Sneha Rawal 1

About Cadbury 2

The Worm Crisis 3

First news to the company 5

Impact of Crisis on Cadbury 6

Cadbury’s Response 7

Target Market 9

Indian State Seizes Cadbury Chocolate Stocks 10

Cadbury’s Second Response 15

Cadbury’s Third Response 23

Campaign Results 24

Suggestions for Cadbury 25

Evaluation 26

Email Interview with Business Standard 28

References 32

2

•

About Cadbury

Cadbury is a British multinational confectionery company owned by Mondelēz Interna-

tional. It is the second largest confectionery brand in the world. Cadbury is headquar-

tered in Uxbridge in Greater London and operates in more than fifty countries world-

wide.

Cadbury was established in Birmingham, England in 1824, by John Cadbury who sold

tea, coffee and drinking chocolate. Cadbury developed the business with his brother

Benjamin, followed by his sons Richard and George.

Cadbury is best known for its confectionery products including the Dairy Milk chocolate,

the Creme Egg, and the Roses selection box.

Cadbury India:

In 1948, Cadbury India began its operations in India by importing chocolates. On 19

July 1948, Cadbury was incorporated in India. It now has manufacturing facilities in

Thane, Induri (Pune) and Malanpur (Gwalior), Hyderabad, Bangalore and Baddi (Hi-

machal Pradesh) and sales offices in New Delhi, Mumbai, Kolkata and Chennai. The

corporate head office is in Mumbai. It is the market leader in the chocolate confectionery

business with a market share of over 70%.

On 21 April 2014, Cadbury India changed its name to Mondelez India Foods Limited.

3

The Worm Crisis

In October 2003, India’s big “festival of lights,” Diwali, was approaching and Cad-

bury’s chocolate sales were expected to peak. Sales during the last festival, Raksha

Bandhan, had been better than expected, and the anticipation in the air at Cadbury’s

headquarters in south Mumbai was palpable. Fresh stocks of chocolate bars were being

shipped out to 650,000 outlets across all of India. Cadbury's found itself in the eye of a

storm, when customers in Mumbai complained about finding worms in Cadbury Dairy

Milk chocolates. This was just a week after live worms were found in the Cadbury

chocolates in a cooperative store in Akurdi, Pune. Acting on the complaint from the con-

sumer, the State Food and Drugs Administration began seizing stocks of Cadbury

chocolates. The Food and Drug Administration(FDA) commissioner, Uttam Khobragade

seized the chocolate bars to investigate on this issue. “I ordered seizure of the Cadbury

Dairy milk brand all over the State after the case was brought to my notice, “FDA com-

missioner Uttam Khobragade told the Indian Express. “The chocolate was manufac-

tured at the Talegaon plant of the company. Hence, I have ordered the officers to seize

all Dairy Milk stock from that plant,” Khobragade said.

State FDA Commissioner Uttam Khobragade said to Midday that a group of people ap-

proached him with chocolates that had worms in them. Sebastian Fernandes had pur-

chased a Cadbury Dairy Milk chocolate from a shop at Pick and Pay, Vile Parle. Fer-

nandes discovered that the chocolate (Batch No 28F3I10703) had worms in it. "We felt

that if eaten by children, these chocolates could be hazardous. We have ordered

4

seizure of all the Dairy Milk chocolates in Maharashtra and are in the process of issuing

them notices,'' Khobragade said.

A few days later another girl (name undisclosed) opened her Diwali gift, a box of pre-

mium Cadbury Cashew Magic chocolates, with eager anticipation on Wednesday

evening. What she saw in the box, perhaps, put her off chocolates for ever.

Crawling out of the chocolate nuggets, packed in June 2003 and deemed fit for con-

sumption for nine months, were a swarm of tiny white worms. There was also a fungus

layer on portions of it. When produced before the State Food Laboratory at the Public

Health Institute on Thursday afternoon, the chief chemist and public analyst, S. Tara,

said the chocolates were "insect-infested and unfit for eating''.

