RELATIONS 

PR concerns the total communications of your total organization/group

of organizations. PUBLIC RELATIONS FORM AN INDISPENSABLE PART

OF ANY ORGANISATION. Public relations include ongoing activities to

ensure the company has a strong public image. Public relations

activities include helping the public to understand the company and its

products. Often, public relations are conducted through the media that

is, newspapers, television, magazines, etc.

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. PR if used properly

can have an impact 10 times higher than Advertising. And at

times, especially during crisis advertising doesn’t work but

only PR works.

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.

PR RESCUES CADBURY

The PR department of Cadbury’s played a very effective role in

managing the reputation and keeping up the goodwill of the company.

After being struck with the Worm Controversy it was not possible to

create a very good impact on consumers who trusted the company the

most. But through the efforts and a good PR team Cadbury’s managed

to wriggle itself out of the controversy with a clean chit.

STEPS TAKEN TO SOLVE THE CONTROVERSY

1. NOT DENYING THE FACT

It helped that the Maharashtra Food and Drug Administration had

given a clean chit to the company's two plants in the state. Cadbury

went into overdrive to tell consumers that improper storage of what is

essentially a perishable commodity might lead to worm infestation. 

That last November Bharat Puri, Cadbury's mild-mannered MD, went to

media offices around the country meeting reporters, answering mostly

hostile queries and patiently explaining the company's stand on the

issue. 

"Unlike the cola companies which were caught in a controversy just a

month earlier and displayed an ostrich-like attitude, Cadbury did not

go into denial mode. It accepted that there was a problem, which may

not have been of its own making, and made a commitment to the

consumer that it would plug all possible safety loopholes," says a

Mumbai-based brand consultant.

As a result Cadbury improved the packaging and paid more attention

to the way its chocolates were stored by nearly 6,50,000 retailers

across the country.

2. TAKING PRECAUTIONS

'Project Vishwas' - “Steps to ensure quality & regain the

confidence”

Following the controversy over infestation in its chocolates, Cadbury

India Ltd unveiled 'Project Vishwas', a plan involving distribution and

retail channels to ensure the quality of its products. The Vishwas

programme was intended to build awareness among retailers on

storage requirements for chocolates, provide assistance in improving

storage conditions and strengthen packaging of the company's range

of products. Cadbury reduced the number of chocolates in its bulk

packets to 22 bars from the present 60 bars. These helped stockists

display and sell the products "safely and hygienically". 1,90,000

retailers in key states were covered under this awareness programme.

"What you see now is the most over-engineered packaging for a Dairy

Milk chocolate anywhere in the world. Even our festival packs come

with a tamper-proof outer sealing and improved packaging inside,"

explains Purohit.

The new double packaging even for the smallest offering, the 13 gm Rs

5 Cadbury Dairy Milk, had the bar wrapped in aluminium foil and

enclosed in a polyflow pack, which was sealed on all sides.

The larger Cadbury Dairy Milk packs came in poly-coated aluminium

foil, which was heat-sealed and then wrapped in the branded outer

package. Both these initiatives are country specific and Cadbury

invested nearly Rs 25 crore (Rs 250 million) this year on new

machinery for the improved packaging.

The company's team of quality control managers, along with around

300 sales staff, checked over 50,000 retail outlets in Maharashtra and

replaced all questionable stocks with immediate effect. The company

also carried out quality checks at its facilities as well as its carrying and

forwarding warehouses and distributor warehouses and found products

free of infestation.

3. GAINING BACK TRUST

The Big B promoted the Big C in the chocolate business - Cadbury in

India. Indian cine superstar Amitabh Bachchan has signed on to

become the brand ambassador of the chocolate major for two years. 

The Big ‘B’ FACTOR

The big factor that has pushed up CDM sales is the Amitabh Bachchan

campaign. It helped restore consumers' faith in the quality of the

product. In early January that year, Cadbury appointed Amitabh

Bachchan as its brand ambassador for a period of two years. The

company believed that the reputation he has built up over the last

three decades complements their own, which was built over a period of

50 years. AB played a pivotal role in all communication relating to

Cadbury's products and brands, be it in print, on television or the great

outdoors, the company's managing director Bharat Puri has been

quoted as saying in media reports.With the help of its Public Relations

Dept. and advertising agency O&M, it created a campaign which aimed

for both rational and emotional appeal.

One of the ads showed Bachhan visiting a Cadbury plant, inspecting

the systems and processes and finally consuming a bar of chocolate to

be convinced that there's nothing wrong with the brand. 

Addressing his audience, Mr. Bachchan says, "Mujhe aapse kuch

kehna hai, jis kaam mein manushya ki antar aatma uske saath

na ho, uss kaam ko karne se usse sab kuch mil sakta hai... man

ki shaanti nahin mil sakti.Isliye jab Cadbury walon ne mujhe

kaha ki unki baat main aap tak pahunchaoon, to pachpan

saalon seCadbury khaane wala main bhi thoda sa

hitchkichaya.... ...Maine unse ek sawaal poocha, ki kya iske

baad main chain ki neend so paoonga ya nahin, to jawaab mein

voh mujhe apni factory le gaye."

