Introduction to Case
Cadbury is a brand which almost everyone knows. Even after completion of more than 100 years, the brand is into hearts of many people & it also leaves a significant mark amidst all the competition. Cadbury stands tall in food product sector. Cadbury is world’s leader in chocolates and it is also one of the topmost FMCG brands in India. Cadbury decided to enter Indian market in 1948. Cadbury India began its operations in India by importing chocolates. On 19th July 1948 Cadbury was incorporated in India. Cadbury has a share of over 67% in the market, which is the highest Cadbury brand share globally. Cadbury now has 5 manufacturing units all over India. Cadbury operates in India with following categories of products: Chocolate, Confectionery, Beverages, Biscuits and Candy.Cadbury was performing very well since its incorporation in India But, suddenly in 2003 Cadbury came across a problem of worms.
In 2003, just a month before Diwali few instances of worms in its Dairy Milk Bars were reported in Maharashtra. In eight outlets across Maharashtra worms were found. In October 2003, customers in Mumbai complained about finding worms in Cadbury Dairy Milk Bars.
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 it seized the stocks of chocolate bars which were manufactured in Cadbury’s Pune Plant.
Cadbury in defense issued a statement where it mentioned that problem of worms was not at the manufacturing stage but the problem arose due to poor storage facility by the retailers.
FDA denied the statement made by Cadbury. FDA Commissioner Uttam Khobragade came up with a statement saying “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.”
Then there were many allegations and counter allegations between Cadbury and FDA. Due to this event reputation of Cadbury was hampered. Cadbury sales went down by 30% which they had expected to increase by 15% due to negative publicity.
For the first time, Cadbury’s Advertisements went off air for one and a half months after the Diwali due to this controversy
Recovery Strategy:
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 aluminum 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.
Current Situation:
After that Incident Cadbury now takes great care of all the products they have. Cadbury is currently leading the market in chocolates segment. Market share of the Cadbury Dairy Milk is around 35% in India. Cadbury has not faced any controversy related to products after that incident.
*A hearty condolence to the families who lost there family members in pulwama attack on 14th feburary 2019
for any doubt related to business and investing feel free to contact me on - santhil.kherwal05@gmail.com
by - Santhil Kherwal
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