The seizure had been widely reported by the local media.

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 synony-

mous with chocolate, the company’s reputation and credibility was under intense scru-

tiny. 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 media continued its onslaught; in those three

weeks, there were close to 1,000 adverse newspaper articles and about 120 TV clips in

ten languages. The infestation incident became the subject of SMS jokes and warnings,

cartoons and TV tickers.

5

First news to the company

The phone rang at 2:30 pm at Cadbury’s headquarters on October 3. It was a CNBC

correspondent saying they had heard of infestation complaints being lodged with the

Maharashtra Food and Drug Administration (FDA) and would like a statement from Cad-

bury. The FDA had announced to the media that based on consumer complaints it had

seized chocolate stocks, sent them for sampling, and was investigating Cadbury. The

news was flashed on mobile phone networks, and CNBC was the first to carry the story.

CNBC’s phone call to Cadbury was the company’s first news of the infestation. Cadbury

had not heard anything directly from the FDA.

6

I mpact of Crisis on Cadbury

This incident occurred just before Diwali in 2003. As a result, Cadbury’s sales dropped

by around 30% when they were actually supposed to go up 15%. For the first time, Cad-

bury did not advertise for a month and a half.

7

Cadbury ’ s Response

Push the blame:

Few hours after the phone call A Cadbury spokesman, said the company has not yet

received any FDA communication on the issue. "We would like to reiterate that Cadbury

India follows stringent quality procedures," he said. "Chocolate is a food product that re-

quires specific care and attention in manufacturing and storage. At all Cadbury plants,

every manufacturing process is closely monitored by experienced technical personnel,

and a quality assurance team tests finished goods before their dispatch for sale."

The spokesman said chocolates are vulnerable to infestation if they are stored near

grains and cereals, or in unhygienic conditions. The company, therefore, provides retail-

ers with storage dispensers and visicoolers to give adequate protection to its products.

Additionally, every Cadbury product label mentions the care instruction: 'Store in a cool,

hygienic and dry place.'

"We believe that by and large retailers follow our operating instructions and adhere to

the required storage conditions," he said. But the FDA didn’t buy that. FDA commis-

sioner, 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 air-

tight, 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. Leading to massive negative publicity.

Result:

■ Made their partner salesperson angry

8

■ The consumers felt uncared for, as no one was ready to take the responsibility of

the incident

■ The sales dropped by 30% within 15 days and the stakeholders started to doubt

the credibility of Cadbury.

9

Target Market

The problem started, Mumbai, and parts of Maharashtra but later spread to other parts

of India. But it became a nationwide crisis since national media covered it. So the first

target audience that needed to be addressed was the media — both electronic and print

media, national and local. Additionally trade partners, as their confidence was shaken.

Finally, the employees, especially salespersons as the third group.

Challenges and objectives:

This incident acquired political overtones with parties decrying Cadbury as an irrespon-

sible 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 chan-

nels

■ Cadbury Dairy Milk continued to be safe for consumption

The challenges were:

■ 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 me-

dia) that questioned it.

10

Indian S tate S eizes Cadbury C hocolate S tocks

BOMBAY, Oct 3 (AFP) –

The government of Maharashtra Friday ordered the seizure from stockists in the west-

ern state of all Dairy Milk branded chocolates manufactured by confectionery giant Cad-

bury India after worms were found in some of its chocolates.

"Some stockists complained to us about worms found in the Dairy Milk chocolates in

suburban Bombay," said Uttam Khorbargade, chairman of the Food and Drug Adminis-

tration (FDA) in Maharashtra State.

"We carried out our inspections and found that some chocolates did contain worms. Fol-

lowing this, we have ordered seizure of all Dairy Milk chocolates, starting with stocks in

Bombay City from Friday."

