about cadbury

1. Cadbury India
Company profile:
 In 1948 in India, Cadbury began its operations by importing chocolates.
 Cadbury operates in different categories Chocolate, Confectionery, Milk Food Drinks,
Candy and Gum category. With brands such as Dairy Milk, Gems, 5 Star, Bournvita,
Perk, Celebrations, Bytes, Chocki, Delite and Temptations, there is a Cadbury offering
to suit all festive occasions and moods.
 Cadbury enjoys a value, market share of over 70% - the highest Cadbury brand share in
the world.
 In 1824 John Cadbury began selling tea, coffee and chocolate produced by him.
 Cadbury in the Indian sub continent defined the first taste of chocolate. The company
today employs nearly 2000 people across India.
 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.(locations of factories.)
Case brief: (a sweet story turning sour)
On October 2003, just a month before Diwali, 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,

2. 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) and build back credibility for the
same channels (the media) that had questioned it. 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.
Issues:
 Ethical and social responsibility of company (Worm controversy hit Cadbury in
Oct 2003 .Fungus layer on portions of its chocolates)
 Role of regulatory bodies (Food and Drugs Administration ( FDA ) began seizure
of the chocolate from all outlets across the state.FDA also ordered inspection of
Stock at company’s Mumbai Plant)
 Importance of quality aspects in FMCG (Peak Season Sale and outsourcing
model affected due to controversy)

3. (Figure representing the visual aspects of the worm controversy)
Effects
 The heat of negative publicity melted Cadbury's sales by 30 percent, at a time when it
sees a festive spike of 15 percent
 Net profit in 2003 dipped 37 per cent to Rs 45.6 crore as compared to a 21 per cent
increase the previous year
 Retailer stocking and display dropped, employee morale especially that of the sales team
was shaken
Reasons:
•
Aggressive marketing by Company while neglecting on the Quality of Retailers
•
Lack of efforts to Educate Retailers and ensure adequate hygienic storage conditions at
retail outlets
•
Poor quality in packaging of product
•
Issues related to transportation of product

4. •
No Norms in terms of Storage for Chocolates
SWOT analysis of Cadburys:
Strength
Cadbury is a company, which is reputed internationally as the topmost chocolate provider in the
world.
The brand is well known to people & they can easily identify it from others.
Cadbury the world leaders in chocolate, is a well-known force in marketing and distribution.
Users have a positive perception about the qualities of the brand.
Cadbury main strength is Dairy milk. Dairy milk is the most consumed chocolate in India.
By using popular models like Cyrus Brocha, Preety Zinta and others Cadburys has managed to
portray a young and sporty image, which has resulted in converting buyers of other brands to
become its staunch loyalists.
Cadbury has well adjusted itself to Indian custom.
It has properly repositioned itself in India whenever required i.e. from children to adults,
togetherness bar to energizing bar for young ones etc.
Weaknesses
There is lack of penetration in the rural market where people tend to dismiss it as a high end
product. It is mainly found in urban and semi-urban areas.
2. It has been relatively high priced brand, which is turning the price conscious customer away.
3. People avoid having their chocolate thinking about the egg ingredients.

5. Opportunities
The chocolate market has seen one of the greatest increases in the recent times (almost @ 30%)
There is a lot of potential for growth and a huge population who do not eat chocolates even
today that can be converted as new users.
Threat
There exists no brand loyalty in the chocolate market and consumers frequently shift their
brands.
New brands are coming and existing brands are introducing new variants to add up to an already
overcrowded market.
Strategy followed by Cadbury to overcome the Worm
controversy:

Project Vishwas.

Packaging Change.

focused and intense communications program

Amitabh Bachchan as a Brand Ambassador to reinforce the credibility.

Cadbury hired Advertising Agency O & M.

New product introduction
Suggestion

Prevention

6. Design Quality Progress Reviews Requirements Documentation Quality planning
Supplier capability surveys.

Appraisal
Unit Testing Regression Testing Automated Test Tools User Interface Reviews.

Internal Failure
Rework, Scrap, Re-inspection, Defect Tracking & Reports, Requirement Changes.

External Failure
Product Recall, Liability Costs, Help Desk/Warranty Claims, Lost Sales/Market Share.

7. 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.

8. 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 headon. 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."

9. 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.
For more such reports, log on to www.moneycontrol.com
Molshree Vaid, Moneycontrol.com

10. 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.
For more such reports, log on to www.moneycontrol.com
Molshree Vaid, Moneycontrol.com