Walking into the Cadbury factory, he takes a look at their complete

manufacturing process and continues, "Aur mujhe apni

international technology.... apne kade quality controls aur

double protection... ...packaging dikhayi." Saying which he

takes a bite of the chocolate. Finally giving his personal

assurance and approval he says, "Aaj kal mein badi chain ki

neend so raha hoon." 

"Ab aapki favourite Cadbury Dairy Milk naye purity seal pack

mein."

The other ad featured Bachhan and his granddaughter to emphasize

that the product was absolutely safe for children.

Cadbury stepped up it’s advertising spend significantly that year to

nearly Rs 40 crore (Rs 400 million). With a turnover of Rs 729 crore (Rs

7.29 billion) in 2003, Cadbury has a 70 per cent market share in

chocolates and Dairy Milk chocolate has 30 per cent market share,

despite competitors like Nestle and Amul.

Notice how the company used, the term “Don’t Worry Be happy, and also used the

sealed packaging, to make the customers believe that there was a defect not in the

manufacturing standards but in the transportation, packaging, etc. that is the worm

did not originate in the factory but on its way to or in the store.

ENVIRONMENT AND SOCIETY

The image of Cadbury India is mandatory to be maintained among its customers and

shareholders. So time and again the company made sure that their Stockholders and

customers were informed about the ethical practices of Cadbury.

Nutrition, Education, Security and Love

Cadbury India has a large factory in Malanpur, one of the most under developed districts

in Central India. In 1999, theylaunched the Cadbury Community Initiative Programme

under the banner: Nutrition, Education, Security and Love.

In setting up the programme, the local Corporate Affairs Manager, Narender Katoch,

initiated a long-term dialogue with local stakeholders to engage them in helping the

compnay identify what community support theyshould be providing.

As a result, theyfocused on healthcare and education in the nearby village of Gurikha. A

nursery school was started and key improvements were made to the primary school. The

consultation and a bit of lateral thinking led to some real social improvements: fresh

drinking water from a new village pump, a doctor’s clinic, vet services for milk

producing animals and fruit trees for each household to plant during the rainy season.

They also helped increase school attendance levels.

Last year, the education programme supported the Indian Government’s Year of Women

Empowerment. Special focus was given to the rights and contribution of girls and to the

counteraction of female infanticide through a variety of initiatives, including awareness

generation and gender sensitization programmes leading to formation of women self help

groups.

Reaching Out Programme

Reaching Out Programme is one small beginning in their endeavour to lend a helping

hand to the needy. They collect from those who have and give it to those who need it the

most. They have recently completed the Medicine Collection Drive in which they

collected medicines and distributed it among those sections of society that needed it the

most. They also have a toy box programme. Used toys are collected and donated to needy

children.

BENEFITS OF A GOOD PR CAMPAIGN -

CADBURY’S SINGING SWEETLY AGAIN

Cadbury’s reiterated that all through the 55 years of leadership in

India, that it has remained synonymous with chocolates and have

remained committed to high quality and consumer satisfaction." All is

well that ends well. And for Cadbury’s India, nothing can be

sweeter than regaining back the Consumer Confidence. Thanks

to quick action taken to recover the damage done by the worm

controversy like Operaion Vishwas, adopting new packaging,

massive advertising with Mr. Amitabh Bachchan as their brand

ambassador and company's managing director Bharat Puri’ PR

skills in terms of handling of the media and press, attending

consumer grievances on a personal, level cool headedness &

down to earth attitude resulted in Cadbury’s regained its

market share.

The survey conducted by the company says that consumers have long

forgotten the controversy and are back to their merry chocolate-

chomping ways. Sales were back to the pre-controversy levels.

Consumer confidence in the product was back and there was a steady

progression in sales.

The company bounced back soon after the campaign hit the screens.

Between October 2003 and January 2004, Cadbury's value share

melted from 73 per cent in to 69.4 per cent. The recovery began in

May 2004 when Cadbury's value share went up to 71 per cent. The

company posted a high double digit sales growth in that year end.

Cadbury's Indian operations are not just the largest in Asia but also the

cheapest. In India, Cadbury has the largest market share anywhere in

the world and has been the fastest growing FMCG Company in the

those last three years with a compound annual growth rate of 12.5 per

cent.

So, despite the bitter moments of the that year, the company did

surpirisingly well in the succeeding year.

CONCLUSION

PR needs research, planning, implementation and evaluation.

PR needs to be based upon a strategy, including the budget.

PR is a very vital tool for management, but the top leaders and policy-

makers must also be involved in the strategy.

They must be knowledgeable and be up-to-date on what key

audiences or “publics” know (or think they know) about our

organization, if they expect to communicate effectively with them.

PUBLIC RELATIONS FORM AN INDISPENSABLE PART OF ANY

ORGANISTION.

Public relations include ongoing activities to ensure the company has a

strong public image. Public relations activities include helping the public

to understand the company and its products. Often, public relations are

conducted through the media that is, newspapers, television, magazines,

etc.