Cadbury's 2nd plant under lens:

Cadbury India's second plant in Maharashtra is now under the lens of Maharashtra's

food and drugs administration. "We are looking at quality control issues in the Thane

plant as well. Further, we are seizing only one brand (Dairy Milk) from a wholesaler and

that is the reason nothing has been seized from retailers," FDA Commissioner Uttam

Khobragade told Business Standard.

Cadbury Dairy Milk is mainly manufactured at Cadbury's factories in Talegaon near

Pune and Thane, which cater to the entire country. The company's chocolates reach

over 650,000 retailers directly and indirectly.

11

The FDA started inspecting Cadbury India's plants after worms were allegedly found in

a Cadbury Dairy Milk chocolate bar. The chocolate bar was produced at Cadbury's

Talegaon plant. The FDA has also sent the allegedly contaminated pieces for testing at

its laboratories.

If the FDA finds evidence of infestation or contamination, Cadbury India could face ac-

tion under the Prevention of Food Adulteration Act. Khobragade declined to say whether

Cadbury India executives faced arrest.

The revenue and the bottom line of the local arm of British confectionery and beverages

giant Cadbury Schweppes could take a hit if the FDA decides to initiate action against it.

Cadbury Dairy Milk, the flagship brand, contributed about 30 per cent to the company's

Rs 687.30 crore (Rs 6,873 million) turnover in 2002. Cadbury India is the market leader

with brands like Dairy Milk, Five Star, Perk and Gems, with a market share of over 65

per cent. Cadbury Dairy Milk has a 30 per cent share of the packaged chocolate market.

In a faxed response to a Business Standard questionnaire, Cadbury India said: "Only a

specific lot of Cadbury Dairy Milk chocolates has been set aside as a precautionary

measure by the FDA, pending further investigations at some stocking locations. Other

than this, manufacture, stocking and sale of Cadbury chocolate brands continue."

After the discovery of the infested bar from batch number 28F311, the company

checked the factory samples of this batch and found them to be of good quality and free

of any traces of infestation, the company said.

"In spite of every care being taken at the manufacturing stage, chocolate is a food prod-

uct that requires specific care and attention in storage. Additionally, every Cadbury

product label mentions the care instruction: `Store in a cool, hygienic and dry place'.

12

However, chocolates are susceptible to infestation if they are stored near grain and ce-

reals or in unhygienic conditions," a Cadbury spokesperson said.

Mumbai-based distributors of Cadbury said they were aware of the development but

had not been contacted by the company or the authorities to freeze stocks.

Cadbury faces prosecution

Bureaus in Mumbai: Laboratory tests by the Maharashtra Food and Drug Administra-

tion of samples of Cadbury products confirmed the presence of two dead and one live

organisms. The unspecified product was manufactured by Cadbury factory near Pune.

Cadbury India is now liable to be booked under the provisions of the food adulteration

law. Confirming this, FDA Commissioner Uttam Khobargade told Business Standard:

"As per FDA norms this is a clear case of adulteration. We will charge the manufacturer.

We have not found any instance of this adulteration in the Thane unit of Cadbury India."

Khobargade added that while the company had offered the plea that faulty storage by a

dealer was responsible for the incident, it was the manufacturer's responsibility to en-

sure that quality storage conditions were available with the dealers.

In a late night media release, Cadbury said: "We are not aware which samples have

been tested by the Food and Drugs Administration. Neither have we received any offi-

cial report from their office. We would therefore not like to comment until we have had a

chance to see the formal report. However, we have checked the relevant factory control

samples and have found them to be of good quality and free of any traces of infesta-

tion."

13

On October 3, acting on a consumer complaint, the Maharashtra FDA seized stocks of

Dairy Milk chocolates in Maharashtra. A consumer found worms in a Dairy Milk choco-

late bar, bought from a shop in Mumbai's western suburb of Andheri.

Cadbury Dairy Milk, the flagship brand, contributed 30 per cent to the company's Rs

687.30 crore (Rs 6.87 billion) turnover in 2002.

