ABSTRACT

The caselet primarily deals with the worm controversy in October 2003 when a stockiest in
Mumbai found worms in Cadbury's chocolates. It discusses the impact of this incident on
Cadbury's reputation and ethical image. It describes the steps taken by the company to regain its
lost image and briefly examines how Cadbury's competitors gained from the worm controversy.
It also presents an overview of the Indian chocolate market.

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.

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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 they operate; 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.

PURPOSE AND VALUES

Objective:

Vision:
 Cadbury’s mission statement
  Says simply, ‘Cadbury means quality’; this is our promise. Our
reputation is built upon quality; our commitment to continuous
Grow shareholder value…overimprovement
the long term. will ensure that our promise

Strategy:
  
Mission Statement 0f the product:
Create robust and sustainable regional positions in our core categories of confectionery and
The mission statement of our new product is “To provide our
beverages through organic growth, acquisition and disposal.
customers with a tempting and exquisite taste” as Enticing Treats means
Process: a mouth watering treat which is simply irresistible.
They achieve this by Managing For Value.

Managing For Value Process incorporates:

 Setting stretched financial objectives.

 Adopting Value Based Management for major strategic and operational decisions and
business systems.
 Creating an outstanding leadership capability within our management.
 Sharpening our company culture to reflect accountability, aggressiveness and
adaptability.
 Aligning our management rewards structure with the interests of our shareowners across
the country.

Commitment to Human Rights (Ethical Trading)

Respecting human rights and trading ethically are fundamental to the way they work. This isn't
just within their owned and operated businesses, but also with the communities and businesses
they interact with.

Their international Human Rights and Ethical Trading (HRET) Policy are. It covers:
 core labour rights and dignity at work

 health and safety in the workplace

 fair remuneration

 diversity and respect for differences

 Opportunity for development.

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Our HRET policy has been developed to incorporate the highest international standards.  These
include the International Labour Organisation conventions and the Universal Declaration of
Human Rights.

Cultural and legal best practice

They have also taken into account cultural and legal best practice from local markets.

This policy applies to all our business units. It is backed by a rolling programme, putting in place
processes for compliance within all parts of our business and our supply chain.

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 45,000 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 tonnes of chocolate and the
company sells a million bars every day.

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 Po pul a r Br a nds in INDIA
C
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Be v e r a g e s
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k CANDy ’s
s

Cadbury Brands are divided in five categories:

1. Chocolates
2. Snacks
3. Beverages
4. Candy
5. Gums
Products of Cadbury under these categories are as follows

CHOCOLATES
1. Cadbury Dairy Milk
2. 5 Star
3. Perk
4. Celebrations
5. Temptations
6. Eclairs

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7. Gems
SNACKS: Bytes

BEVERAGES: Bournvita

CANDY: Halls

GUMS: Bubbaloo.

A few facts and figures:

 They make and sell three kinds of confectionery: chocolate, gum and candy

 They operate in over 60 countries

 John Cadbury opened for business in 1824 - making us nearly 200 years young

 They work with around 35,000 direct and indirect suppliers

 They employ around 45,000 people

 Every day millions of people around the world enjoy our brands

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MILESTONES OF CADBURY

The June 2003 issue of Business Today identified Cadbury India as one of India's best-
managed companies in 2003.

Cadbury India was identified as one of India’s Best Managed Companies in 2003. India’s
Finance Minister, Mr Jaswant Singh at Business Today’s Best Managed Companies Awards
ceremony, felicitated Mr Bharat Puri, Managing Director of Cadbury India. It was the only
Multinational Company featured in the list of Best Managed companies in India. Cadbury India
was lauded for its value creation, for its strategy of focusing on power brands, and its aggressive
foray into the low end market with Chocki as well as launches at the top end.

Cadbury succeeded in reducing the impact of the slow down in the Indian FMCG industry & was
also recognized for its innovation and consistent development of new products for consumers in
India.

Major Achievements of Cadbury

• Worlds No 1 Confectionery company

• World's No 2 Gums company.

• World's No 3 Beverage company.

• Cadbury Dairy Milk & Bournvita have been declared a "Consumer Superbrand" for
2006-07 by Superbrands India.

• Cadbury India has been ranked 5th in the FMCG sector, in a survey on India's most
respected companies by sector conducted by Business World magazine in 2007.

• Cadbury India has been ranked as the 7th Great Place to Work and the No. 1 FMCG
company in India in 2008, by the Great Place to Work Institute.

