6974588 cadbury case

8/3/2019 6974588 Cadbury Case

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EARLY HISTORY

Cadbury, the global leader in the chocolate confectionery market, began in 1824 when a

young Quaker named John Cadbury opened up a shop in Birmingham. John sold coffee,

tea, drinking chocolate and cocoa at his shop.

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 indicated the move to Bourneville

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.

In 1969 Cadbury merged with Schweppes to form Cadbury Schweppes. Schweppes was a

well-known British brand that manufactured carbonated mineral water and soft drinks.

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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

bridging the flavor 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.

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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 has five company-owned manufacturing facilities at Thane, Induri

(Pune) and Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh)

and 4 sales offices (New Delhi, Mumbai, Kolkota and Chennai). Itscorporate office is in Mumbai.

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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.

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MANAGEMENT TEAM AT CADBURY

CHAIRMAN

C. Y. PAL

VICE CHAIRMAN

RAJIV WAHI

MANAGING DIRECTOR

BHARAT PURI

NON EXECUTIVE DIRECTORS EXECUTIVE DIRECTORS

- Harsh Mariwala - Girish Bhat

- Jaithirth Rao

- Suresh Talwar - Radhakrishnan Menon

- Jaiboy Phillips

- Chandramouli V

- Vidyut Arte

- Sanjay Purohit

Company Secretary

Ms Monaz Noble

General Managers

- Vivek Aggarwal - Finance

- Sunil Taldar - Sales

- Jimmy Gandhy - Materials

- Sharad Gangal - Human Resources

- Ajit Tawde - Science & Technology

- Cedric Vaz – Operations

- Shivanand Sanadi - Legal

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ENVIRONMENT AND SOCIETY

At Cadbury India, it is believed that good values and good business go hand

in hand.

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, they launched 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 company identify what community support they should

be providing.

As a result, they focused 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 increaseschool attendance levels.

Last year, the education programme supported the Indian Government’s

Year of Women Empowerment. Special focus was given to the rights and

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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.

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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.

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NEW PRODUCT LAUNCHES

Cadbury launches Rich Dry Fruit Collection for gifting this festive

season.

Come Diwali and the gifting options for consumers just got better with the

launch of Cadbury Celebrations Rich Dry Fruit Collection a range of

premium chocolate gift boxes.

Available in attractive packs, the Collection

caters to a premium gifting consumer and is

an ideal festive gift. It is a unique

combination of the best Cadbury chocolate

and premium dry fruits.

This combination will be available in select outlets in select cities across

India for the first time. The Rich Dry Fruit Collection comes in four

different formats. Each of these is a mix of select premium dry fruits

enrobed in rich Cadbury Dairy Milk chocolate. This launch will augment the

existing Diwali

offerings from Cadbury such as the Celebration packs with collection of

assorted chocolates. Cadbury Celebrations aims to be the preferred gifting

choice among family and friends this season.

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Cadbury's Creative Launch A new after dinner' segment

Cadbury India Limited, in its endeavor to continuously provide a chocolate-

experience, brings the magic of Cadbury Dairy Milk (CDM) Desserts - withrich indulgent crème center, in exotic & traditional flavors of Tiramisu and

Kalakand. CDM Desserts offer the perfect rounding off taste, after meal that

adds special Meetha’ moments to the family.

The rich tastes of CDM combined with the unique crème center in exotic

flavors provide a special chocolate experience. CDM Desserts add delight to

the after-meal moments, especially with the consumers whose current choice

of sweets range from home made delicacies to fruits to meethai.

Hence CDM Desserts positions itself as the perfect after meal, with the idea

“Khaane Ke baad Kuch Meetha Ho Jaye”.

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THE WORMY CONTROVERSY

RISE OF THE CONTROVERSY

State FDA Commissioner Uttam Khobragade said a group of people

approached him 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.

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EFFECTS OF THE CONTROVERSY ON CADBURY

The state Food and Drug Administration has ordered seizure of Cadbury's

Dairy Milk chocolates from all over Maharashtra after worms were found intwo 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 timing of the controversy couldn't have been worse. Festival season

sales (Cadbury sells almost 1,000 tonnes of chocolates during Diwali)

plummeted 30 per cent.

Until then, in the country's FMCG sector plagued by slow, low single digit

topline and bottomline growth, Cadbury was a sweet exception. But its net

profit in 2003 dipped 37 per cent to Rs 45.6 crore (Rs 456 million) as

compared to a 21 per cent increase the previous year.

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ROLE OF THE PUBLIC RELATIONS

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

organizations.

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.

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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STEPS TAKEN TO SOLVE THE CONTROVERSY

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.

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 maynot 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 650,000 retailers

across the country.

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• TAKING PRECAUTIONS

In the aftermath of the controversy, the company launched Project

Vishwas, a retail education programme under which 190,000 retailers

in key states were covered. The programme entailed generating

awareness and providing assistance in improving storage quality.

"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 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.

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• 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.

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.

The other ad featured Bachhan and his granddaughter to emphasize

that the product was absolutely safe for children.

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Cadbury stepped up it’s advertising spend significantly this 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.

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• BENEFITS OF A GOOD CAMPAIGN

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.

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

the cheapest. In India, Cadbury has the largest market share anywherein the world and has been the fastest growing FMCG Company in the

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

So, despite the bitter moments of the last year, the company is hoping

that the future will be much sweeter.

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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.

• Theymust be knowledgeable and be up-to-date on what key audiences

or “publics” know (or think they know) about our organization, if

theyexpect 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 areconducted through the media that is, newspapers, television, magazines,

etc.

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