Role of the Regulators:

The interaction between the FDA and Cadbury during the incident was strained at best.

Before the 2003 infestation, Cadbury’s relationship with the FDA was agreeable: all of

Cadbury’s factories were certified and there had never been any food safety problems

or complaints. In October 2003, however, the FDA was riding the wave of public senti-

ment following the PepsiCo and Coca-Cola pesticide incident, and the local FDA Com-

missioner used the Cadbury infestation as another opportunity to be seen as a “savior

of the masses.” The FDA authorities visited Cadbury’s factory in Thane, one storage

depot and a few distributors, and froze stocks at the factory and depot. During the first

two days immediately following the incident, the FDA

Commissioner did not allow Cadbury’s team to meet him, although he continued to

meet with the media. When Cadbury finally met him, the company was told that the lab-

oratory reports would be available in two day’s time,but (again) the media was provided

access to the report before Cadbury.

Three days later, the head FDA Minister visited Cadbury’s factory in Thane, along with

a few media persons, and announced,“the hygienic conditions in the factory are more

14

than satisfactory; it is impossible for infestation to occur during the manufacturing

process.” When this was reported in the media, the crisis seemed to be over.

Suddenly, fresh cases of infestation were reported from the city of Nagpur in Maharash-

tra. The FDA Commissioner alleged that Cadbury was using political pressure on him to

go easy. By the next day, the FDA Minister had changed his position, saying that it was

not enough for hygiene to be observed only during manufacturing, and that Cadbury

should accept responsibility for the storage of its products at the retail level as well.

Over the next month, FDA authorities continued to visit Cadbury’s factories in Thane

and Induri, in the hope that they would find some evidence to strengthen a case against

the company under India’s Food Adulteration Act. Despite all their efforts, the FDA au-

thorities never found a single cause for concern in any of the factories. Even though it

was proven that the problem was isolated to the retail level (arguably out of the hands of

Cadbury), the damage had been done.

15

Cadbury ’ s Second R esponse

Interaction with media-Strategy

The Cadbury Team met with the media for the first time a week after the incident to ex-

plain the company’s position. Cadbury’s leadership team decided to embrace the truth

about the infestation and understood from consumer research feedback that their mes-

sage must be very clear. Cadbury therefore developed three key messages to respond

to consumer concerns:

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 organized by the agency, the Cadbury’s Managing Director-Bharat Puri

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, Cad-

bury announced significant steps to restore consumer confidence called Project Vish-

was (Trust), this entailed:

16

■ A retail monitoring and education program undertaken on a war footing to ad-

dress 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

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 man-

age 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 com-

pany’s point of view and to ensure consistency of messaging since employees are the

company’s ambassadors.

17

Phase 2: Packaging Change (January-March 2004)

The new ‘purity sealed’ packaging was launched in January 2004. 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.This entailed double wrapping for maximum protection to reducing

the possibility of infestation. This was a big step involving investment of millions of dol -

lars 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. 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 re-

lease with packaging shots and factory shots was given to television channels to control

18

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 confer-

ences 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 advertise-

ment 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 re-

spected 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.

Internal Communication:

The Cadbury India leadership team decided it was necessary to lay down three guiding

principles that would direct the company’s actions when tackling the crisis:

■ Consumer first

■ Truth always

■ Dare greatly, act quickly

19

Before addressing the consumer, however, it was essential for Cadbury to reinstate the

belief of each and every employee in the company for which they worked. Letters from

the Managing Director (Bharat Puri) were sent out to all the employees. The doubts in

the minds of the sales team were removed by asking them to go into their markets, buy

chocolates worth up to Rs 1000 and see for themselves if any bars were infested. None

of the sales people found infested chocolate bars and were thus able to convince them-

selves there was nothing wrong with their product and that Cadbury had nothing to hide.

