Report On Two Opposing Sides: Cadbury Vs. Fda4

Compare & Contrast Report

Public Relations Efforts 4
Why the public relations effort was a success..7
Mitigation Factors 7

References.8

Cadbury’s Worm Case: The issue and its consequences
Cadbury India Ltd., now called Mondelez, which translates to “delicious world”, was conceived in 1948 in Mumbai, India (“Who We Are”, n.d.). It is an umbrella company which produces beverages, biscuits, cheese and grocery products, gum and candies, and chocolate bars; several brands are housed under Mondelez, including Cadbury, Oreo, Trident, Tang, Milka, Bourneville, Halls, Toblerone, and Jacobs (“Who We Are”, n.d.). The Company’s flagship brand is Cadbury Dairy Milk. Most of these brands sell products in almost 165 countries worldwide under Mondelez International. As part of its workforce, Cadbury has more than 100,000 employees worldwide (“Who We Are”, n.d.). While initially starting off as a company that imported chocolates, Cadbury India Ltd. began the cultivation of cocoa in India in 1965 after striving relentlessly to improve its cocoa yields and cultivating practices, and research in cocoa, the Company eventually planting and harvesting cocoa, which it used locally to produce chocolates (“Our Business”, n.d.).
One of the most devastating public relations issues occurred in Mumbai, India in October 2003, right after the Hindu festival of Diwali, also called the festival of lights. Specifically, two Cadbury chocolate bars were found infested with worms. The chocolate stock, from which these bars were provided, was immediately seized by the Food and Drug Administration in Maharashta in a Cadbury manufacturing plant in Pune.
However, the public relations issue affected Cadbury in several ways, the most prominent of which was a shocking drop, specifically 30%, in the sale of Cadbury's products in India. It was observed that this massive reduction was also shocking because around that time of the year, Cadbury typically experienced a 15% hike (Vaid, 2006). This was a corollary of media coverage.
Two opposing sides: Cadbury vs. FDA
Consequently, a string of claims were made by both sides: Cadbury and Maharashta FDA. Cadbury claimed that there could not have been any worm infestation during the manufacturing of chocolate bars, whereas FDA claimed otherwise: infestation had indeed occurred during the manufacturing process at Cadbury's plant. More specifically, the FDA elaborated on the issue by adding that worms had probably gotten into the Cadbury Dairy Milk chocolate bars during storage owing to poor or sub-optimal packaging, or unhygienic conditions in the manufacturing plant at Pune. As a result, many allegations and counter-allegations were made as each party was adamant in its own claim and justifications, pulling the Company deeper into the public relations fiasco.
Stakeholders
The two most important stakeholders impacted by Cadbury’s worm infestation case were its consumers and the retailers which sold Cadbury’s products at retail outlets spread across India. In less than a week after the incident, the sale of Cadbury products dropped by 30 percent during the peak sale season whereby sales usually increase by almost 15 percent typically. A consumer survey conducted by Cadbury in cities spread across India revealed that a large proportion of consumers were unwilling to risk their health by buying Cadbury’s products after the incident, and they were highly skeptical of the Company’s manufacturing process; many consumers, in fact, prevented their kids form buying Cadbury chocolates. Thus consumer behavior was adversely affected, owing primarily to widespread media coverage.
Public Relations Efforts
As a result of the issue, Cadbury faced debilitating consequences, spread in India and across the globe primarily via the media. The matter was exacerbated as Maharashta FDA began prosecution proceedings against Cadbury and asked the Company to stop moving consignments until the quality of manufacturing and packaging had been improved considerably. To deal with the situation, Cadbury too many measures: it stopped advertising its products in India and implemented an educational public relations program that targeted retailers among other measures. This project was titled “Vishwas”, also a symbol for restoring trust and faith in Cadbury among its consumers, who seemed to have shunned buying chocolates to a large extent or had shifted to substitutes; it covered almost 190,000 retailers in India’s most prominent states (Vaid, 2006).
Briefly, Project Vishwas was comprised of three steps: packaging, distribution chain, and retail channels. One example of redesigned packaging is the following: bulk packaging was reduced from 60 to 22 chocolate bars and each bulk package was wrapped in shrink wrap which was intended to prevent sale of individual bars, which pose a greater risk of contamination. Furthermore, control managers, fully trained, were made to conduct quality checks of almost 50,000 retail outlets across India; they were accompanied by sales people, who made sure that they provided holistic information to retail outlets regarding storage of Cadbury chocolates before sale (“Cadbury Unveils Project Vishwas”, 2003). This project was especially effective because suggestions for improvement and alterations were gathered from different sectors, especially the stakeholders which included Cadbury’s consumers, retail partners, and the FDA.
