REGARDING PUBLIC RELATIONS:

Saturday, November 7, 2009

PR - a Silent and Powerful Weapon. Case of Cadbury's Worm Controversy !

CADBURY - The Brand on Fire.

This is a classic case which explains how PR can create wonders

for a company especially during the times of crisis.

THE CADBURY’S WORM 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.

EFFECTS OF THE CONTROVERSY ON CADBURY

The discovery of worms in some samples of Cadbury’s Chocolate in early

October 2003 created one of the biggest controversies in India against a
Multi National reputed for being a benchmark of QUALITY.
The state Food and Drug Administration has ordered seizure of Cadbury's
Dairy Milk chocolates from all over Maharashtra after worms were found in
two 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 "worms’ controversy" came at the worst time. The next few
months were the peak season of Diwali, Eid & Christmas. Cadbury sells
almost 1,000 tonnes of chocolates during Diwali. In that year, the sales
during festival season dropped by 30 per cent. The company saw its value
share melt from 73 per cent in October 2003 to 69.4 per cent in January
2004. In May, however, it inched up to 71 per cent. CDM sales volumes
declined from 68 per cent in October’03 to 64 per cent in January 2004
Clearly, the worm controversy took a toll on Cadbury's bottom-line. For
the year ended December 2003, its net profit fell 37 per cent to Rs 45.6
crore (Rs 456 million) as compared with a 21 per cent increase in the
previous year.
The controversy created an deep adverse impact on the company with
their sales not only drastically dipping down, but at the same time
allowing the competitors to establish their foothold and taking maximum
advantage of Cadbury’s misfortune.
The controversy, and the adverse publicity received in several countries,
set back its plan of outsourcing model which would have resulted in
significant revenue generation, several months back.

ROLE OF THE PUBLIC RELATIONS

PR concerns the total communications of your total organization/group of
organizations. 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 are conducted through the media that is, newspapers,
television, magazines, etc.
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. PR if used properly can have an
impact 10 times higher than Advertising. And at times, especially
during crisis advertising doesn’t work but only PR works.
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.

PR RESCUES CADBURY

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
itself out of the controversy with a clean chit.

STEPS TAKEN TO SOLVE THE CONTROVERSY

1. 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.
That 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 may not
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 6,50,000 retailers across the
country.

2. TAKING PRECAUTIONS

'Project Vishwas' - “Steps to ensure quality & regain the

confidence”
Following the controversy over infestation in its chocolates, Cadbury India
Ltd unveiled 'Project Vishwas', a plan involving distribution and retail
channels to ensure the quality of its products. The Vishwas programme
was intended to build awareness among retailers on storage requirements
for chocolates, provide assistance in improving storage conditions and
strengthen packaging of the company's range of products. Cadbury
reduced the number of chocolates in its bulk packets to 22 bars from the
present 60 bars. These helped stockists display and sell the products
"safely and hygienically". 1,90,000 retailers in key states were covered
under this awareness programme.
"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's team of quality control managers, along with around 300
sales staff, checked over 50,000 retail outlets in Maharashtra and
replaced all questionable stocks with immediate effect. 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.

3. 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.
The Big ‘B’ FACTOR
The big factor that has pushed up CDM sales is the Amitabh Bachchan
campaign. It helped restore consumers' faith in the quality of the product.
In early January that year, Cadbury appointed Amitabh Bachchan as its
brand ambassador for a period of two years. The company believed that
the reputation he has built up over the last three decades complements
their own, which was built over a period of 50 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.
Addressing his audience, Mr. Bachchan says, "Mujhe aapse kuch kehna
hai, jis kaam mein manushya ki antar aatma uske saath na ho,
uss kaam ko karne se usse sab kuch mil sakta hai... man ki
shaanti nahin mil sakti. Isliye jab Cadbury walon ne mujhe kaha ki
unki baat main aap tak pahunchaoon, to pachpan saalon se
Cadbury khaane wala main bhi thoda sa hitchkichaya.... ...Maine
unse ek sawaal poocha, ki kya iske baad main chain ki neend so
paoonga ya nahin, to jawaab mein voh mujhe apni factory le
gaye."
Walking into the Cadbury factory, he takes a look at their complete
manufacturing process and continues, "Aur mujhe apni international
technology.... apne kade quality controls aur double
protection... ...packaging dikhayi." Saying which he takes a bite
of the chocolate. Finally giving his personal assurance and
approval he says, "Aaj kal mein badi chain ki neend so raha
hoon."
"Ab aapki favourite Cadbury Dairy Milk naye purity seal pack
mein."
The other ad featured Bachhan and his granddaughter to emphasize that
the product was absolutely safe for children.
Cadbury stepped up it’s advertising spend significantly that 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.
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
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.

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