Furthermore, a series of town hall meetings were held with the senior managers and

employees to ensure the employees were kept informed of the proactive steps being

taken to manage the media, help the retailers, and ensure future occurrences of such

incidents were kept to a minimum. Regular email updates were also used to communi-

cate the senior management’s point of view and to ensure consistency of messaging.

The External Response:

Cadbury’s external response to the crisis included

■ changing the product packaging,

■ implementing a comprehensive media campaign, and

■ Reaching- out to its retailers.

During the crisis Cadbury monitored consumer opinion across the major cities regularly

and identified four kinds of consumers:

20

■ Loyalists, who were staunch supporters of the brand in spite of the incident and

its coverage;

■ Fence-sitters, in whose minds a basic trust in the brand existed, but some doubts

had been raised;

■ .Pseudo-rejectors, who were not sure of the Cadbury brand-sometimes defend-

ing, sometimes rejecting it; and

■ Rabid rejectors, those who had already judged and condemned the brand.

Managing the opinions of the latter three consumer segments required different actions

and types of communication. The fence-sitters would need to be reassured; pseudo-re-

jectors needed tangible action for the doubts to be erased; and rabid rejectors required

a combination of tangible action, increased transparency, reassurance from sources

other than the company (i.e., the media), and of course, time. Cadbury believed the ra-

bid rejectors to be the most crucial segment: if the company could turn their opinion

around, the other segments would follow. The first tangible action taken by Cadbury

was to strengthen Cadbury Dairy Milk’s packaging. The packaging changes would re-

duce dependency on proper storage conditions as much as possible. Cadbury intro-

duced “purity-sealed” packaging: an inner layer of foil with an outer metallic “flow wrap”

for small packs of chocolate; and a reinforced heat-sealed polyfoil with an outer “band

wrap” for the large packs. A purity-sealed logo was created and displayed on all wrap-

pers and advertisements.The new purity-sealed packaging was launched in January

2004 and involved a significant investment of GBP 1.5 million. Furthermore, the new

21

production process was implemented in an unprecedented eight weeks (instead of the

usual six months). Cadbury’s second important response to the crisis was the imple-

mentation of the Project Vishwas (“Project Trust”) campaign.

The goal of Project Vishwas was to win back the confidence of the consumer. Retailers

and consumers were reached nationally through the press advertisement, “Facts about

Cadbury,” released in 55 publications in 11 languages. The advertisement presented

facts about Cadbury’s manufacturing and storage facilities and highlighted corrective

steps being taken by the company. Cadbury also brought in a brand ambassador to re-

inforce the credibility that the company had demonstrated through it's repackaging ef-

forts. Amitabh Bachchan, a legendary Indian film star, was chosen (at a significant cost)

because he embodied the values of Cadbury as a brand and connected with all of India:

mothers, teenagers, children, media persons and business partners.

In a consumer study, the Indian Prime Minister Atal Bihari Vajpayee and Amitabh

Bachchan were found to be the two most credible people in India! Bachchan announced

Cadbury’s new packaging through a testimonial advertisement on TV called ‘Sincer-

ity.’Most importantly, the ad acknowledged and accepted the problem. Bachchan spoke

straight into the camera and described how he visited the Cadbury factory to first con-

vince himself of the quality of Cadbury chocolates before agreeing to become a

spokesperson. He then described the actions Cadbury had taken in introducing new

packaging.

A second TV advertisement ‘Charm’ showed Bachchan playing with his granddaughter,

who is wary of eating the chocolate he offers her, stating she has heard there is “some-

22

thing in it.”Bachchan assures her of the safety of the product. The second advertise-

ment also refused to skirt the issue, and dealt with infestation fears directly and honest-

ly.In addition to rolling out the Bachchan TV ads, a media conference was organized in

Mumbai to launch the new packaging. This was followed with press conferences in

cities worst affected by the crisis: Pune and Nagpur in Maharashtra and Cochin in Ker-

ala. 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 pack-

aging first hand. An audio-visual message from Bachchan was beamed to build credibil-

ity and excitement. To advertise the new packaging in the city where the crisis began,

Mumbai, Cadbury launched a school outreach program across 100 schools, using the

platform of the Bournvita Quiz Contest (a popular children’s TV quiz show sponsored by

Cadbury). Road shows were conducted across the states of Maharashtra and Kerala.

