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How Cadbury's won the battle of worms
Molshree Vaid, Moneycontrol.com | December 24, 2006
Three years back, Cadbury's found itself in the eye of a storm, when a few instances of worms in its Dairy Milk bars were reported in Maharashtra. In less than two weeks, the company launched a PR campaign for the trade. And three months later, came an ad campaign featuring Big B and a revamped poly-flow packaging.
Marketing and communications experts brought together by AICAR and the Subhash Ghoshal Foundation say that Cadbury moved quickly to bear the cost of damage.
And thanks to its equity with the consumers, Cadbury's won back consumer confidence, with hit on sales notwithstanding.
In October 2003, just a month before Diwali, customers in Mumbai complained about finding worms in Cadbury Dairy Milk chocolates. Quick to respond, the Maharashtra Food and Drug Administration seized the chocolate stocks manufactured at Cadbury's Pune plant.
In defense, Cadbury issued a statement that the infestation was not possible at the manufacturing stage and poor storage at the retailers was the most likely cause of the reported case of worms.
But the FDA didn't buy that. FDA commisioner, 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 airtight, 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. The heat of negative publicity melted Cadbury's sales by 30 per cent, at a time when it sees a festive spike of 15 per cent.
For the first time, Cadbury's advertising went off air for a month and a half after Diwali, following the controversy. Consumers seemed to ignore their chocolate cravings.
As a brand under fire, in October itself, Cadbury's launched project 'Vishwas' - a education initiative covering 190,000 retailers in key states. But what the company did in January 2004 is what really helped de-worm the brand.
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.
Bharat Puri, managing director, Cadbury's India says, "While we're talking about a few bars of the 30 million we sell every month - we believe that to be a responsible company, consumers need to have complete faith in products. So even if it calls for substantial investment and change, one must not let the consumers confidence erode."
Simultaneously, Cadbury's roped in brand ambassador Amitabh Bachchan to do some heavy duty endorsement putting his personal equity on the line for the brand.
The company upped ad spends for the Jan-March quarter by over 15 per cent. The recovery began in May 2004, and by June, Cadbury's claimed that consumer confidence was back.
These experts believe that the reason for Cadbury's success was that it took crisis head-on. And the consumers were more forgiving, because the brand enjoyed an emotional equity in India.
Santosh Desai, former president, McCann-Erickson says, "The nature of the relationship that Cadbury's has built with the consumer is responsible for latitude the consumers are giving it.
"They are seeing it as a lapse, not a breach of trust - this difference is key. What Cadbury's set out to deliver, it goofed up once but it seemed to be very sincere in its intent to get things right."
Even so, other experts felt Cadbury's was itself to blame for the worm crisis.
Mahnaz Curmally, PR counsel, explains, "Cadbury's had known for a long time that packaging needed change, so in a sense, they waited for something to happen before they made that change and perhaps in hindsight, they could have made that change voluntarily."
Cadbury's could be case study of a sweet recovery from a crisis. It continues to lead the Indian chocolate market with over 70 per cent marketshare. However, the experts feel that today's constantly changing environment should keep the company on guard.
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