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Asian Marketing Effectiveness Awards 2008 for Bournvita Folk/Fusion campaign - GOLD
award for the "Best Insights and Strategic Thinking" and SILVER award for the 'Most
Effective Use of Advertising

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CADBURY WORMY CONTERVERSY

SUMMARY
On October 3, the Food and Drug Administration Commissioner received complaints about
infestation in two bars of Cadbury Dairy Milk, Cadbury India’s flagship brand with over 70%
market share. He ordered an enquiry and went directly to the media with a statement. Over the
following 3-week period, resultant adverse media coverage touched close to 1000 clips in print
and 120 on TV news channels. In India, where Cadbury is synonymous with chocolate, the
company’s reputation and credibility was under intense scrutiny. Sales volumes came down
drastically in the first 10 weeks, which was the festival season; retailer stocking and display
dropped, employee morale - especially that of the sales team - was shaken. The challenge was to
restore confidence in the key stakeholders (consumers, trade and employees, particularly the
sales team) and build back credibility for the corporate brand through the same channels (the
media) that had questioned it.

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 behavioral parameters like
intention to buy Cadbury chocolates.
The last two helped to restore faith in the corporate brand among the trade and employees.

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Examine the effect of controversy on Cadbury?explain measures taken by the company to
overcome them?

Ans:- On October 3, the Food and Drug Administration Commissioner received complaints
about infestation in two bars of Cadbury Dairy Milk, Cadbury India’s flagship brand with over
70% market share. He ordered an enquiry and went directly to the media with a statement. Over
the following 3-week period, resultant adverse media coverage touched close to 1000 clips in
print and 120 on TV news channels. In India, where Cadbury is synonymous with chocolate, the
company’s reputation and credibility was under intense scrutiny. Sales volumes came down
drastically in the first 10 weeks, which was the festival season; retailer stocking and display
dropped, employee morale - especially that of the sales team - was shaken. The challenge was to
restore confidence in the key stakeholders (consumers, trade and employees, particularly the
sales team) and build back credibility for the corporate brand through the same channels (the
media) that had questioned it.

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 behavioral parameters like
intention to buy Cadbury chocolates.
The last two helped to restore faith in the corporate brand among the trade and employees.

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MARKETING CHALLENGE AND OBJECTIVES

On October 3, the Food and Drug Administration (FDA) Commissioner received complaints
about infestation in 2 bars of chocolates. He ordered an enquiry and went directly to the media
with a statement. Huge media attention and the graphic nature of the coverage resulted in the
consumer perception that every bar could be infested. The incident came close on the heels of a
cola controversy where a scientific laboratory declared colas unsafe due to high levels of
pesticide. The jury was still out on that issue and so this incident acquired political overtones
with parties decrying Cadbury as an irresponsible MNC. Andrea Dawson Shepherd, Global
Corporate Communication Counsel, Cadbury Schweppes called it ‘the worst worm infestation-
related crisis anywhere in the world’.

The immediate objective was to get the following key messages across:
 Infestation could never occur at the manufacturing stage
 The problem was storage linked; this without alienating trade channels
 Cadbury Dairy Milk continued to be safe for consumption

The challenge was to restore confidence in the key stakeholders (trade and employees,
particularly salespersons) and build back credibility for the corporate brand through the same
channels (the media) that questioned it.

TARGET MARKETS

The problem started in one city, Mumbai, but later spread to other towns in the states of
Maharashtra and Kerala. But it became a nationwide crisis since 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 stakeholder 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 salespersons as the third
group.

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STRATEGY

It was decided from the start to address the issue head-on and take whatever steps were necessary
to restore confidence. Having historically maintained a low profile with the media and let its
brands and its performance speak for it, the company began to cultivate relationships with the
media and turn it into an ally and a credible, independent endorser to rebuild stakeholder
confidence.

Phase 1: Presenting Cadbury’s view (October-December 2003)

 The day the crisis broke, the agency set up a media desk to ensure that no media query
went unanswered. From Day 1 every story carried Cadbury’s point of view.
 At the first media briefing organised by the agency, the Cadbury’s Managing Director
addressed consumer concerns with the following key messages:
 Infestation is a storage linked problem.
 It is safe to eat Cadbury chocolates.
 Consumers must exercise the same care in purchasing a chocolate as they would when
buying any food item.
 At a second media briefing about two weeks after the first incident was reported,
Cadbury announced significant steps to restore consumer confidence. Called Project
Vishwas (Trust), this entailed:
 A retail monitoring and education program undertaken on a war footing to address
storage problems
 Significant packaging changes to ‘reduce dependency on storage conditions as much as
possible’ to be launched within two months.
 An Editorial Outreach program with 31 media editors across 5 most affected cities was
orchestrated by the agency to get senior Cadbury spokespeople to share their version of
events in one-on-one meetings. The trade, and consumers, were reached nationally
through a press ad ‘Facts about Cadbury’, released in 55 publications in 11 languages.
It presented facts about Cadbury manufacturing and storage and highlighted corrective