Given that much of the damage had come from television coverage, a video news re-

lease with packaging and factory shots was given to television channels to control the

visual messaging. Simultaneously, senior Cadbury spokespersons continued with the

Editor Outreach program that had been initiated in November 2003.

Cadbury ’ s Third R esponse

This included the implementation of a retail monitoring and education program to ad-

dress storage problems. Distributors and shopkeepers were supported with posters and

23

leaflets to help improve their storage conditions as well as share Cadbury’s point-of-

view with their customers. Cadbury also distributed more metal dispensers and coolers

to its retailers. A response cell with a toll free number and e-mail was put in place to

give shopkeepers a means to directly contact the company with any issues they faced.

On the response cell’s first day, the unit received 158 calls and 60 emails. These ac-

tions helped reinforce the company’s commitment to quality and reaffirm retailers’ confi-

dence and proper storage practices.

Finally, even as Cadbury was in the throes of the crisis, the company believed it was

necessary to assure its consumers and retailers that it was business as usual at Cad-

bury. Cadbury increased it's spending on all other chocolate brands (e.g., Perk,Five

Star), and re-launched its chocolate product, Temptations.

Campaign Results

■ Media Coverage: The media relationship effort clearly helped in making me-

dia accept that the infestation was genuinely caused by storage-linked prob-

lems. From the start, all media reports carried the Cadbury’s point-of-view.

24

Bad news automatically gets great coverage. However, the agency helped

Cadbury get a total of 378 clips in over 11 languages covering the new pack-

aging, 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 the

first 8 weeks 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 con-

sumers on parameters like company image, responsiveness of company and

behavioral 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

predisposition played a huge part in helping Cadbury regain its reputation in

the market.

Suggestions for Cadbury

■ People tend to trust hard statistics in crisis situations: Cadbury should have

released a report/information comparing the worm infested chocolate with per-

fectly fine chocolate.

25

■ Cadbury should have utilised opinion leaders to combat rumours: Even

though social media was not such a big deal back in 2003, it was talked about a

lot on TV, newspapers and text message jokes. But, Cadbury could have miti -

gated the rumours with the help of some opinion leaders or influencers across

various media.

■ Address the victims: They should have had important company officials pub-

licly address the people affected by the infested chocolate bars and offer them

compensation.

■ No mention on the Cadbury website: Cadbury's website history does not ad-

dress 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, stakeholders or the victims.

Evaluation

■ Cadbury identified key target audience and developed effective strategies to

overcome the crisis.

26

■ The company took corrective action and necessary steps to control the damage

from the crisis.

■ Cadbury did not try to avoid responsibility for the crisis and was honest to the

public.

■ The company was adamant about making sure the public did not believe the in-

festation occur in the manufacturing process.

■ They tackled the crisis well from day one with communication to the audience

and good media relations.

■ Project Vishwas was very effective in regaining customer trust and managing

media relations. For example, 4 weeks after the incident, 39% of people inter-

viewed trusted the company. After 24 weeks, that percentage jumped up 10 to

49%. 4 weeks after the incident, only 42% were willing to buy Cadbury for their

kids. After 24 weeks, that jumped all the way up to 78%.

■ The two phase strategy used effective action and assured customers that the er-

ror would not happen again.

■ Using a celebrity spokesperson was very clever because India admired and

trusted Bachchan.

■ Sales stabilised within 8 weeks after the Project Vices.

■ Today, Cadbury is still the synonym for chocolate in India.

27

Email Interview with Business Standard

October 7, 2003

(Referred to in Cadbury’s response):

28

Cadbury India Managing Director Bharat Puri explained his company's side of the story

in an email interview with Deputy Managing Editor Amberish K. Diwanji.