As part of the project, Cadbury ensured that all the safety and health measures it took during manufacturing and storage of its products were communicated effectively and promptly via press release. To further remedy its marred reputation, Cadbury imported new and more advanced machinery, worth almost 150 million Rupees, and implemented further changes such as improving and re-designing the packaging of its chocolate bars; despite the greater cost of the new packaging, Cadbury did not alter the price so that the additional costs of production were borne entirely by Cadbury, without any extra profit. Shortly after these changes were adopted, Cadbury resumed its advertisement campaigns to boost sales and re-build its brand image. Very soon, the “revamped poly-flow” packaging restored consumer trust in Cadbury’s products and sales went back to normal, also owing to Cadbury’s equity with its consumers (Vaid, 2006). Approximately two months after it implemented changes and adopted cleaner and safer means of manufacturing, storing, and packing, sales were restored. In addition, eight months after the crisis, the Company claimed that consumer confidence in Cadbury's products had been restored.
Thus Cadbury’s public relations efforts initially focused on removing all advertisements and instead focusing on improving the quality of its products and educating the retailers of its products. This was primarily because Cadbury stood by its stance that the worm infestation had occurred due to improper storage at a retail outlet, rather than sub-optimal storage or production conditions in Cadbury’s manufacturing plant at Pune. Eventually, advertisements were restored, when Cadbury reintroduced its once-famous products with a new design, new packaging, and better health safety measures so that they would appeal to the consumers. Media was largely used to reach out to consumers. Cadbury recruited Amitabh Bachan, one of the most famous personalities in India and across the globe, to serve as its brand ambassador and further strengthen its brand image. This effort sought to reinforce Cadbury’s credibility in the confectionary market as Amitabh was a legendary and inspiring film actor in India and across the globe, and when consumers saw him supporting Cadbury by taking part in its commercials, their faith in the Company was slightly restored. Amintabh Bachan spread the idea that Cadbury’s new and improved packaging was safe, and advertised via a TV commercial titled “Sincerity”. Similarly, the India Prime Minister of the time Atal Bihari Vajpayee was also used as an aid to boost publicity and brand image.
The response to the incident initiated by Cadbury was both internal and external. External response efforts dealt with transforming the packaging of Cadbury bars, starting an effective and widespread media campaign to re-launch the brand and communicate the improvements which had been made in both manufacturing and storage, as well as in educating retailers.
Why the public relations effort was a success
Thus Cadbury engaged with both its major stakeholders to an extent that they eventually were convinced of Cadbury’s improved measures which promoted hygiene, health, and safety and maintained top quality; the consumers were satisfied because they were sure that Cadbury had taken appropriate measures to fix the situation, the FDA was satisfied because being a government authority, it was glad that Cadbury was now following health safety rules and regulations, and the retailers were satisfied because they had been given proper education and provided with rules regarding product storage and shipment to avoid ambiguities and contamination. In short, Cadbury’s immense investment and consistent efforts to raise its brand image and sales, and restore consumer confidence in the Company paid off well.
Cadbury was primarily successful become of its optimal timing for closing down the advertisement, re-designing the packaging and making other necessary changes, and then re-launching the improved design to attract customers. Had the company delayed any of these measures or continued to sell its products without making any alterations, it would have continued to face a persistent loss in sales and customers switching to substitutes.
Mitigation factors for Future
The public relations issue provided several insights into what should be done in case an incident occurs such that a company faces huge losses in profits and revenue as well as trust from customers. It highlights the importance of taking a holistic approach, looking into the circumstances from the perspectives of all the stakeholders before deciding on which steps to take to ameliorate the situation. How Cadbury made public relations effort in order to re-build, advance, and promote its reputation, restore its sale, and revert people’s trust in its products was an epitome of how important public relations is to build relationships among the company employees and between the company and the stakeholders, keeping ethics in mind, which was demonstrated by the dynamics between the FDA and Cadbury (Parsons, 2008). The case also indicated which means can be imperative and successful for building public relations; social media, which many companies rely on to build good relations today, is one of the strongest means of building public relations by reaching out to stakeholders and communicating with them efficaciously. It also demonstrated a robust campaign in marketing, essential for public relations efforts (Watson, Tom, and Noble, 2005).
References
Cadbury unveils 'Project Vishwas' (2003, January 1). Retrieved from http://articles.economictimes.indiatimes.com/2003-10-16/news/27521373_1_bharat-puri-cadbury-india-cadbury-products
Our Business. (n.d.). Retrieved from http://in.mondelezinternational.com/about-us/india-business
Parsons, P. (2008). Ethics in public relations a guide to best practice (2nd ed.). London: Kogan Page.
Puri, B. (2013, January 1). How to transform consumer opinions when disaster strikes. Retrieved
Vaid, M. (2006, January 1). How Cadbury's won the battle of worms. Retrieved from http://www.rediff.com/money/2006/dec/24cad.htm
Watson, T., & Noble, P. (2005). Evaluating public relations a best practice guide to public relations planning, research & evaluation. London: Kogan Page.
Who We Are. (n.d.). Retrieved from http://in.mondelezinternational.com/about-us/who-we-are