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 steps being taken by the company. This was a public statement of the corporate stand on
the issue.
 The trade was supported with posters and leaflets to help them share Cadbury point-
of-view with their customers. A response cell with a toll free number and an e-mail
id were put in place to give trade a means to directly contact the company with any issues
they faced- reinforcing the company’s commitment to quality.
 From the beginning, a series of town hall meetings were held with senior managers
addressing employees to ensure they were updated on the proactive actions being taken
by Cadbury to manage media, help trade and ensure future occurrences of such incidents
were kept to the minimum. Regular email updates from the
 MD were also used to communicate the company’s point of view and to ensure
consistency of messaging since employees are the company’s ambassadors.

Phase 2: Packaging change (January- March 2004)

“Pearlfisher is the design agency responsible for the execution of the pack's
new look”

 ALUMINIUM FOIL
 PAPER COVER
 PLASTIC COVER

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The new ‘purity sealed’ packaging was launched in January 2004. This entailed double
wrapping for maximum protection to reducing the possibility of infestation. This was a big step
involving investment of millions of dollars and getting on stream a production process in 8
weeks, that would normally take about six months. To communicate these significant changes
the company was making, Cadbury brought in a brand ambassador to reinforce the
credibility that the company had demonstrated through its actions.

Amitabh Bachchan, a legendary Indian film star, was chosen,

as he embodied the values of Cadbury as a brand and
connected with all of India - mothers, teenagers, children,
media persons and trader partners.

A media conference was organized in Mumbai to launch the

new packaging. And this was followed with press conferences
in cities worst affected by the crisis - Pune and Nagpur in
Maharashtra and Cochin in Kerala. In these conferences, media
persons were encouraged to compare the old and new packs
with an innovative comparison kit and experience the
significant changes in packaging first hand.

The Big factor that has pushed up CDM sales is the Amitabh
Bachchan campaign.

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An audio visual with a message from Amitabh Bachchan, was beamed to build credibility and
excitement. Given that much of the damage had come from television coverage, a video news
release with packaging shots and factory shots was given to television channels to control the
visual messaging. Simultaneously, senior Cadbury spokespersons had one-on-ones with the
Editors of the Outreach program initiated in November 2003.

Another audio visual with a message from the star was used in a series of sales conferences to
enthuse and reassure salespersons. And this helped to rebuild confidence in the salespersons to
go and sell the product more convincingly and confidently to the trade. The announcement of the
new pack was done through a testimonial advertisement on TV called ‘Sincerity’. It
consciously addressed the problem head-on, with the superstar talking straight into camera about
how before doing the ad he first convinced himself about the quality of Cadbury chocolates by
visiting the factory. Consumers respected the brand for not skirting the issue but acknowledging
it and giving a solution to the problem This was Public Relations using a TV Commercial to get
key messages across!

ADVANTAGES OF PACKAGING
 Protect the product from physical damage or deterioration
 Display the product – good graphic design and shape is important.
 Attracting customers
 Improved efficiency

GAINS TO THE COMPETITORS:

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 COMPETITORS

This incident helped its competitors eat into Cadbury's market share, however, they did not use
it to gain publicity as the entire chocolate industry had been put under the microscope and they
too could suffer. Cadbury clarified that the worms were not because of bad manufacturing
practices or substandard goods but due to bad storage at the retailers outlets.

Interestingly, the loss of Cadbury has been the gain of imported chocolate brands like Toblerone,
Ferrero, Arcor Rocher and Raffaello The worms controversy has resulted in a spurt in sales of
chocolates by Cadbury's rivals like Amul, which could result in a swing in shares in the 24,000
tonne per annum market. Amul has reported a large increase in its chocolate sales after the
controversy broke out.According to the executive, while 20 per cent of the growth in Amul’s
sales in recent days has been because of the Cadbury controversy.

In an attempt to boost sales, amul has launched three new chocolates in Mumbai under the
brands Fundoo, Bindaas and Almond Bar. While the first two have been priced at Rs 10 for a 30
gm stick, Almond Bar carries a price tag of Rs 10 for a 35 gm chocolate
.
 
As a result, the company’s festival season pack “Rejoice” now comes with six chocolates in the
city, up from three during the festive season last year

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CAMPAIGN RESULTS AND MEASUREMENT (GAINING BACK TRUST)

 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 THE PUBLIC RELATIONS

PR concerns the total communications of your total organization/group of organizations.

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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.

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

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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.

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 its self out of the controversy with a clean chit.

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