Consumers have complained that worms have been found inside Cadbury choco-

lates? How could this have happened?

Cadbury would like to state that it follows stringent quality procedures in India as it does

elsewhere in the world. At all Cadbury plants, every manufacturing process is closely

monitored by experienced technical personnel and a quality assurance team tests fin-

ished goods before their dispatch for sale.

However, Cadbury chocolates reach out to over 650,000 retailers directly and indirectly.

In spite of every care being taken at the manufacturing stage, chocolate is a food prod-

uct that requires specific care and attention in storage. Chocolates are susceptible to in-

festation if they are stored near grains and cereals or in unhygienic conditions.

What safety measures does Cadbury use to ensure quality control at its factory,

and in transporting the chocolates?

At Cadbury India Ltd, we follow the internationally accepted HACCP (Hazard Analysis &

Critical Control Points) program, which is the most comprehensive food safety system to

ensure that our products are free from any physical, chemical and microbiological is-

sues.

The manufacturing process of chocolates takes place at high temperatures, making it

impossible for any infestation to take place during the process.

29

Further samples from every batch are kept in the factory both under ambient conditions

and also in an air-conditioned room to enable us to revert to these in case subsequent

investigation is required at our end

Cadbury has asked the chocolates be stored in a cool and dry place? Are these

norms followed? What happens if a shopkeeper does not follow such norms?

We believe that by and large our retailers, with their experience and knowledge, take

maximum care in handling and storage. Our commitment to quality does not end at our

factory gate. We work closely with our retailer partners, educating them on storage of

chocolate to ensure that products reaching you are of the best quality.

Given India's hot and humid climate, can there not be an alternative in terms of

storing and packaging?

Given India's climate, chocolates need to be stored in a cool, dry and hygienic place

away from grains and cereals. To this end, the Company provides retailers with storage

dispensers and visi-coolers to give adequate product protection. Additionally, every

Cadbury product label mentions the care instruction: 'Store in a cool, hygienic and dry

place.'

Are these visi-coolers and storage dispensers used by the retailers, who to save

costs often do not use such coolers?

We believe that by and large retailers follow our operating instructions and adhere to the

required storage conditions.

30

Does Cadbury check whether its retailers are following the norms and does it

take action against retailers who do not follow hygienic norms in storing the

chocolates? And if so, what kind of action?

Our sales officers and re-distributors salesmen during their regular visit to the outlets

check and continue to educate the retailers on storage norms.

In the present cases, Cadbury has said that the fungus growth occurred because

of the rains. How could this have been avoided?

Chocolate is a food product that requires specific care and attention in storage.

How does Cadbury plan to avoid such mishaps in the future?

We are undertaking a drive in the distribution system. And, as a company that has re-

mained committed to quality for the last 55 years, we are proactively initiating steps to

further strengthen the existing packaging.

(A press release from Cadbury India Limited, dated October 15, 2003, said over the

next two weeks, over 300 sales people trained for quality control would do a thorough

check of the retail outlets across Maharashtra, and later India.)

Coming to Cadbury's plans in India, what are your plans to remain market leader?

We will continue to delight the consumer through excellent and innovative products and

continued commitment to quality.

31

Recently, different chocolates were branded under the Dairy Milk brand? The rea-

son for this singular branding?

This umbrella branding under the Cadbury Dairy Milk looks at leveraging the Dairy Milk

brand across the entire range of moulded chocolate.

The per person chocolate consumption in India is among the lowest. As market

leader, how do you plan to raise the consumption levels?

We will continue to focus on affordability and value for money, thereby raising the rele -

vance of chocolates in the daily consumption basket in India. Additionally, with our focus

on width of distribution we hope to continue to expand the market for chocolates.

One complaint is that many chocolates available in the West are still not available

in India. Can we expect them soon?

Our new product launch agenda continuously evaluates the most appropriate formats

for the Indian market.

References

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32

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