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. 1
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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.
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Vision: "Working together to create brands people love"
Cadbury’s mission statement Says simply, ‘Cadbury means quality’; this is our promise. Our reputation is built upon quality; our commitment to continuous
improvement will ensure that our promise
Mission Statement 0f the product: The mission statement of our new product is “To provide our
customers with a tempting and exquisite taste” as Enticing Treats means a mouth watering treat which is simply irresistible.
PURPOSE AND VALUES
Objective:
Grow shareholder value…over the long term.
Strategy:
Create robust and sustainable regional positions in our core categories of confectionery and
beverages through organic growth, acquisition and disposal.
Process:
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
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diversity and respect for differences
Opportunity for development.
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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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
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6. Eclairs
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